Event recap: Economics of AI

“Forge Ahead or Fall Behind - The Imperative of a United Europe of AI”

Dr. Pierre Alexandre-Balland's keynote highlighted several key points about the current state and future potential of AI, particularly in Europe:

Europe's Position in AI: Dr. Balland noted that while Europe is often seen as lagging behind in AI compared to the U.S. and China, there are significant opportunities for growth and innovation. He emphasized that Europe has talented individuals and initiatives in AI, but there's a need for increased collaboration and unity to compete effectively on a global scale.
Importance of AI in Global Competition: He stressed the transformative impact of AI across various industries and its potential for job creation. The presentation highlighted the global competition in AI, pointing out the dominance of the U.S. and China, and the need for Europe to step up its efforts.
Generative AI and Open Source AI: Dr. Balland discussed the rise of generative AI and the importance of open-source AI. He argued that Europe could leverage its strengths in open-source AI as a competitive advantage.
Regulation and Investment: The need for sensible regulation that fosters innovation rather than stifling it was a key point. Dr. Balland mentioned that Europe is adept at regulation, which can be a strength if used correctly. He advocated for strategic investment in AI and technology to boost Europe's position.
Network Effects and Data Integration: The speaker pointed out the challenges posed by fragmented digital markets in Europe, stressing the importance of integrated and collaborative efforts across the continent. He mentioned the significance of network effects in AI and the need for large, unified datasets.
Socio-Economic Impacts and Redistribution: Dr. Balland touched upon the socio-economic impacts of AI, particularly in terms of job displacement and wealth concentration. He suggested that there might be a need for redistributive mechanisms like an AI tax to address the social challenges posed by AI advancements.
AI's Influence on Industries and Education: The talk also covered how AI is poised to transform various industries, including banking and education, with a shift towards digital and automated solutions.
Potential of European Cities and Talent: Highlighting the talent pool in Europe, Dr. Balland noted that European cities like Paris and Vienna have the potential to be key players in AI if leveraged properly.
Cultural and Regional Collaboration: The presentation also emphasized the need for cultural shifts and greater regional collaboration within Europe to foster a more robust AI ecosystem.

The Role of Skills in Times of AI

Dr. Fabian Stephany from the University of Oxford provided a deepdive on the impact of AI on the job market:

Importance of Skills in AI Era: Skills are fundamental to the development, maintenance, and application of technology, especially AI. They are crucial in adapting to technology-driven changes in the labor market.
Empowerment Through Skills: Mastering a skill brings a sense of empowerment and is a powerful resource in the labor market. Skills development, especially complex ones, have been a defining trait of humans as a species.
Skill Premiums in Economics: Skill premiums, or the economic rewards of skills, depend on the market demand for tasks those skills can accomplish and the rarity of such skills. This premium is not just monetary but also includes benefits like work flexibility.
Impact of Technology on Skills and Labor Market: Throughout history, technological advancements have often led to fears of job loss. However, they have typically resulted in increased demand for labor, especially at the technology frontier.
AI's Role in the Current Labor Market: AI is seen as a general-purpose technology, affecting all sectors. There is a growing demand for AI talent, which includes not just high-end tech skills but also more accessible AI skills.
Skill-Based Hiring and the Diminishing Importance of Formal Education: With the rapid evolution of AI, there's a move towards skill-based hiring, where practical skills are valued over formal educational qualifications.
Rising Demand for AI Skills Across Various Job Roles: There's an increasing demand for AI skills in various sectors, not just in tech-focused roles. These skills offer significant salary bonuses and better job prospects.
Fragmented Learning as a Path to Acquiring AI Skills: Dr. Stephany emphasizes that learning AI skills often happens in a fragmented manner through internships, online courses, and on-the-job training, rather than traditional educational pathways.
Policy Recommendations for Skill Development: He suggests institutional adjustments to recognize fragmented learning experiences and promote learning as part of working, stressing the growing importance of human capital and skills in the AI-driven economy.
Data Literacy for All: He concludes by encouraging a broader understanding of data and its role in AI, advocating for basic data literacy as essential in the AI era.

Impulse Talks

The second part of the event ft. keynotes by Hermann Erlach, Managing Director at Microsoft Austria, and Alexander Wahler from conversational AI scale-up Onlim.

Panel #1 “Economic perspective on AI”

Panelists Monika Köppl-Turyna, Pierre-Alexandre Balland, Fabian Stephany, and Clemens Wasner discussed the need for strategic collaboration, innovative policy, and education in AI to drive economic growth and maintain Europe's competitive edge in the global AI landscape.

