Economists Urge Europe to Revive Innovation Across 27 States as AI Race Exposes 25% Research Gap
Updated
Updated · Project Syndicate · Jun 10
Economists Urge Europe to Revive Innovation Across 27 States as AI Race Exposes 25% Research Gap
2 articles · Updated · Project Syndicate · Jun 10
Summary
Philippe Aghion said Europe risks prolonged stagnation rather than crisis because it failed to move from postwar catch-up growth to frontier innovation, even as the US and China pull ahead in AI and other high-tech sectors.
25% of scientific citations behind breakthrough patents still come from Europe, he said, but excessive regulation, fragmented national rules, weak venture capital and the lack of a true single market stop that research from becoming major companies.
Aghion backed Mario Draghi’s reform agenda but argued Europe also needs a coalition led by France, Germany and potentially the UK, plus DARPA-style agencies, longer-term research funding and a capital-markets union.
90% wage replacement for up to two years in Denmark’s flexicurity model was cited as a template for cushioning AI-driven disruption, alongside schools that keep AI out of core learning so students retain basic cognitive skills.
On AI, Aghion estimated roughly 0.7 percentage points of extra annual productivity growth from task automation, versus Daron Acemoglu’s 0.07, while warning entrenched incumbents and poorly designed EU rules could still choke new entrants.
Can Europe's regulatory power become its greatest weapon in the AI race, or is it the very anchor holding its innovators back?
Will 'flexicurity' protect Europe's workers from AI disruption, or will it simply make it easier for companies to fire them?
With €33 trillion in savings, why can't Europe fund its own tech future instead of watching its best startups flee to America?
Europe at a Crossroads: Bridging the $1.36 Trillion AI Investment Gap for Global Competitiveness
Overview
Europe is at a critical point in the global AI race, facing an urgent need to accelerate progress to protect its competitiveness and economic influence. Despite strong scientific expertise and a leading share of global AI research, Europe lags in AI adoption and investment, which threatens its ability to create global tech champions. The report highlights that increased AI adoption leads to significant productivity growth, as seen in both the U.S. and Europe. However, without faster adoption and better translation of research into market success, Europe risks falling further behind, making decisive action essential for its future.