How to shape the EU and Western Balkan economies — and how that compares to the USA, China, Japan, India and South Korea

Influence of 5G / 6G, Industry 4.0, Digital Twins, the Metaverse and Related Technologies Abstract: advanced connectivity (5G/soon-6G), Industry 4.0 adoption, digital twins and early metaverse applications are multiplying productivity levers across manufacturing, transport, healthcare and services. The EU is pushing strategic coordination and standards to capture value, but faces fragmentation and slower first-mover deployment vs. the US, China and South Korea. The Western Balkans show improving fundamentals and accelerating funding support, but lag on large-scale industrial transformation, advanced digital skills and nationwide 5G/6G roll-out — creating both constraint and opportunity. Below I explain why, give cross-region comparisons and practical policy / business takeaways.

1) Why these technologies matter (quick lens) 5G/6G provide ultra-reliable, low-latency and massive-IoT connectivity that enables remote robotics, autonomous logistics, AR/VR telepresence and distributed sensing — all foundational for Industry 4.0 and large-scale digital twins. Industry 4.0 (automation, cloud/edge computing, AI, sensors, robotics) raises factory throughput, quality and customization while shifting value toward software and services. Digital twins create virtual replicas of assets, processes or cities that let firms simulate improvements, prevent failures and optimize operations before spending on physical changes. The metaverse (in its narrow business sense: immersive collaboration, training, digital marketplaces and virtual twins) can reduce travel, accelerate design cycles and open new channels for customer engagement. Together these drive productivity, new services, higher-value exports and new business models — but benefits depend on broadband coverage, skills, regulatory clarity and access to capital. 2) Europe (EU) — coordinated strategy, strong standards push, uneven roll-out The EU has clearly signalled that digital transformation is a priority: Digital Decade targets (SME digital intensity, cloud/AI adoption) and Europe’s 6G roadmap aim to align industry, research and funding to avoid fragmentation of standards and to secure industrial competitiveness. The European 5G Observatory and related EU initiatives track deployment and set milestones for coverage and uptake. This combination — strong standards work, substantial R&D coordination and sizeable public programmes (NextGenerationEU, JU initiatives) — is a structural advantage for industrial competitiveness in connected manufacturing and digital twins. Constraints: heterogeneous member-state roll-out speed, supply-chain exposure (telco equipment), some telecom capex caution (affecting vendors/operators), and skills gaps for advanced AI and twin-enabled processes. The EU’s approach favors interoperability and resilience over single-player speed-to-market; that reduces systemic risk but can slow early adoption. 3) Western Balkans — catching up, lots of upside, structural gaps The Western Balkans are improving digital infrastructure and there's rising international financing and programs to accelerate digitalisation (EU-backed initiatives, EBRD funding and region-wide programmes). Recent reports show progress in broadband and certain e-services, but measurable shortfalls remain in advanced digital skills, 5G coverage and AI/industry digitalisation metrics compared to EU averages. This produces a two-track reality: pockets of digitally advanced firms and fast followers, but a broader manufacturing base that is still on the early slope of Industry 4.0 adoption. Opportunities: relatively low labour costs + improving connectivity can attract investments into digitalised manufacturing (nearshoring), pilot digital twin projects in infrastructure and energy, and targeted SME upgrades through grants/credit lines. But success requires coordinated national/regional industrial policies, workforce skilling and faster spectrum and fiber roll-out. 4) USA, China, Japan, India, South Korea — quick comparative notes USA Strengths: large private capital markets, rapid commercial 5G deployments in consumer and enterprise niches, strong cloud providers and software ecosystems (AWS, Microsoft, Google), fast VC financing for startups. US analysts estimate very large macroeconomic gains from 5G adoption and tie it to millions of jobs in digital services and apps. Weaknesses: fragmented telecom regulation across states, slower industrial policy/coordination for standardisation than China/Europe. China Strengths: state-backed industrial strategy, massive early 5G infrastructure rollout, vertically integrated ecosystems (operators, device makers, cloud and AI firms). China pushes aggressive scale and domestic standards leadership and couples infrastructure deployment with industrial pilots. Weaknesses: