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THE STATE OF THE EUROPEAN UNION
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it is fundamental not only to efforts to create
better jobs, construct a more sustainable society
and improve our quality of life, but also to at-
tempts to maintain the EU’s competitivity in the
global market, something on which everything
else depends.
The fourth industrial revolution
Technological transformation and the ways in
which the new digital technologies are giving
rise to a fourth industrial revolution are high on
the strategic agenda of companies and govern-
ments, have been the focus of copious media
coverage, and are a regular topic of discussion
and analysis. For Europe, the stakes could not
be higher, and our societies and companies will
pay a very steep price if they fail to keep up with
these changes.
This is not the first time that technological
and scientific progress have caused profound,
long-lasting economic upheaval. More than two
centuries ago, the first industrial revolution
transformed manufacturing processes through
the application of steam power. The use of me-
chanical power replaced human muscle and
animal traction as basic forces of production,
and industries such as textiles, iron- and steel-
making, and transport (with the arrival of rail-
ways) were transformed, bringing about perma-
nent social change. Many of the effects are still
visible today, some two hundred years later.
The second industrial revolution combined
electricity, capital goods and sophisticated man-
ufacturing processes to create the production
line, used to manufacture complex products
such as cars in huge factories. Only a few dec-
ades ago, the third industrial revolution occurred
as a result of developments in the fields of elec-
tronics, and information and communication
technologies, with computers and IT applica-
tions soon becoming widespread.
We are now in the fourth industrial revolu-
tion, one that is characterised by the fusion of
digital technologies and an acceleration in the
pace of change, a trend that has combined with
the hyperconnectivity of people and objects to
transform our world, bringing about the in-
creasing hybridisation of the physical, digital
and biological spheres. There is no question as
to the scale of the disruptive change that these
new technologies are generating in society, af-
fecting how we relate to each other, how we
learn, our patterns of social interaction, and our
political and administrative structures.
Digital transformation opens the way for
profound innovations in our business and social
models, changes that undermine the “estab-
lished order”, blur boundaries between coun-
tries and sectors, lower the entrance barriers to
new agents, and create new networked models
that challenge traditional businesses. There is
no need to list the impacts – so obvious to all –
of the digital revolution. The scale and speed of
technological transformation means that Europe
has a lot at stake.
European countries and EU institutions are
aware that other parts of the world are better
positioned in the sphere of technological inno-
vation, whether due to the presence of a
stronger technological and business ecosystem,
because of strong and sustained public invest-
ment in R&D, or as the result of the (alleged or
real) conservatism of European business. None
of the global tech giants in the key sectors is
European, and our competitors – countries such
as the USA and China – are striving to achieve
hegemony and leadership in this technological
revolution.