---
title: "ITIF Report: Raising European Productivity Growth Through ICT"
date: "2014-06-02"
issues: ["Productivity"]
content_type: "Press Releases"
canonical_url: "https://itif.org/publications/2014/06/02/itif-report-raising-european-productivity-growth-through-ict/"
---

# ITIF Report: Raising European Productivity Growth Through ICT

Contact:
William Dube
[wdube@itif.org](mailto:wdube@itif.org)
202-626-5744

WASHINGTON (June 2, 2014) - Most commentary on the European economy focuses on its precarious financial system and anemic employment recovery. But Europe faces a challenge of equal or even greater magnitude that has received far less attention: lagging productivity. While Europe steadily reduced the productivity gap with the United States after WWII, since the mid-1990s the gap has widened as EU productivity growth has stalled, leaving many European companies uncompetitive, incomes stagnant, and government finances in turmoil.

If Europe is going to catch up it must follow the same path that drove U.S. productivity growth, in particular, more ubiquitous adoption of information and communication technologies (ICTs) by all organizations (for-profit, non-profit, and government) throughout Europe.

*Raising European Productivity Growth Through ICT*, a report by the Information Technology and Innovation Foundation (ITIF), examines the impact of ICT use on productivity and analyzes why firms in Europe have not invested more in ICT or seen larger productivity gains from the investment they did make. It also proposes a series of policy reforms to enhance ICT adoption and productivity growth.

The report points to several key reasons why Europe has fallen behind America when it comes to productivity, including the fact that product, labor and land regulations raise the cost of ICT investment and/or reduce returns from that investment, as well as the lack of scale for firms, both from too many small firms and the lack of an integrated EU market.

"European policymakers have focused more on creating world-class ICT firms than they have on ensuring that all firms in Europe invest more in ICT," says Robert Atkinson, President of ITIF and co-author of the report. "Unfortunately, efforts to regulate ICT, including policies to create a 'European cloud,' will only make it harder for firms in Europe to adopt ICT and improve productivity. Rather than try to create the next European 'Google' or 'Microsoft,' Europe's policymakers would be advised to instead dismantle regulatory barriers and strengthen incentives for broad-based ICT adoption in the corporate, government and non-profit sectors."

To address ICT-based productivity growth in all sectors the report proposes a series of reforms including:

- Focusing first and foremost on ICT use, not ICT production in Europe
- Finding ways to address legitimate concerns around digital issues like privacy and security without damaging the ICT ecosystem and imposing costs on ICT producers and users.
- Transforming tax and trade policy to spur, instead of inhibit, ICT growth, by making sure that ICTs are affordable for both consumers and businesses.
- Actively encouraging digital innovation and transformation of economic sectors, including through enhanced government procurement of ICTs.
- Help more firms in Europe reach the scale needed to fully benefit from ICT investment, by reducing government preferences for small business.

"Europe has the potential to raise productivity significantly, but only if the EU and individual nations put in place the right polices that provide firms with stronger incentives to drive productivity through ICT." adds Ben Miller, Economic Growth Policy Analyst with ITIF and report co-author.

Read the [report](https://cdn.sanity.io/files/03hnmfyj/production/e15b1b2072c51abaf45ecf5266d24651267c68a6.pdf).

---
*Source: Information Technology & Innovation Foundation (ITIF)*
*URL: https://itif.org/publications/2014/06/02/itif-report-raising-european-productivity-growth-through-ict/*