Regional economies and digital transformation

Digital transformation is a key strategic issue for countries and regions aiming to boost economic growth, job creation, technology development, and innovation. Emerging technologies such as the Internet of Things (IoT) are expected to shape the future of innovation and knowledge production, yet different regions have different abilities to exploit the opportunities they create.

On Wednesday 2 March 2022, CIMR welcomed a panel of digital technology experts to discuss new research into regional economies and digital transformation. The session was chaired by CIMR Visiting Fellow Saverio Romeo.

Mapping regional strengths in digital technologies

Dr Federica Rossi began the discussion by presenting research conducted with Saverio and colleagues in Italy and France on the distribution of IoT competences across European regions.

The research aimed to identify the prevailing IoT competences in different regions and, based on this data, which regions exhibit the greatest potential for further expansion of their IoT technological capabilities.

The researchers used the Amadeus database to analyse data from 206,357 companies in eighteen European countries and to gain a more detailed overview of 17,008 companies (mostly larger firms) via a web scraping procedure.

Five clusters related to IoT themes were identified:

  • Software and data processing
  • Telecommunication
  • Manufacturing of telecom equipment
  • Manufacture of electronic components
  • Manufacture of measure instruments

More central regions and larger European countries tend to be more heterogeneous in their profile, exhibiting many different clusters (UK, France, Germany). Conversely, peripheral regions tend to be more homogenous, with most companies in the area all in one cluster (Ireland, Spain). The full value chain tends to be present in densely populated regions, such as capital cities.

What does this mean for the potential of IoT development? The mapping process showed the regions that are more diversified or specialised in terms of their IoT competences, and their corresponding potential for expansion:

  • Diversified competences (high potential for technological capabilities expansion) are found in the UK, France and Germany.
  • Partially diversified IoT competences (intermediate potential for technological diversification) are found in the UK, Germany, Italy and France.
  • Specialised IoT competences (limited part of the IoT value chain is present) are found in other areas of Europe.

A European digital innovation hubs covering the Smart Connectivity domain

Pierre-Yves Dannet, Consultant in Smart Connectivity, introduced the Smart Connectivity Digital Innovation Hub Network (SCoDIHNet) initiative which encompass DIHs covering 5G, IoT, AI and cybersecurity. The network was formed as a result of a European Commission initiative to facilitate digital technology adoption in European industry. The SCoDIHNet represents a merger of the Alliance for the Internet of Things Innovation (AIOTI) and the 5G Infrastructure Association (5GIA), which will support and influence activity relating to 5G, IoT, AI and cybersecurity. The network aims to share good practices and identify opportunities for development across Europe. The European Commission is also funding a Digital Transformation Accelerator to coordinate activity in this field. The digital innovation hub currently has 83 members, representing most countries in the EU.

There is a high interest to map the study conducted by CIMR and the members of the SCoDIHNet in order to identify possible local collaborations with IoT technical providers and DIHs.

Alliance for Internet of Things Innovation

David Langley, Professor of Internet, Innovation and Strategy at the University of Groningen, shared his involvement with the AIOTI, where he chairs a working group on innovation ecosystems. Much of the work is driven by the European data strategy, which is set to be the basis for many developments in Europe based on core values such as data protection, authenticity and digital sovereignty. David highlighted legislative developments, such as the 2022 Data Act, that actors in the industry should keep in mind.

In his role as Senior Researcher at TNO, David is exploring the AI ecosystem and conducting a market analysis in the Netherlands. While there has been an increase in data sharing initiatives, David cautioned that “no single initiative provides the perfect solution yet.” He argued that the IoT is essential in delivering circular economy, which will require smart business models.

Commenting on the paper presented by Federica, David cautioned against placing too much emphasis on numbers of companies in a region and suggested taking turnover into account as well to identify hotspots.

Accelerating adoption of advanced digital technologies

Brian MacAulay is Lead Economist at the Digital Catapult, one of nine catapults created to allow universities and industry to work together to accelerate digital adoption. According to Digital Catapult assessments, the UK is 1st in Europe and 3rd in the world for the development and uptake of advanced digital technologies.

Brian shared Digital Catapult’s aims to break down barriers to digital adoption, de-risk innovation and open new markets. This can be done by providing physical and digital facilities, designing and delivering targeted innovation and acceleration programmes and collaborating with universities on research and development.

Previous research by Digital Catapult mapped IoT companies across the UK and identified an acceleration of such companies from 2010, largely concentrated in the Southeast. Digital Catapult work with a range of companies, from early stage start-ups, SMEs and international corporations, to deliver accelerated adoption of advanced digital technologies.

Commenting on the paper put forward in the session, Brian called for the authors to probe the relationships between companies within a cluster to understand the strength of the partnerships presented.

Ensuring an inclusive digital transformation

Questions from the audience asked whether there is any work undertaken in IoT to ensure accessibility and that no one is left behind in this and future advances.

Pierre-Yves commented that the digital innovation hubs are open to individuals as well as industry. EU member states are involved to ensure that public money is used in a way that benefits everyone.

We would like to thank our panel and attendees for sharing valuable insights into IoT developments.

The recording of this event is available to watch on YouTube.


This post has been contributed by Isobel Edwards