Impact of Emerging Technology on the Economy of Italy

Emerging technologies such as AI, automation, big data, and other digital technologies will go a long way to solve socioeconomic challenges people face. It is incumbent upon the private and public sectors to come together and harness these technologies to benefit the people. As the horizon for technological evolution narrows, there is an increasing potential for people to experience the benefits of emerging technologies. Given Italy’s aging population, automation will be key to enhancing workforce productivity: Impact of Emerging Technology on the Economy of Italy.

Current Socioeconomic Problem

The Italian economy is facing a daunting demographic challenge caused by an aging workforce. The aging workforce has resulted from extended infertility periods, leading to fewer younger people entering the workforce. Besides, unfavorable net migration dynamics have led to fewer women and young people’s participation in the workforce. More people are moving out of Italy than those who are moving in.

Based on the outlook presented by the International Monetary Fund (IMF), this socioeconomic challenge is set to worsen (International Monetary Fund, 2023). The aging population poses serious challenges for the Italian economy. One such outcome is productivity reduction due to a shrinking workforce (International Monetary Fund, 2023).

Besides, an aging population has put pressure on public finances as the country digs deeper into the exchequer to cater for the ballooning pension. Besides, the increasing aging population has led to increased healthcare expenditure as the government implements steps to care for the elderly.

According to d’Errico et al. (2022), Italy’s rapidly aging population is characterized by reduced productivity. This is partly due to the declining health among employees aged above 60 years. As d’Errico et al. (2022) put it, men between 60-64 years report diminishing health due to conditions such as cardiovascular diseases, arthritis, and physical morbidity. On the other hand, women in this age bracket have reported diminishing health, especially resulting from mental health issues such as anxiety, depression, and arthritis.

Apart from health concerns, an aging workforce is exposed to poor working conditions, especially when it comes to hazardous workplace environments. Aged employees working in industries that involve physical engagement are at a higher risk of getting injured. With the sickness and associated exposure to certain working conditions, there is reduced productivity among Italy’s aging workforce.

Emerging Global or Local Technology

Automation can be an effective response to an aging workforce like that of Italy. While people are concerned that emerging technologies such as automation through robotics may lead to job losses, it is a perfect response to a country like Italy that is facing a scarcity of young and middle-aged employees. The deployment of robots in different industries will be particularly useful in improving the productivity of employees aged 55 years and above.

Since cognitive and physical ability significantly reduces after age 55, leveraging robotics to perform repetitive tasks will be crucial in improving productivity (Aisa et al., 2023). With automation, senior employees will only be required to perform basic training for the robots as they undertake the rest of the duties. Therefore, instead of hiring more people to perform a task, automation will complement the aged employees to perform the task.

Notably, adopting automation poses financial implications for organizations. For instance, organizations are increasingly implementing AI-driven automation, especially in the financial services sector (Adeyeri, 2024). The positive impacts of AI adoption include cost reduction, improved efficiency, and accuracy in operations. Automation in the banking services sector goes a long way to reduce the cost of operations (Adeyeri, 2024).

With AI-driven algorithms, a loan request can be processed automatically, thus cutting the loan origination cost. Besides, automation’s positive financial implications are due to improved productivity. For instance, Bank of America’s AI assistant, Erica, has handled multiple customer requests, helping the bank avoid the cost of hiring multiple support staff. To that end, it is clear that AI-driven automation leads to positive financial implications for an organization.

Hype Cycle and the Six Ds of Disruption Model

According to Bosch-Sijtsema et al. (2021), the hype cycle and the six Ds of disruption model can be used to explain the evolution that automation has undergone over the years. Based on the hype cycle phase, the first step of automation was the innovation trigger when automation started gaining attention as a method that could be used to improve organizational operations. Next is the peak of inflated expectations, a stage where too many expectations are attached to an organization’s capability.

Although automation tools contribute to an effective workflow, they lack the emotional aspect of a human being. Next is the trough of disillusionment, which is characterized by the weaknesses that were realized to result from the use of automation, including errors, leading to people losing interest in the technology. During the slope of the enlightenment phase, cloud-based automation technologies were introduced to replace older tools. A good example is the AI-based automation. Finally, automation’s plateau of productivity emerged when it became possible to leverage AI tools like virtual assistants to create real value.

On the other hand, the six Ds of the disruption model show the disruptive implications of a technology over time. Regarding automation, the initial step is digitization, referring to the conversion of technology into software. Instead of using manual workflows, a software known as robotic process automation emerged. The next phase is deceptive, referring to the slow speed of a technology.

