Guidance Lab > Digital transition > key findings & learning

Causal evidence linking Cohesion Policy to digital transition outcomes is scarce. One of the very few evaluations directly addressing digital public services is provided by Caravaggio et al., (2025). The study shows that cohesion-funded digital projects improved core dimensions of local e-government capacity, notably the adoption of modern web standards (e.g. HTML5) and simpler website structures. Effects are stronger among smaller municipalities and in Southern and Inner Areas, while no systematic improvements are found in broader dimensions of web interactivity, indicating selective digital gains.

In this context, causal evaluations of innovation-oriented instruments under Cohesion Policy, particularly Smart Specialisation Strategies (S3) and innovation projects, are highly relevant for digital transition. Regional-level evidence points to positive effects of Cohesion Policy interventions targeting research and innovation (Ferrara et al., 2017). At the firm level, counterfactual evidence from a large collaborative industrial research programme co-funded under Cohesion Policy—anticipating core features of Smart Specialisation Strategies—finds no average effects on firms’ investment, value added or employment, with limited positive impacts confined to low-technology sectors, suggesting that the collaborative dimension added little to programme effectiveness (Crescenzi et al., 2020). By contrast, ERDF-funded innovation projects improve total factor productivity, especially among initially less productive firms (Fattorini et al., 2020), and more recent evidence shows that projects embedding Industry 4.0 technologies within the S3 framework generate significantly stronger effects on value added, employment and labour productivity (Serafini et al., 2025).

Other policy experiences beyond Cohesion Policy

Digital infrastructure is necessary but not sufficient. Broadband expansion increases firm size and employment but does not automatically translate into productivity gains and may even widen income inequality in structurally fragile and lagging areas without complementary investments in skills and institutional capacity (De Stefano et al., 2018; Bergantino et al., 2025). Spatial and firm-level evidence confirms heterogeneous effects: ICT infrastructure is a necessary but not sufficient condition for development (Tranos, 2012), and productivity gains from broadband adoption do not increase with higher connection speeds (Grimes et al., 2012).

Industry 4.0 and firm-level digital adoption. Digital technologies generate substantial but uneven performance gains. Industry 4.0 adoption significantly improves labour productivity and sales, with effects concentrated among small and medium-sized and more mature firms (Cirillo et al., 2023). In Italy, Industry 4.0 incentives have fostered investment in innovative capital (Calabrese et al., 2025), and firm-level evidence shows that subsidies effectively sustain digital investment and are positively associated with employment growth, with heterogeneous effects across firms and workers (Bratta et al., 2022).

E-government and institutional capacity. Institutional complementarities are crucial: digitalisation improves governance outcomes only when embedded in broader administrative reforms, as increased Internet diffusion reduces corruption, while stand-alone digital measures are less effective than coordinated e-government and governance strategies (Andersen et al., 2010).

R&D incentives, intensity and firm heterogeneity. R&D subsidies show no average investment effects but can benefit specific firms. Small firms increase investment roughly by the amount of the subsidy, while larger firms do not respond (Bronzini and Iachini, 2014); similarly, no significant effects emerge when exploiting an unexpected funding shortage (De Blasio et al., 2015). Evidence reveals an inverted U-shaped relationship, with intermediate subsidy intensities stimulating employment and intangible asset growth, but no additionality for fixed assets (Cerulli et al., 2020).

EXISTING CAUSAL EVIDENCE IS STILL INCONCLUSIVE OR LACKING ON RELEVANT ASPECTS

Despite the central role assigned to digital transition within EU Cohesion Policy—and the scale of investments devoted to digital projects targeting both public administrations and firms—causal evidence remains limited on several dimensions critical for policy effectiveness. Only a small share of cohesion-funded programmes is evaluated using rigorous counterfactual methods, with digital related interventions being particularly underrepresented (Santos et al., 2023).

A first gap concerns final outcomes. While Cohesion Policy has extensively financed digital infrastructure, skills and e-government projects, robust causal evidence linking these investments to sustained firm-level digital adoption, productivity gains, improvements in public service delivery or regional digital convergence remains scarce.

A second gap relates to distributional and territorial dynamics. Regional evidence shows that digitalisation trajectories in the EU remain highly uneven and largely driven by structural factors such as human capital and innovative capacity, rather than by uniform policy measures (Răileanu Szeles and Simionescu, 2020).  Although the overall impact of ICT and digital infrastructure on economic performance is generally positive (Vu, 2011; Elburz et al., 2017), benefits are unevenly distributed and tend to accrue disproportionately to higher-skilled workers, higher-income groups and IT-intensive firms (Akerman et al., 2015). In disadvantaged contexts where complementary growth drivers—such as human capital, firm capabilities and institutional quality—are weak, digital infrastructure investments may even prove ineffective or counterproductive underscoring the importance of supply-side conditions (Rietveld and Bruinsma, 2012). These asymmetries are particularly evident in countries characterised by strong internal divides: in Italy, pronounced territorial disparities persist both in households’ use of digital services and in firms’ integration of digital technologies (Crespi et al., 2025; Benecchi et al., 2023). More broadly, a largely non-causal literature suggests that digital transition does not automatically foster convergence and may instead reinforce existing disparities, with regional evidence showing that digital skills can exacerbate income inequalities, particularly among lower-income groups (Consoli et al., 2018). Regional analyses document persistent polarisation in digital skills adoption (Caravella et al., 2023), pronounced territorial heterogeneity in the macroeconomic returns to digital investment (European Commission, JRC, 2025), divergence-enhancing effects of smart and green policies depending on local conditions (Niavis et al., 2025), spatial clustering of ICT and twin innovators with limited spillovers to lagging regions (Fazio et al., 2025), and firm-level advantages concentrated in urban contexts (Cattani et al., 2025).

Third, governance and implementation conditions are widely recognised as key conditioning factors, yet their causal role remains largely untested. Descriptive evidence highlights the importance of coordination, administrative capacity and multilevel governance in shaping digital strategies (Colnot and Pellegrin, 2019; OECD, 2019), and shows that green and digital projects under Next Generation EU are particularly prone to implementation delays (Crescenzi et al., 2021). Evidence further suggests that timely delivery is favoured by strong central coordination, simplified procedures and clear spatial targeting, but these governance features have rarely been examined through counterfactual evaluation approaches.

Finally, a critical and still underexplored gap concerns the interaction between digital and green objectives. While digitalisation can enhance energy productivity and support sustainability goals (Benedetti et al., 2023), it may also increase energy demand, electronic waste and reliance on critical raw materials, generating environmental and geopolitical risks (Bianchini et al., 2023). These complementarities and tensions are highly place-specific and depend on regions’ heterogeneous capacities, a core tenet of Smart Specialisation (Faggian et al., 2024). Consistently, recent evidence documents a strong geographical concentration and marked heterogeneity in EU-funded green, digital and twin projects across regions (Barbero et al., 2025). Empirical evidence jointly assessing green and digital priorities remains limited, and recent findings point to highly non-linear effects of the Twin Transition within Smart Specialisation Strategies, with positive impacts in low-productivity regions and weaker or negative effects in intermediate ones, consistent with middle-income trap dynamics (Marrocu et al., 2025).

More actionable measures will be provided starting from the research we are carrying out within the project (cfr. Policy Targeting). Any recommendations from academics or practitioners are welcome. Please use our contacts to contribute to this Guidance Lab at any stage! 

References

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