Introduction: Mario Draghi’s Opportunity and Relevance
Mario Draghi, a former president of the European Central Bank (ECB), had an opportunity to significantly impact Europe, much like Charles de Gaulle did for France. In 2012, during the euro crisis, Draghi declared that the ECB would do “whatever it takes” to preserve the euro. Now, as an advisor to the European Commission, Draghi’s recent report on EU competitiveness has become increasingly relevant.
The Draghi Report: Key Findings and Recommendations
The Draghi report highlights that since the 2008 global financial crisis, the per capita income in the United States has grown more than that of Europe. Moreover, Europe lags behind both the US and China in technological advancements. This productivity gap stems from chronic underinvestment; in 2021, EU companies spent €270 billion ($305 billion) less on research and development than their US counterparts.
Draghi recommends increasing annual investments to €750-800 billion (4.4-4.7% of GDP) to address this issue. However, he emphasizes that mere investment isn’t enough; Europe needs to invest in strategic sectors and foster market formation through an “entrepreneurial state” approach.
Draghi also suggests that EU regulations are excessive and proposes a vice-presidential role to oversee regulatory simplification. However, this recommendation overlooks the potential of well-designed regulation to stimulate innovation.
Capacity Building and Strategic Sectors
The report underscores the importance of developing Europe’s digital sector aligned with European principles, especially in artificial intelligence (AI). Currently, Europe lacks large tech companies competing with US giants like Alphabet (Google), Amazon, and Microsoft. Over 80% of Europe’s digital infrastructure and technologies are imported, with 70% of foundational AI models developed in the US.
China’s success in digital development through substantial investments in technologies, AI, digital infrastructure, and attracting global experts offers a model for Europe. EuroStack, an initiative proposing €300 billion in investments over a decade, aims to transform Europe’s digital ecosystem and restore its digital sovereignty.
However, Europe needs a “firewall” to prevent foreign tech giants from benefiting from increased digital infrastructure investments. The EU should create preferential access for its companies, changing the current data collection and storage dominance by US firms.
Europe has a strong industrial base in areas like chip manufacturing (ASML), AI (Mistral), and cloud services (SAP). To avoid replicating the US digital feudalism, Europe must strengthen competition defense and prevent foreign acquisitions of promising European digital companies.
Moreover, Europe should mandate technology transfer for foreign tech giants seeking access to EU markets. For instance, companies like Google, Facebook (Meta), OpenAI, Microsoft, Apple, and Amazon could be given one to two years to partner with a European firm gradually taking over daily operations, data management, and storage. In return, US tech firms maintain access to one of the world’s largest markets.
Ethical Concerns and AI Regulation
The tragic case of Sewell Setzer III, a 14-year-old who took his life after interacting with a realistic AI character on Character.AI, highlights the urgent need for stricter measures to protect children and young adults from AI risks.
While AI holds immense ethical potential, such as promoting human health and dignity or improving education for marginalized populations, these benefits should not overshadow ethical risks and real-world costs. Any violation of human rights must be considered unacceptable.
Setzer’s case isn’t isolated; in December, two Texas families sued Character.AI and Google, alleging that the platform’s chatbots sexually and emotionally abused their school-aged children, leading to self-harm and violence.
Key Questions and Answers
- What is the main concern of the Draghi report? The report emphasizes Europe’s need to develop its digital sector, aligned with European principles, especially in AI. It highlights the gap in productivity between Europe and leading nations like the US and China, attributed to chronic underinvestment.
- What does Draghi recommend for Europe’s digital development? Draghi suggests increasing annual investments to €750-800 billion (4.4-4.7% of GDP) and fostering an “entrepreneurial state” approach to market formation.
- Why is regulatory simplification controversial? While Draghi proposes regulatory simplification, critics argue that well-designed regulation can stimulate innovation.
- What are the ethical concerns regarding AI? The tragic case of Sewell Setzer III underscores the urgent need for stricter measures to protect children and young adults from AI risks.
