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Digitization increases productivity, but not in Italy

In the opening sentence of the new report on Italy, the European Commission recalls, not by chance, the need to increase our country's productivity to boost economic growth: the adoption of digital technology is the main tool but so far the effects on the system they were disappointing

Digitization increases productivity, but not in Italy

In the opening sentence of the report on Italy the European Commission recalls the need to increase the low productivity of the country and with it potential growth with positive effects ranging from a higher level of wages to the sustainability of public debt. Since the growth of total productivity (not only and not so much that of labour) is the way to increase prosperity and since this growth stagnates in all rich countries, but to a lesser extent than in Italy, studies and analyzes multiply by find out how to get it started again.

One way to understand is to study how they do it businesses "at the frontier" achieve total productivity growth 4-5 times greater than the least productive, and the difference grows to 10 times for labor productivity. 

The recovery after the crisis has seen the gap widening between total productivity growing in the more digitally intensive industries at the frontier and less productive firms.

Then a digital adoption is the main tool for increasing productivity.

The good news is that increasing the productivity of firms far from the border would dramatically increase total productivity. But it is not easy. At the moment, it is frontier firms that profit most from new technologies. 

- investment in broadband, in cloud computing, inEnterprise resource planning or in Customer relationship management they are necessary, but not sufficient: as the figure below shows, new digital technologies are adopted by up to 50% of firms in advanced economies, with the exception of the Nordic countries. Even in Germany, where high-speed broadband is available and reasonably priced, only 50% of businesses have adopted it.

Digital Technologies Chart
SOURCE: OECD

The bad news is that digital works only if management, workers and institutions are prepared to welcome it. Otherwise, not only do you not get the benefits of digital, but you suffer the risks. 

An OECD study for theInternet Governance Forum 2018 concluded that secure technologies can improve the lives of only those with the skills to use them. Otherwise, the risks involved in accessing digital technology will prevail.  

The OECD has made a great effort to collect data on the benefits and risks of digitization in the first place creating a morphology of risks and benefits. Among the benefits, free access to information, the availability of a wider choice of consumer goods, efficiency gains. Among the risks, the digital divide, or different possibilities of access and ability to make use of them; the scarce in digital literacy, or how to safely navigate the digital space that requires a mix of technical knowledge and critical thinking to filter and select quality information, not get involved (self-control digital involvement), avoid mental problems (for example being able to resist online bullying); the theft of private data e cyber hacking.

In the table an example of the 33 indicators developed by the OECD and their classification as risk or opportunity:

OECD indicators graph
SOURCE: OECD

For different dimensions of well-being, the indicators are represented in one "wheel" of digital well-being whose center corresponds to the minimum results and the intermediate circle to the maximum results with the opportunities in blue and the risks in yellow.

Finland chart
SOURCE: OECD

 

Italy chart
SOURCE: OECD

It is noted that in Finland there are many benefits and few risks in contrast to the'Italy which has many risks and few benefits.

It `s important to note that there is no correlation between risks and benefits/opportunities, i.e. the increase in opportunities does not necessarily increase the risks, as can be seen in the following table:

Digital Risk Chart
SOURCE: OECD

Opportunities are linked todigital access, which is therefore a necessary condition, but without the ability to use it can cause serious risks. We all wish we were in the lower right quadrant with low risk and high opportunity. It follows that public incentives for the adoption of digital technologies are useful if the ground is prepared for its use: while the supply of fiber in the area is being completed, the same commitment is therefore necessary for the training of adults of all ages looking for a job. But also the introduction of Boolean logic in elementary school programs and in middle and high school programs digital literacy, digital literacy, and the deepening of students' critical and original thinking skills. 

The spread ofe-governmentIn addition to public administration efficiency gains, it would also provide a learning arena for the public. In addition, initiatives by industry organizations to facilitate this should be encouraged joint ventures of university laboratories with digital companies to exploit synergies by overcoming the bureaucratic or "territorial" obstacles that afflict both.

These are limited and even inexpensive measures if digital companies that have an interest in the multiplication of potential customers/users are asked to contribute to teaching and research. But it is necessary to convince or neutralize the powerful lobbies for the status quo, as in the other sectors that hinder the recovery of growth in Italy. IThe debate with these lobbies and all stakeholders, starting with students, must start as soon as possible. 

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