The University of Bonn, in partnership with the Vodafone Institute, is analyzing the challenges and opportunities facing Europe

From computer chips and cloud computing to artificial intelligence, Germany and the rest of Europe want to become less dependent on digital technologies from abroad by driving forward their own innovations. The Center for Advanced Security, Strategic and Integration Studies (CASSIS) at the University of Bonn has now prepared a policy brief, in cooperation with the Vodafone Institute for Society and Communications, Vodafone’s European think tank. The paper tackles the continent’s “digital trade deficit” and shows how hidden trade dependencies on the US and China are raising questions about the effectiveness of current European strategies.

Although strong growth in digital trade would appear to lay firm foundations for meeting the targets set by the European Commission for its “Digital Decade,” closer analysis reveals hidden weaknesses with the potential to jeopardize future progress—specifically, Ireland’s disproportionately strong influence on the continent’s digital trade balance. Looking more closely, Europe’s digital trade surplus actually turns out to be a digital trade deficit.

Because US tech corporations have a disproportionately large presence in Ireland and get cheap access to European markets, this “Ireland effect” is distorting Europe’s trade statistics and restricting its digital autonomy. Without these US firms being in Ireland, the EU would have a massive digital deficit. “Between 2022 and 2024, this deficit cost Europe over $350 billion, which is nearly 40 percent of the defense spending planned for the years to 2030,” says Assistant Professor Maximilian Mayer, a member of the Individuals & Societies Transdisciplinary Research Area at the University of Bonn and coordinator of the project at CASSIS.

The study also highlights Europe’s excessive dependence on China in the trade involving digital goods. In light of this significant imbalance and the Ireland effect, it is becoming clear that Europe is being squeezed between the two digital giants—China and the US—according to the analysis. It also suggests that this reality is putting a question mark over Europe’s economic gains, increasing its geopolitical vulnerability and restricting its digital autonomy.

The authors are advising the European Commission to continue strengthening Europe’s manufacturing industry and competitiveness, further reduce its dependence on China for the trade in digital goods, and adopt a political language that identifies autonomy and sovereignty as common goals and fosters new, multifaceted technology partnerships with the public and private sectors.

“The analysis shows that Europe’s digital dependencies are greater than the statistics would suggest,” says Michael Jungwirth, Director Public Policy & External Affairs at Vodafone Germany and Public Policy Director Vodafone Group. “What we need now is a coherent trade and industry policy that genuinely strengthens digital resilience—for an economically and geopolitically sovereign Europe.”

Digital Dependence Index to be revamped

CASSIS’s Digital Independence Index (DDI) shows how well this is going by providing a figure for how vulnerable European countries are compared to their counterparts elsewhere in the world. The indicators include how dependent an EU country is on electronic components or communications equipment from abroad. The index also illustrates the extent of a country’s reliance on foreign companies for computer software, operating systems and patents. Says Mayer: “The DDI uses a large number of indicators to highlight the challenges and areas of potential involved in reducing technological dependencies in a globalized economy with a high degree of labor specialization.”

Having focused primarily on the G20 member states up until now, the DDI is to be overhauled, updated and expanded to include over 50 nations across the globe. This will ensure much better coverage, including of many smaller countries in Europe, Africa and Asia. “This will bring a great many benefits for several reasons,” adds Mayer. “Not only will the measurements be more extensive in geographical terms, we’ll also be able to illustrate global and regional trends as well as patterns in digital capacities, vulnerabilities and costs.” The Vodafone Institute will also be supporting the work to update and expand the DDI during its year-long partnership. In addition, the DDI’s web page is being redesigned to make it even clearer and more accessible to users and further improve its analysis features.

About the project

The policy brief was written by the University of Bonn in collaboration with the Vodafone Institute, Vodafone’s European think tank. It forms part of a series aimed at analyzying Europe’s digital dependencies and the challenges and opportunities associated with them. This year-long partnership aims to provide innovative assessments of how Europe’s digital capabilities are developing and identify the implications of these trends for Europe’s economic and political autonomy.

The Vodafone Institute

The Vodafone Institute for Society and Communications is Vodafone’s European think tank. The Institute brings together perspectives on the digital transformation of the economy and society, operating at the intersection of business, politics, academia and civil society. In collaboration with partners, it develops studies on pressing issues to identify pathways for the digital future. Read more at https://www.vodafone-institut.de/en/institute/.

CASSIS

The Center for Advanced Security, Strategic and Integration Studies (CASSIS) is an interdisciplinary research center at the University of Bonn that conducts strategic research into foreign, European and security policy. Adopting the mindset that “global challenges need European answers” and working across different disciplines and institutions, CASSIS helps to formulate and assess European strategies for meeting current challenges in foreign and security policy and instigate public debate concerning the issues raised. Read more at https://www.cassis.uni-bonn.de/en/homepage.

Policy brief by CASSIS and the Vodafone Institute:
https://www.vodafone-institut.de/wp-content/uploads/2026/03/wake-up-call-for-the-eus-digital-decade.pdf

Information about the DDI:
https://www.cassis.uni-bonn.de/en/research/interdisciplinary-research-initiatives/politics-and-governance-of-global-infrastructures/research-projects/digital-dependence-index-2.0?set_language=en