For instance, initial chatbots were slow and incoherent. During the disruptive phase, businesses that had not yet adopted automation started to struggle. Next is the dematerialized phase, but this is yet to be achieved in automation because it costs companies, unlike technologies like generative AI. Also, democratization, which allows everyone to leverage the technology, has not yet been achieved for automation because of limited access.

Emerging Technology to Foster Sustainability Practices

Adopting automation across different sectors in Italy will lead to operational sustainability benefits for organizations that have been negatively impacted by the surging aging workforce. One sustainability outcome that will result from automation adoption is job creation and workforce transformation. While AI adoption may potentially lead to job displacement in some roles, there will be a demand for new roles in data entry and training, especially for AI-driven automation (Adeyeri, 2024).

Also, automation fosters inclusive access to services by customers. For instance, with the emergence of fintech and digital banking solutions, customers can access credit from the comfort of their homes; hence, continuity of business even when workers are unavailable or less productive.

Existing MNC Actions

UniCredit is one of the multinational corporations operating in Italy that may leverage automation technology to overcome the challenge of an aging workforce. One of the potential applications of automation at UniCredit is for budgeting and planning. Some of the activities that may be performed by automated tools in budgeting and planning include top-down planning for commissions and net fees. Also, the company may leverage automation to come up with market share targets. If performed manually, these activities require significant effort and time. With a plummeting and aging workforce, implementing automation will ensure UniCredit’s operations are sustainable.

Conclusion

In summary, Italy is facing a daunting demographic challenge of an aging workforce. This problem has been exacerbated by reduced fertility, prolonged life expectancy, and unfavorable net migration. An aging workforce negatively impacts the economy because it is associated with reduced productivity and increased health expenditures.

To ensure there is productivity across different sectors, there is a need to adopt automation for both factory and office jobs. Automation will complement aging employees and consequently bolster productivity.

References

Adeyeri, T. B. (2024). Economic impacts of AI-driven automation in financial services. Valley International Journal Digital Library, 12(7), 6779–6791. https://doi.org/10.18535/ijsrm/v12i07.em07

Aisa, R., Cabeza, J., & Martin, J. (2023). Automation and aging: The impact on older workers in the workforce. The Journal of the Economics of Ageing, 26, 100476. https://doi.org/10.1016/j.jeoa.2023.100476

Bosch-Sijtsema, P., Claeson-Jonsson, C., Johansson, M., & Roupe, M. (2021). The hype factor of digital technologies in AEC. Construction Innovation, 21(4), 899–916. https://doi.org/10.1108/ci-01-2020-0002

d’Errico, A., Ardito, C., Leombruni, R., Ricceri, F., Costa, G., Sacerdote, C., Odone, A., Amerio, A., Ardito, C., Carioli, G., Costa, G., d’Errico, A., Fontana, D., Frascella, B., Gaetti, G., Gentile, L., Gianfredi, V., Leombruni, R., Odone, A., & Ricceri, F. (2022). Working conditions and health among Italian ageing workers. Social Indicators Research. https://doi.org/10.1007/s11205-021-02862-w

International Monetary Fund. (2023). Italy: Selected issues. In IMF (Country Report No. 23/274). https://www.imf.org/-/media/Files/Publications/CR/2023/English/1ITAEA2023002.ashx

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Write a paper (1,100-1,250 words) that discusses the following questions through your research and analysis on the effect of one specific emerging technology on the economy in the country you previously selected in The Origin and Impact of Globalization Presentation assignment in Topic 2.

1. Define a current socioeconomic problem in the country you previously selected in the Topic 2 assignment. Refer to the resources, “Socioeconomic Problems,” and “The 17 Goals,” by the United Nations, both located in the Topic 3 Resources, for samples of socioeconomic problems. Who is affected by the socioeconomic problem? Where are the affected individuals located within the country? What are the resulting socioeconomic costs of the problem to the affected individuals?
2. What specific global or local technology is emerging that could be used as part of a solution to address the problem? What are the major financial considerations when implementing the emerging technology?
3. Apply both the hype cycle and the six Ds of disruption model (also known as the six Ds of exponential change) to explain the evolution of the emerging technology.
4. To what extent will the emerging technology foster sustainability practices in the economy of the selected country?
5. Explain how a specific existing multinational corporation (MNC) that operates in the selected country could potentially address the problem by implementation of the emerging technology while supporting sustainability practices.
   

   Impact of Emerging Technology on the Economy of Italy

You are required to include a minimum of three sources with in-text citations and references.

Client’s Notes:

• Use a country in Southern Europe