ECONOMIC POLICY INSTRUMENTS FOR INNOVATIVE GROWTH IN THE EUROPEAN UNION - THE CASE OF AI

Abstract

The recent economic (USA tariffs) and geopolitical (conflict in

Ukraine) developments are creating a host of challenges for the EU, at

a time when a new wave of high technology is intensifying EU’s eco-

nomic competition with the U.S. and China. In the last 15 years, the

European economy has been lagging in both the quantitative and qual-

itative characteristics of growth compared with its two main rivals.

Therefore, the enhancement of the EU’s technological and product

innovation capabilities is of critical importance for its future positions

in the global marketplace.

This research focuses on the selection of adequate economic policy

instruments for the establishment of an investment, R&D, and institu-

tional environment that will enhance innovation processes in the EU,

with a focus on artificial intelligence (AI) – where, currently, the EU

lags behind the USA and China. An in-depth analysis outlines the key

factors behind the lag and proposes specific mechanisms and instru-

ments for catching up.