The revival of industrial policy in the EU and its potential for the digital transformation of the Greek economy

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Industrial policy is back in fashion on the European economic policy agenda. Of course, this is not something completely new. Since the Great Recession of 2008, the European Commission (EC) has openly supported coordinated and complementary policies as an effort to tackle structural deficiencies. However, it was the European Grean Deal[1] that labeled these targeted efforts as industrial strategies, bringing forward sustainable development as the ultimate goal of European economic policy.

In this context, a New Industrial Strategy[2] was devised in 2020 to guide the continent’s green and digital -or twin– transition, with specific policy priorities such as maintaining global competitiveness, achieving climate neutrality by 2050, and shaping Europe’s digital future. This action plan was never truly tested, as the COVID-19 pandemic came to revamp the European economy, leading to a direct update of the EU’s industrial strategy in 2021[3] in a strategic document that still guides EU and member-states’ policymaking efforts. The update placed the EU’s “open strategic autonomy” at the epicenter and proposed a set of actions along three key axes: i) strengthening the resilience of the European Single Market, ii) strengthening of the EU’s strategic autonomy, and iii) accelerating the twin transition. In addition, it highlighted key industrial ecosystems and proposed tailor-made policy toolboxes and industrial alliances to support them. To achieve the ambitious goal set by its updated industrial strategy, the EC directed funds from flagship programs, including inter alia, InvestEU, NextGenerationEU and its Recovery and Resilience Facility (RRF) instrument, the Multiannual Financial Framework (MFF) 2021–2027, and Horizon Europe.

However, the escalation of the Russo-Ukrainian war produced one of the largest energy crises the continent has ever faced. The EU’s response came in the form of the Green Deal Industrial Plan for the Net-Zero Age[4] in 2023, which seeks to ensure that the Green Deal’s ambitious goals remain on track with the recent geopolitical developments. The new industrial plan and its flagship initiatives, such as the Net-Zero Industry Act and the Critical Raw Materials Act, aim to speed up Europe’s progress to climate neutrality by fostering the development of a simplified and predictable regulatory framework, enabling faster access to funds, supporting up-skilling and re-skilling initiatives, and implementing actions that enhance the resilience of the EU’s supply chains through open trade.

These strategic documents caused a chain-reaction in the EU member-states, including Greece. High public-private debt and large fiscal and balance-of-payments deficits -the same problems that led Greece in a decade-long recession (2008-2018)- are still present, rooted in the lack of structural reforms implemented in the country. Following the direction set by the EC, the country presented in 2022 a strategic document titled National Industrial Strategy and Action Plan[5], outlining a vision where the Greek industry can act as the transformative factor of the economy through innovation, international cooperation, and human capital development. The document provided a roadmap of 43 interventions along key strategic areas. Among those areas, the digital transformation of the Greek business economy is a focal point, as the strategy aims to promote the digitalization of industrial firms, the adoption of cutting-edge digital techs, and the upgrading of digital infrastructure.

Greece’s digital transformation in all fronts, both public and private, has been a pressing issue. Coming off from the 2008-2018 economic crisis, the country ranked in the last place (28th) on the Digital Economy and Society Index (DESI) for 2018, with particular problems in digital readiness. Since 2019, Greece has made significant progress in all four pillars of the DESI, including digital skills, digital infrastructure, digital transformation of businesses and, above all, the digitalization of public services during the pandemic.[6] For the public sector, the country devised one of its very first concrete strategy documents, the Bible of the Digital Transformation 2020-2025[7], and pledged significant funds from its Recovery and Resilience Fund (RRF) to its digital transition and to achieving the EU’s ambitious Digital Decade targets. For the private sector, the country published in 2021 a National Strategy for the Digital Transformation of the Greek Industry[8] to address the deficiencies in the country’s business sector digital infrastructure and workforce skills. The document is aligned to the country’s national industrial strategy and provides guidelines, objectives, and an action plan to achieve them.

Both these documents are part of an extensive body of strategic directions, action plans, initiatives, and reforms which constitute the current Greek industrial policy landscape. The timing of these documents is critical. On the one hand, extreme global challenges are already putting the structurally deficient Greek productive model under immense pressure, demanding an immediate strategic response. On the other hand, the EU’s shift towards active engagement and, most importantly, the direct financial stimulation of industrial competitiveness presents an unprecedented opportunity for restructuring the Greek productive model. However, for Greece to meet its transformative potential, the country must be continuously engaged in a path of dynamic policy interventions.

