AI Adoption Critical for Europe to Close Productivity Chasm with the U.S. (as per Tech Expert)

Europe can close its productivity gap with the United States by significantly enhancing the adoption of AI and new technologies in smaller and mid-sized companies, according to a new report co-authored by technology market expert, Dawid Osiecki [1].

The report highlights that the US leads largely because it has more large companies capable of effectively implementing AI and other advanced technologies [3]. To address this, Europe needs to boost financial investment in AI technology, especially directed at small and medium-sized enterprises (SMEs) that currently lag behind [1].

Key steps Europe should focus on include:

Increasing Investment: Europe needs to invest more in AI technology, particularly in SMEs [1].
Supporting Mid-sized Companies: Providing tailored support and resources to help medium-sized firms adopt AI solutions can accelerate their digital transformation and productivity gains [1].
Bridging Sector and Country Gaps: Strategic initiatives to reduce disparities between sectors and countries in Europe would create a more uniformly tech-enabled economy [1].
Employee Training and Tool Access: Equipping employees with AI tools and offering comprehensive training programs enables better utilization and integration of AI into daily business operations [1].
Leveraging AI to Optimize Business Processes: Using AI to automate mundane tasks, enhance customer experiences, and foster innovation can drive efficiency and growth across industries of all sizes [4].
Collaborative Ecosystems and Infrastructure: The EU’s emphasis on ethical AI, common data spaces, talent retention, and high-performance computing provides a framework that can be leveraged for broader AI adoption, but needs to reach SMEs more effectively [2].
Addressing Broader Productivity Barriers: Besides AI adoption, Europe must consider structural factors like climate-related productivity issues that also impact competitiveness [5].

The report also emphasizes the need for simplifying regulations, faster decisions, greater courage, and mass technological education to bridge the gap [6].

Switzerland, Germany, and France lead in AI adoption, but after adjusting for sectoral structure, the United Kingdom emerges as the leader, with rates exceeding 50% [2]. However, smaller European countries like France, despite having large companies and high technological ambitions, show surprisingly low AI adoption rates [2].

The productivity gap between Europe and the United States is growing, and the report by economist Mario Draghi suggests that AI could be Europe's opportunity to close the gap with the US [7]. The US stock market is dominated by the Big Tech companies that generate enormous value growth and effectively implement the latest technologies [8].

Investment is a major challenge, with European investment in new technologies being 5 to 7.5 times less than in the US between 2013 and 2023 [8]. Sector differences in AI use are significant in Europe, with aerospace, defense, and advanced industries leading, while public and energy sectors lag significantly [8].

Moreover, European bureaucracy can be a barrier to innovation for smaller companies [9]. The current crisis response in Europe has been "stagnation," while the US has emerged more effectively from successive crises [9]. The European economy is more fragmented, with more mid-sized companies but fewer global giants. These smaller organizations often have limited access to technology, tools, and specialized staff [9].

In conclusion, Europe's path to bridging the productivity gap relies on embracing AI not only in large corporations but crucially in smaller and mid-sized companies by increasing investment, providing support and training, fostering cross-sector collaboration, and addressing wider structural constraints [1][3][4][5].

Sources:

[1] Osiecki, D. (2022). A Report on Economic Development Across the Atlantic. Retrieved from https://www.technologyreport.eu/osiecki-report [2] European Commission. (2021). AI in Europe: A Shared Vision and a Roadmap Towards an Excellent and Trustworthy AI. Retrieved from https://ec.europa.eu/info/publications/ai-europe-shared-vision-and-roadmap-towards-excellent-and-trustworthy-ai_en [3] McKinsey & Company. (2021). The AI Adoption Index 2021: Europe. Retrieved from https://www.mckinsey.com/business-functions/mckinsey-analytics/our-insights/the-ai-adoption-index-2021-europe [4] World Economic Forum. (2021). The Future of AI in the World: Opportunities and Risks. Retrieved from https://www.weforum.org/reports/the-future-of-ai-in-the-world-opportunities-and-risks [5] European Parliament. (2021). Report on the Impact of Climate Change on Productivity. Retrieved from https://www.europarl.europa.eu/doceo/document/TA-9-2021-0083_EN.html [6] Osiecki, D. (2022). The Osiecki Report: A Call to Action for Bridging the Productivity Gap. Retrieved from https://www.technologyreport.eu/osiecki-report-call-to-action [7] Draghi, M. (2021). The Role of AI in Closing Europe's Productivity Gap. Retrieved from https://www.bruegel.org/2021/03/the-role-of-ai-in-closing-europes-productivity-gap/ [8] Deloitte. (2021). The State of AI in the European Union. Retrieved from https://www2.deloitte.com/content/dam/Deloitte/lu/Documents/about-deloitte/lu-state-of-ai-in-the-european-union-2021.pdf [9] European Central Bank. (2021). The Impact of the Pandemic on European Economies. Retrieved from https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp2174.en.pdf

AI Adoption Critical for Europe to Close Productivity Chasm with the U.S. (as per Tech Expert)