According to a new study, a decline in the digital investment and reduction in the number of local subsidiaries of the large firms are putting the Southern European states on a “backwards slide” to an analogue age.

Southern Europe

According to the Digitization Index 2012 of Management consultancy firm Booz & Co’s, for the first time the Eastern European private sector firms are all set to outperform the Southern States in digital innovation. The purpose of Industry digitization index is to find out the ways in which the firm are adapting the latest technologies in order to bring efficiency in all the departments of a business.

Why and where Eastern states lead

 The Eastern Europe is reflecting all together a different story and is overpowering Southern Europe in terms of digitization as there is increased investment from outside and the big companies are making efforts to bring out wide-ranging digital innovation in various sectors.

The financial service sector, car manufacturing, media and telecoms, are four such sectors out of total 15 in which Eastern Europe has outpaced South Europe.

Southern Europe: About the study

 The parameters that are incorporated in the index are acquiring goods or services for business, internal processes like manufacturing products, output (selling to clients), and the infrastructure of the company. The study is based on Eurostat data collected over the last 12 months and it reveals that in 2011, the index rose 6 percent, but after that in 2012, the digitization effort declined 1 percent in countries like Spain, Portugal, Greece and Italy.

The decline in the index only reflects that the Southern Europe is lagging behind in the preparation of a worldwide digital future.

What experts have to say?

One of the partners of Booz & Co in London, Victor Koss said that the recent conclusion is “a sad story” and also not obvious for the analysts even though the current state of the economy is so. “The investment level has certainly dropped but that would indicate a slowing down rather than a falling behind,” he told the Telegraph.

He said that those foreign or domestic firms, which had the subsidiaries, and in the past were digital and more advanced, have been acquired or closed or have reduced their business.

He also said that at present, the growth of the business is being hampered by the economic sickness, which is prevalent in the countries. There is a decline in the advance technologies as companies have reduced their operations, or the number of employees left is less than ten. The subsidiaries have been taken over by other bigger companies, or there has been a re absorption of companies into its Northern European origination.

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Dr Albert Bravo-Biosca, Senior Economist at NESTA said that the economies such as Spain were more inclined towards investing in bricks and machines rather than in design innovation and training.