geopolitical frictions for export markets; regulatory uncertainty for foreign partners. Japan Strengths: manufacturing excellence, robotics leadership, and deep industrial systems knowledge. Japan invests in standardisation and quality-centric Industry 4.0. Weaknesses: demographic pressures and slower startup culture for platform businesses. India Strengths: large software talent pool and fast adoption of cloud and mobile services; strong potential for localised mobile innovations and for becoming a services hub supporting digital twin modelling and IoT analytics. Weaknesses: telecom capex constraints, highly variable broadband quality across regions; domestic 5G and edge ecosystems still maturing. South Korea Strengths: one of the fastest 5G national roll-outs, strong policy push on smart factories and digital twin pilots, globally competitive electronics and telecom exporters. South Korea often leads in smart factory adoption and close public–private coordination. 5) Digital twins & metaverse: who benefits most (value channels) Manufacturing: digital twins reduce downtime and design cycles. Europe’s high-value manufacturing and South Korea/Japan’s electronics/automotive sectors are natural early adopters. IDC and other market trackers show strong twin adoption in construction, resources and manufacturing. Cities and transport: twins + 5G enable traffic optimization, energy management and resilience planning — EU smart cities programs and national pilots in advanced economies are proving value. Skills & training (metaverse/AR): immersive training reduces errors in high-risk industries (healthcare, heavy industry) — a measurable operational saving. PwC/McKinsey style forecasts see large theoretical upside if use cases scale. Important: many metaverse value estimates assume broad consumer and enterprise adoption that is still experimental; realized value depends on standards, privacy rules and UX maturity. 6) What the comparison practically means for the EU & Western Balkans EU: strong policy coordination and funding can capture the higher layers of value (platforms, standards, services, cross-border twins). But to win against the US/China fast movers, EU states need faster spectrum allocation, incentives for private capex in 5G/edge, and sharper skills programmes so SMEs can adopt Industry 4.0 at scale. (This is already a policy priority in several EU instruments.) Western Balkans: the region can position itself as a cost-competitive manufacturing and digital services hub for European supply chains — by prioritizing: (1) faster fiber + 5G roll-out in industrial zones, (2) SME digitalisation grants/credit lines, (3) regional digital twin pilots (in energy, transport), and (4) workforce reskilling partnerships with EU industry. Existing EBRD / EU programs show funding pathways for such steps. 7) Risks & policy levers Risks Digital divide (urban vs rural, large firms vs SMEs). Supply-chain shocks to telco equipment (political/geo tensions). Skills bottlenecks and uneven regulation (privacy, data governance) that slow cross-border twin/data sharing. Policy levers Targeted subsidies/credit for SME adoption of sensors, cloud and twins. Fast, predictable spectrum auctions and fiber backhaul investment (reduce operator risk). Regional digital twin testbeds (public–private) to shepherd standards and produce local success stories. Upskilling programs tied to industry certifications (digital twin modelling, industrial AI, network operations). 8) Concrete recommendations (short list) For EU policymakers: accelerate spectrum & industrial 6G coordination; scale regional twin pilots across critical infrastructure sectors; fund SME digital transformation vouchers specifically for sensors, edge compute and twin subscriptions. For Western Balkan governments: link EBRD/EU funding to industrial zone digital upgrades; create “twin demonstrators” with local university + industry consortia; prioritize telecom backhaul (fiber) for industrial parks and logistics hubs. For companies: start with high-ROI pilot twins (critical machines, energy), design for interoperability (open APIs & edge compute), and partner with cloud/telco players for managed private 5G and edge services. 9) Conclusion The technical building blocks (5G/6G, IoT, edge, cloud, AI, twins, AR/VR) multiply each other: gains are nonlinear when adopted together. The US and China are fastest at commercial scale and platform capture; South Korea and Japan excel in industrial application and early roll-outs; EU has strong governance and industrial policy but needs faster deployment; Western Balkans have a clear opportunity window — but must move rapidly on infrastructure, skills and targeted pilots. Policy choices now (spectrum, standards, SME funding, training) will determine whether regions capture the high value of digitalised manufacturing and twin-enabled services — or remain stuck as low-margin suppliers.