Key points:

Growth and AI: The panelists debated the necessity and implications of economic growth in the context of AI. While some questioned the continuous pursuit of growth, others argued that growth correlates with various positive societal outcomes. The environmental impacts of growth were discussed, with insights on how developed countries have managed to decouple economic growth from environmental degradation.
AI and Workforce Transformation: Concerns about AI replacing jobs and the need for people to adapt by "racing with the machines" were addressed. The panelists discussed how adapting to technological changes can be empowering and not necessarily something to fear.
AI Policy and Europe's Position: The discussion touched on the need for more cohesive AI policies in Europe, especially in the context of competition with the US and China. The panelists emphasized the importance of European collaboration and integration in AI development and policy.
Venture Capital and Financing in Europe: The role of venture capital in fostering AI innovation in Europe was discussed. There was a consensus that Europe needs more efficient funding mechanisms and better integration of markets to support AI innovation.
Role of Education and Talent Mobility: The discussion highlighted the significance of educational institutions in nurturing AI talent and the need for policies that encourage mobility and collaboration among AI professionals within Europe.
Regulation and Consumer Protection: The panelists debated the EU's approach to AI regulation, focusing on consumer protection and the strategic importance of developing national champions in AI.
Practical Steps for Advancing AI in Europe: Suggestions included investing in core centers for AI research and development, revising university policies to encourage entrepreneurship among academics, and enhancing the interface between technical AI skills and business applications.
The Future of AI and Productivity: The panelists discussed the impact of AI on productivity, with a focus on the potential for AI to drive significant gains in efficiency and innovation.
AI and Economic Policy: There was a critical view of the European policy response to the economic crisis of 2009, suggesting that flooding the market with cheap money led to inefficient investments and stifled innovation.
Measurement Challenges: The difficulty of measuring productivity gains from AI, especially in sectors where services are not priced, was acknowledged.

In conclusion, the panelists emphasized the need for Europe to adopt a more cohesive, collaborative, and strategic approach to AI development and policy. This includes fostering talent, revising regulatory frameworks, and creating conducive environments for innovation and growth in the AI sector.

Panel #2 “Business perspective on AI”

In their panel discussion Clemens Wasner, Hermann Erlach, Thomas Arnoldner, Michael Zettel, and Karin Mair emphasized the importance of maximizing AI utilization, fostering collaborative ecosystems, and addressing ethical challenges to harness the full potential of AI in the business world

Underutilization of AI and Data: Panelists emphasized that a major shortfall in AI is the underutilization of available data and AI applications in businesses. Only a small fraction of data is being leveraged, and AI is not being applied to its full potential, particularly in business contexts.
Focus on Cost-Saving Rather Than Value Creation: There was a consensus that many AI projects are initiated more for cost-saving rather than creating additional value or revenue. This approach limits the transformative potential of AI in businesses.
Disappointment and Hype Cycle: The panelists discussed the cycle of hype and disappointment that often accompanies new technologies, including AI. They noted that while there are successful applications like chatbots, other expectations (like self-driving cars, blockchain, etc.) have not been fully realized, partly due to short attention spans and media influence.
Impact of Regulation and GDPR: A significant portion of the discussion revolved around the impact of regulations, particularly the General Data Protection Regulation (GDPR) in Europe, on AI adoption. Panelists felt that GDPR and similar regulations often hinder AI progress due to their complexity and the caution they instill in businesses.
Cultural and Organizational Challenges: Besides technological issues, the panelists identified cultural and organizational challenges, including change management, skills gaps, and leadership as major barriers to AI adoption and success in enterprises.
Need for Ecosystems and Collaboration: The panelists highlighted the lack of open ecosystems and collaboration in the AI field. They suggested that more open sharing and collaboration, even among competitors, could accelerate AI progress.
AI in Consulting and SMEs: The discussion touched on the role of AI in consulting and its potential impact on small and medium-sized enterprises (SMEs). AI is seen as a growth area in consulting, and there's a belief that SMEs could be more agile in adopting AI due to fewer regulatory constraints.
Future of AI and Responsibility: The future of AI was discussed with an emphasis on the need for a balanced approach that considers innovation, regulation, ethics, and corporate responsibility. The panelists stressed the importance of creating a conducive environment for AI adoption that balances speed and regulation.
Inclusivity and Diversity in AI: The panel concluded with a call for greater inclusivity and diversity in AI, especially the need for more female representation in the field. This aspect was highlighted as crucial not only for representation but also for influencing how AI models are trained and developed.

In summary, the panelists agreed that while AI has great potential, its full benefits are yet to be realized due to various challenges including underutilization, regulatory hurdles, cultural issues, and the need for more collaborative ecosystems. They also emphasized the importance of considering ethical implications and fostering diversity in the AI field.