Opening Up International Value Chains: Embracing Collaboration and Innovation

In today's interconnected world of complexities, rebuilding trust and fostering collaboration within international value chains has never been more critical. Ursula von der Leyen, speaking at the World Economic Forum, emphasized the urgency of this mission: “This is not a time for conflicts or polarization. This is the time to build trust. This is the time to drive global collaboration more than ever before.” Her call to action highlights the necessity for industries to become more open to international collaborations and to continuously seek improvements within their value chains, though mindful of recent geopolitical risks.

Europe is uniquely positioned to lead the charge in fostering global collaboration. Von der Leyen noted, “Our democracies and our businesses have interests that align: creating prosperity, wealth, and security for people, creating a stable environment to unlock innovation and investment, and creating equal opportunity and freedom.” This alignment of democratic values and business interests provides a robust framework for enhancing international value chains.

European industries have long been at the forefront of innovation and international cooperation. For example, Estonia’s digital advancements have significantly contributed to the global understanding of e-governments, cyber risks and e-health and continue to play a crucial role in digitalizing German industries. Estonia's expertise in digital solutions, increasingly combined with Germany's industrial capabilities, showcases the potential of cross-border collaborations to drive efficiency and innovation. By questioning existing value chains and striving for continuous improvement, European companies can maintain their competitive edge. This requires a mentality of change, where entrepreneurs and managers regularly ask themselves if they are questioning enough and if they are open enough and free of prejudice towards new innovative solutions. It is easy to remain in the comfort zone, especially in larger corporations where advocating for innovative methods can lead to additional work, the need for diplomatic skills to convince and communicate among stakeholders, and ultimately, a risk to job security. "Have we become too saturated?" –a former German mayor recently discussed with me.

One of the key challenges today is that businesses have become too comfortable and accustomed to pre-existing practices. This often results in a lack of openness to new sources and countries for purchasing. Well-developed Eastern European economies, for instance, present untapped opportunities that many Western companies have yet to fully explore. By broadening perspectives and embracing these new sourcing markets, the resilience and efficiency of value chains can be significantly enhanced and geopolitical risks mitigated.

Furthermore, the World Economic Forum’s Global Risk Report highlights artificial intelligence (AI) as one of the top potential risks for the next decade. However, AI also represents a tremendous opportunity for industries and organizations willing to adopt it responsibly. As a tech optimist, the transformative impact of AI on various sectors is clear to me, boosting productivity and fostering innovation. Making us change the way we life, work and do science. Europe, home to nearly 200,000 software engineers with AI expertise, is in a strong position to lead in the responsible use of AI. The Baltic States are home to nearly 150,000 IT specialists (Techbehemoths, 2024) working in various tech companies across the countries. One can only guess how many of them have AI expertise. Focusing on AI that enhances human capabilities and improves productivity ensures that European industries remain competitive on the global stage. It helps integrate smart technologies into industry and foster the growth and export of manufacturing of traditional as well as deeptech goods.

The pandemic has underscored the importance of collaboration and adaptability. Just as the global community united to overcome a health crisis, similar unity is needed to address the challenges facing integration in international value chains. The collective strength of democracies, businesses, and industries lies in their ability to transform and collaborate. This shared resolve and optimism can guide through times of uncertainty.

Estonia's influence extends beyond digital services into manufacturing sectors such as wood construction, machine building, process equipment, professional services such as engineering. As detailed in my earlier article, Estonia’s manufacturing capabilities, focus on high quality niche producer SMEs and digital services are setting new standards through innovative system-to-system integrations. These advancements highlight Estonia's potential to innovate in global value chains, promoting efficiency, sustainability, and smart technological integration.

Opening up international value chains involves more than just collaboration; it requires a culture of continuous improvement and a willingness to question the status quo. By adopting a mindset of constant innovation and curiosity, European industries can adapt to changing global dynamics and enhance their value chains. This approach strengthens individual companies and bolsters the overall resilience and competitiveness of the European industrial sector.

Rebuilding trust and fostering collaboration within international value chains are essential for the future of global industries. Europe, with its unique blend of democratic values and business acumen, is well-positioned to lead this initiative. Embracing technological advancements, fostering cross-border collaborations, and maintaining a relentless pursuit of improvement enable European industries to navigate the challenges ahead and build a resilient, interconnected global economy. In sum, opening up international value chains and becoming more open to international collaborations are crucial for the continued success and growth of global industries. Fostering a culture of innovation and continuous openness and improvement allows European industries to lead the way in creating a stable, prosperous, and secure future for all.

Photo Source: An AI generated photo showcasing the integration of Estonian digital services with German manufacturing industries. It features high-tech digital interfaces, engineers collaborating, and modern manufacturing plants against the backdrop of the Tallinn cityscape. This image highlights the vibrant innovation and international collaboration between Estonia and Germany.

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