Tackling grand challenges with digital innovation: The case of demographic shifts

IMPACTAlthough digital innovation is widely considered a cure for demographic decline, it will only succeed if governments confront how demographic decline itself undermines the capacity to innovate. This article shows that depopulation and workforce aging erode local governments’ organizational capacity by shrinking fiscal bases, depleting human capital, and weakening administrative infrastructure, ultimately making it harder to develop the very solutions that demographic pressures demand. The findings provide insights for policy-makers designing national and local digital innovation strategies, especially in aging societies, where investment in technology will not succeed without parallel investment in the people and institutions adapting to demographic shifts. A demography-smart approach, which combines family support, migration policy, and digital capacity-building, can help governments avoid a ‘vicious circle’ in which demographic decline weakens innovation, which in turn accelerates the decline in institutional quality and public service capabilities. Providing support to smaller and depopulating municipalities is essential to ensure that digital innovation does not become a privilege of major urban centres.