Mario Draghi’s latest report about “The future of European competitiveness” is clear: in order to be more competitive, innovative, and sustainable, Europe radically needs a change. According to this prominent report from the former European Central Bank President, Europe’s priorities should now pivot toward innovation, decarbonisation and security. The INPACE initiative somewhat echoes this: it deepens collaboration in research and innovation by promoting joint research and industrial cooperation for the development and commercialisation of technologies.
At INPACE, we believe that collaboration between Europe and Asia is a real source of inspiration for taking innovation to the next level. Asia is indeed full of opportunities and so is INPACE: The European Union (EU) increasingly strengthens its connection with Asia. With the promotion of digital technologies and Europe-Asia cooperation in this field are a high priority on the EU agenda. In line with its Digital Compass and Strategy for Cooperation in the Indo-Pacific, the EU has established Digital Partnerships with Japan (2022), South Korea (2022) and Singapore (2023), as well as the Trade and Technology Council with India (2022). These bilateral partnerships aim to foster cooperation in common strategic areas in the digital economy and society sectors. The mission of INPACE is to translate these high-level partnerships into concrete outcomes and tangible collaborations. By tackling joint priorities of the EU and its strategic Asian partners, INPACE aims to create a more inclusive, sustainable, and prosperous digital future for both regions.
We have asked Susana Seabra from SPI, partner of INPACE, to go back to some key takeaways of the report which she finds “timely and interesting”:
About Key barriers to Innovation in Europe
“At the root of Europe’s weak position in digital tech is a static industrial structure which produces a vicious circle of low investment and low innovation. Over the past two decades, the top three US companies in Research and Innovation (R&I) have shifted from the automotive and pharmaceutical industries in the 2000s, to software and hardware companies in the 2010s, and then to the digital sector in the 2020s . In contrast, Europe’s industrial structure has remained static, with automotive companies consistently dominating the top three R&I spenders. In other words, the US economy has nurtured new, innovative technologies and investment has followed, redirecting resources towards sectors with high potential for productivity growth; in Europe investment has remained concentrated on mature technologies and in sectors where productivity growth rates of frontier companies are slowing down.The lack of growth potential in Europe is particularly relevant for tech-based innovative ventures, and even more so for deep tech ones. For example, 61% of total global funding for AI start-ups goes to US companies, 17% to those in China and just 6% to those in the EU. For quantum computing, EU companies attract only 5% of global private funding compared with a 50% share attracted by US companies.”
About lowering the cost of AI deployment
“The EU has a unique opportunity to lower the cost of AI deployment by increasing computational capacity and making available its network of high-performance computers. Since the launch of the Euro-HPC Joint Undertaking in 2018, the EU has created a large public infrastructure for computing capacity located across six Member States, which is one-of-a-kind globally. Three of its supercomputers are in the top ten worldwide and the launch of two exascale computers is planned. While so far this capacity has been mostly used for scientific research, the Commission is progressively opening it to AI start-ups, SMEs and the broader AI community. The report recommends building on this initiative by significantly increasing the computing capacity dedicated to the training and algorithmic development of AI models in HPC centres.
At the same time, the EU should finance the expansion of Euro-HPC to additional cloud and storage capabilities to support AI training in multiple locations. A “federated AI model” should be developed based on cooperation between public and private infrastructures to provide AI training power and cloud services to increase the EU’s competitive scale. To help financing the additional resources invested in the network, it is recommended to create an EU-wide framework allowing public sector “computing capital” to be provided to innovative SMEs in exchange for financial returns. For example, public HPC facilities or research centres could offer free computing capacity in exchange for equity options, royalties or dividends to be reinvested in capacity and maintenance.”
“The EU should promote cross-industry coordination and data sharing to accelerate the integration of AI into European industry”. Developing AI verticals hinges on industrial players working together with AI researchers and the private sector to enable problem definition across different sectors. For instance, discovering whether an innovative product can be developed by a factory using an AI-powered digital twin requires replication of the factory, its robots, processes and the overlay of an AI algorithm. To facilitate this cooperation, EU companies should be encouraged to participate in an “AI Vertical Priorities Plan”. The aim of this plan would be to accelerate AI development across the ten strategic sectors where EU business models will benefit most from rapid AI introduction (automotives, advanced manufacturing and robotics, energy, telecoms, agriculture, aerospace, defence, environmental forecasting, pharma and healthcare). Companies that participate in the plan would benefit from EU funding for model development and a specific set of exemptions regarding competition and AI experimentation. To overcome the EU’s lack of large datasets, model training should be fed with data freely contributed by multiple EU companies within a certain sector. It should be supported within open-source frameworks, safeguarded from antitrust enforcement by competition authorities. Experimentation should be encouraged via the opening up, EU-wide coordination and harmonisation of national “AI Sandbox regimes” to companies participating in the plan. These experimental “sandboxes” would enable regular assessments of regulatory hindrances deriving from EU or national legislation and provide feedback from private companies and research centres to regulators.”
About “Closing skills gaps”
Skills shortages are acting as a barrier to innovation and technology adoption and could potentially hinder decarbonisation efforts too. Skills are also lacking to diffuse digital technologies faster through the economy and to enable workers to adapt to the changes these technologies will bring. Almost 60% of EU companies report that lack of skills is a major barrier to investment and a similar share report difficulties in recruiting ICT specialists. At the same time, European workers are generally unprepared to take advantage of the widespread digitalisation of work: around 42% of Europeans lack basic digital skills, including 37% of those in the workforce. “The EU should overhaul its approach to skills, making it more strategic, future-oriented and focused on emerging skill shortages. The report recommends that, first, the EU and Members States enhance their use of skills intelligence by making much more intense use of data to understand and act on existing skills gaps.
Second, education and training systems need to become more responsive to the changing skill needs and skill gaps identified by the skills intelligence. (…) Specific sectors (strategic value chains) or specific skills (both worker and managerial capabilities) will require complementary targeted interventions. For example, it is proposed to launch a new Tech Skills Acquisition Programme to attract tech talent from outside of EU, adopted EU-wide and co-funded by the Commission and Member States. (…)
To shape a more inclusive and prosperous digital future, INPACE will drive the development and deployment of key human-centered digital technologies. INPACE’s objective is similar to what Draghi shares in his ‘Foreword’: “Europe’s fundamental values are prosperity, equity, freedom, peace and democracy in a sustainable environment. The EU exists to ensure that Europeans can always benefit from these fundamental rights(…) The only way to meet this challenge is to grow and become more productive, preserving our values of equity and social inclusion.1”
The project’s objectives are as follows:
- Support the implementation of the Digital Partnerships and the Trade and Technology Council
- Boost international cooperation in digital technologies between Europe and Asia
- Deepen research and innovation collaboration by promoting joint research and industrial cooperation for technology development and commercialisation
- Inform policy, analyse synergies, and foster digital dialogues to promote convergence between digital technology and policy
- Drive the development and deployment of key human-centred digital technologies to shape a more inclusive and prosperous digital future.
- Foreword, https://commission.europa.eu/document/download/97e481fd-2dc3-412d-be4c-f152a8232961_en ↩︎