Digital Economy: How is digitalization changing global competitiveness and economic prosperity? — GED Blog from

How does digitalization change production processes?

  • When human labor is increasingly used by robots, computers and machines, the labor-intensive developing countries lose their decisive competitive advantage: cheap labor.
  • At the same time, the competitive situation of rich industrialized countries is improving be-cause they are better able to finance the costs of digital transformation.

Digital Economy: How does digitalization change the competitiveness of individual economies?

1 Western industrial economies

  • If these countries succeed in promoting the use of digital technologies, they will become even more competitive. The result will be a further increase in GDP per capita. This includes the U.S. in particular.
  • Those industrialized countries that fail the digital transformation are losing competitiveness. This applies to economically weak countries that are also heavily indebted, such as Greece and possibly Italy. Ageing societies can also fall into this group of countries because the innovative power and productivity of an ageing society tends to be lower.

2 Asian emerging economies

3 African developing countries

  • On the one hand, African countries have a young and growing population. If these countries succeed in building a digital infrastructure and promoting the education sector, strong economic growth can result.
  • Some of these countries may even be able to skip a technology step. Economists call this leapfrogging. For example, a country that does not yet have a landline for telephony is setting up a mobile network and is therefore on the same technological level as an industrialized country.
  • On the other hand, it becomes problematic for poor, underdeveloped economies that have no valuable raw materials and no access to the capital market. They are in danger of being left even further behind in economic terms because they are losing competitiveness.

Digital Economy: Changing competitiveness and the distribution of global wealth



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Global & European Dynamics

Global & European Dynamics

Our mission on this blog is to shed light on Europe’s role in the world economy.