Issue link: https://maltatoday.uberflip.com/i/1527317
10 OPINION maltatoday | WEDNESDAY • 2 OCTOBER 2024 The European Union set a global precedent with the approval of the world's first comprehensive Artificial Intelligence (AI) regulation THE future of the European Union is at a critical juncture, with artificial intelligence (AI) emerging as the pivotal factor. Faced with challenges such as sluggish productivity growth, demographic shifts, and mount- ing competition from global tech giants, the EU stands at a crossroads. The adoption of AI is not just an option, but an urgent necessity for Europe to maintain its competitiveness in a rapidly evolving world. AI is the solution to Europe's press- ing economic issues and the key to unlocking new opportunities for growth, innovation, and so- cietal progress. The question that looms is: will Europe seize this AI opportunity or risk fur- ther decline? Europe's current economic challenges are well-document- ed. A shrinking workforce, slow productivity growth, and a tech sector lagging behind the Unit- ed States and China have made it clear that maintaining the sta- tus quo is no longer an option. Productivity growth has been stagnant, with the EU's labour productivity level now trailing behind the US by around 20%. What's more, Europe's tech sector has struggled to produce new giants capable of com- peting globally. While the US boasts multiple trillion-dollar tech companies, Europe has yet to produce a comparable suc- cess story in the last half-cen- tury. At the same time, China has rapidly grown in fields such as AI, dominating industries like electric vehicles and clean technology through aggressive industrial policies. In this context, AI becomes a critical tool for addressing Eu- rope's lagging competitiveness. As other global powers push ahead with AI, Europe must catch up to avoid a further wid- ening this gap. The good news is that AI holds immense poten- tial that can be used to strength- en Europe's existing strengths. Industries like healthcare, man- ufacturing, and green technolo- gy, where Europe already has a strong foothold, stand to ben- efit significantly from the inte- gration of AI. For instance, AI can revolutionise diagnostics and patient care in healthcare by offering real-time feedback and personalised treatment. In manufacturing, AI can improve productivity by automating complex tasks, optimising sup- ply chains, and reducing waste. Decarbonisation efforts, too, can be accelerated through AI by improving energy manage- ment and enabling smart grids. However, the road to an AI-powered future is challeng- ing. Europe must first overcome significant barriers currently hindering its ability to lead in AI development and adoption. One major hurdle is the reg- ulatory environment. While regulation in Europe has been essential for protecting citizens and ensuring fair competition, the fragmented nature of reg- ulations across member states stifles innovation, particularly for small and medium-sized en- terprises (SMEs). Many Europe- an entrepreneurs choose to take their ideas and businesses to the US, where venture capital is more abundant and regulations less restrictive. For example, nearly 30% of European start- ups valued at over $1 billion have moved their headquarters abroad, primarily to the US, in search of better business condi- tions. Another significant challenge lies in the innovation gap. Eu- ropean companies, on average, invest significantly less in re- search and development (R&D) compared to their US coun- terparts, with the gap reach- ing nearly €270 billion in 2021 alone. While Europe is home to many talented researchers and innovators, the transformation of these ideas into commercially viable products remains a ma- jor obstacle. However, with the adoption of AI, Europe has the potential to bridge this inno- vation gap, thereby preventing further lag in the global AI race and fostering economic growth. Education and skills develop- ment are also critical compo- nents in Europe's AI journey. As AI continues to reshape indus- tries, ensuring the workforce is equipped with the necessary skills to thrive in this new en- vironment will be essential. Eu- rope's educational systems are robust, but they need to adapt quickly to the pace of techno- logical change. Lifelong learning and retrain- ing programs must become a central feature of the EU's strat- egy to ensure that all citizens, not just the highly skilled, can benefit from AI. By fostering an inclusive approach to AI, Europe can create a more eq- uitable and resilient economy where technology enhances rather than displaces workers. Despite these challenges, there are many reasons to be optimis- tic about Europe's AI future. The EU has a solid foundation to build upon, particularly in sectors like clean technology, advanced manufacturing, and healthcare. Europe's commit- ment to sustainability also po- sitions it well to lead in areas where AI can drive green inno- vation. AI-powered technologies can play a central role in achiev- ing Europe's ambitious climate goals by enabling smarter en- ergy use, optimising transpor- tation networks, and reducing industrial emissions. Further- more, Europe's strong empha- sis on ethical AI development could become a competitive Europe's New AI-ge Alexiei Dingli is Professor of Artificial Intelligence Alexiei Dingli