Europe Can Advance Productivity and Economic Growth by Making Better Use of AI

A new research paper that the Center for the Governance of Change (CGC) at IE University is publishing today argues that “Europe’s key lever to deliver higher economic growth is to boost productivity through better use of technologies like AI.”

The publication, European Economic Growth in the Age of AI, is authored by Zach Meyers, Director of Research at the Centre on Regulation in Europe (CERRE).

The paper recommends raising take-up of AI, even if that means increasing Europe’s dependencies in the short term. However, Meyers argues, the EU must simultaneously develop its technological lead in important inputs into AI value chains, like cutting-edge photolithography and chip design, and develop leadership in industrial uses of AI, where other countries will have dependencies on the EU.

The publication offers policy proposals in three areas where the EU’s economic environment can be adapted incrementally to make progress without undermining European values:

1) Boosting investment in R&D: In the short run, European policymakers, should make modest changes to national pension laws to unlock new sums for AI development and deployment. In the longer run, the EU should take all necessary measures to unify member countries’ capital markets.

2) Allowing more tolerance of economic disruption within and between economic sectors: Labor and corporate laws should make it easier for firms to experiment and take risks with AI, while at the same time providing high levels of social security protection for affected workers.

3) Ensuring a more innovation-friendly regulatory environment: Rather than deregulate —which could encourage further fragmentation in the laws which apply to AI deployment across Europe— the paper proposes that policymakers focus on simplifying regulation and providing guidance to firms seeking to deploy AI.

Read the full research paper here.

This publication is the first in a series of research papers that the CGC will release as part of our AI4DemocraticProsperity program, run in strategic partnership with Microsoft. The program’s Research Lead is Claudio Feijóo, Jean Monnet Chair on Tech Diplomacy at the Technical University of Madrid.

AI4DemocraticProsperity seeks to unlock the potential of AI to strengthen democratic institutions while driving inclusive and sustainable growth. Learn more about it here: https://www.ie.edu/cgc/research/ai4democratic-prosperity/