As Europe is realizing and further enhancing its plans for a smart and green digital economy, the global pandemic is adding complexity, and as well as opportunity, in this transition.
Hence, a digitally-driven economic recovery is more compelling than ever. But the key strengths and weaknesses of European member states’ individual digital economy archetypes are different.
In that context, how can Luxembourg best develop a digital transformation tailored to its specific needs?
During a recent webinar on accelerating the transition to a digital economy, co-organized by Forum Europe, Huawei, and consultancy firm Arthur D. Little, Mario Grotz detailed Luxembourg’s strategy for a competitive and sustainable economy.
Grotz is chairman at Luxinnovation and Head of Directorate for Infrastructure and Technology at the Luxembourg Ministry of Economy and Foreign Trade.
“As a strategic hub, Luxembourg is quite well positioned in the European context,” he said. “, It is one of the top two EU financial hubs, with the European Investment Bank (EIB) and the European Investment Fund (EIF) being headquartered here in the Grand Duchy.”
A True Centre of Excellence
Mario Grotz continued detailing Luxembourg’s competitive advantages, such as it ranking 4th as the most globalized economy in the world and its position as the world’s largest commercial satellite operator.
He further emphasized how the country is a leader in the logistics industry. While it is positioned as a European hub, it has a strong, integrated global supply-chain.
The Head of Directorate at the Ministry of Economy talked about Luxembourg’s role in digitizing the EU. “The country hosts critical European directorates and digital infrastructure,” he said. “A lot of the data of the European Commission is stored and treated in Luxembourg, in our highly secured data centers.”
As per Grotz, the country is now aiming to develop a critical mass of knowledge and expertise, with a set of digital services which are targeting priority areas like digital infrastructure, data economy, modernization of public servicing, and digital solutions.
“So the aim of Luxembourg’s digital pole is to evolve over the next few decades into a true center of excellence and contributing significantly to the EU digital single market,” Mario Grotz explained.
“Luxembourg now aspires to be a next-generation Logistics 4.0 hub.”
Hence, the acceleration of the digital economy will remain the core of the country’s strategy for a competitive and circular economy across its key industrial sectors, such as industry 4.0, EcoTech (with a particular focus on circular economy and smart mobility), HealthTech, logistics, space, and financial services.
The Enabling Power of Digitizing
“Digitization will revolutionize all priority sectors of our economy.” More particularly, Grotz sees Industry 4.0 as a game-changer for companies in the future, it will allow to reduce the time taken from order to manufacture to a day from weeks.
For the Head of Directorate at the Ministry of Economy and Foreign Trade, FinTech is the fastest global adopter of new digital and data technologies: “AI and Big Data solutions are already operational. Digitization of core segments of the financial services is a reality for Luxembourg,” he explained.
On the subject of logistics, he said, “Big Data, coupled with IoT, Blockchain, AI, and automation will reshape logistics processes along the entire value chain.” “Luxembourg now aspires to be a next-generation Logistics 4.0 hub”.
As for the space industry, tight coupling with the digital economy will open new space data-enabled applications and services, Grotz stated. “Luxembourg will provide privileged access to data through its Copernicus ground segment agreement,” he added.
Mario Grotz confirmed Luxembourg’s vision to become the first European Union member state to align and translate the EU climate neutrality goal by 2050, as well as the EU global digital leadership objectives into a single transformative national strategy.
He concluded by saying that Luxembourg’s strategy for a competitive and sustainable economy will ensure that the country continues to become the most progressive and attractive digital and data-economy ecosystem within the European Union.
Coupling Government Policy and Investment
“Our strategy is also designed to leverage the enabling power of digital to position Luxembourg as a future European leader in the sustainable green transition and to future-proofing the economy in the face of strong headwinds and global megatrends,” he explained.
“The most digitalized countries will recover more quickly from the pandemic.”
Andrew Williamson, Vice President of Global Government Affairs and Economic Adviser at Huawei Technologies added, focusing on post-pandemic economic growth, “The recovery remains uncertain, but governments could help shape it,” he said. Adding that there is a much broader consensus amongst economists about the role for governments in medium to longer-term recovery, he said, “Fiscal stimulus through government investment into infrastructure has proven to be an efficient multiplier and provides the best returns.” “Investment in ICT would be the best for future prosperity”.
According to Williamson, the most digitalized countries will recover more quickly from the pandemic: “There is a reasonable correlation between the strength of their GDP recovery and the sophistication of their digital economy,” he explained. “Therefore, digital economy development requires the development of a digital industry ecosystem guided by government policy and investment. In this way, the digital industry can grow continuously.”
Among the best practices to implement, he suggests that governments join-up and fully cooperate with the private sector: “This appears to be the best way of ensuring the greatest digital dividends,” he concluded.