A major challenge for the country is to successfully utilize an unprecedented wealth of EU and state financing tools—including the RRF, the MFF 2021–2027, Horizon Europe, the new development law (Law 4887/2022), and additional funds made available by the various Commission Acts. It is also critical that the pool of financial resources is allocated efficiently and transparently in the Greek economy. For instance, the funds made available by the RRF and the MFF 2021–2027 targeting the digital and green transitions, the re-skilling and upskilling of the Greek labor force, and the development of proper infrastructure across multiple sectors, provide significant transformative potential and can create a horizontal boost for economic and industrial activity. These tools must be put to “good use”, meaning they should seek to benefit everyone and not just selected ecosystems or sectors.

The EU has already transitioned into a decade of industrial policy revival with significant transformative potential for all its members, including Greece. While the country has quickly adjusted to the new status quo with multiple strategic documents that aim to advance its digital and technological capabilities, it must also recognize the fact that strategic planning is not enough. Greece must meet the challenge of implementing its ambitious action plans while constantly monitoring, evaluating and updating (if necessary) its strategic orientation against the volatility of the current global market environment. In this context, the need emerges for a holistic industrial policy approach in the years ahead, in which different strategies related to the industry, the digital transformation, the green transition and other current major challenges are integrated into a unified system of policies that can provide the solid foundations for the pursuit of sustainable growth and competitiveness by the Greek industry in the long term.

 

Note: This article draws from an extensive policy brief entitled “Leveraging EU industrial policy to reshape Greece’s productive model” and can be found here

 

 

 

[1] COM(2019)640

[2] COM(2020)102

[3] COM(2021)350

[4] COM(2023)062

[5] https://www.mindev.gov.gr/wp-content/uploads/2022/09/2.-Εθνική-Στρατηγική-Βιομηχανίας-και-Σχέδιο-Δράσης-National-Industrial-Strategy-and-Action-Plan.pdf

[6] For more information on the country’s DESI 2023 rankings, see here.

[7] https://digitalstrategy.gov.gr/en/

[8] https://www.ggb.gr/el/node/1820

Did someone say “Consolidation”?

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Enrico Letta published his keenly awaited report[1] in April 2024, outlining how European competitiveness could be improved by a series of measures intended to complete the Single Market. In particular, he pointed to the fact that until now the finance, energy, and electronic communications sectors had not been included in the construction of the Single Market:

“Three decades ago, when the Single Market was established, these sectors were intentionally excluded from its scope, deemed too strategic to be integrated beyond the national level. However, the perspective that once prioritised domestic control is now proving to be a barrier to the growth and competitiveness of these sectors at the European level and globally.” (p.51)

Why does this matter now?

“The lack of integration in the financial, energy, and electronic communications sectors is a primary reason for Europe’s declining competitiveness.” (p.8)

The problem is precisely that these sectors provide the basic inputs for most of the functioning of the European economy. And so, he made proposals for creating a Single Market also in these sectors. While all three are important, news headlines tended to focus on national consolidation in the telecoms sector. Some were simplistic:

  • Bloomberg, 16 April 2024: “EU Report Backs Telecom Consolidation, Strong Energy Market”[2]
  • Euractiv, 17 April 2024, “Letta’s report aligns with views of major telecoms on market integration”[3].

Others were more thoughtful or pointed straight at the mistake of not thinking this through:

  • Sandbu, 21 April 2024, “Europe still fails to make enough of its size — here’s how to fix that”[4]
  • von Thun, 5 June 2024. “Competition, Not Consolidation, Is the Key to a Resilient and Innovative Europe”[5]

So, what did Letta actually write?

In his report, Letta stated that the European telecoms market is highly fragmented, with more than 100 operators (p.52) in 27 EU countries. While this corresponds to three operators per country on average, which from a competition policy point of view is already a small number for healthy competition to arise, this corresponds to an average number of 5 million customers per operator, as opposed to 107 million customers in the US and 467 million in China (p.52). The conclusion is that European operators lack scale, which involves lower bargaining power with suppliers and gatekeeper platforms and lower returns from investments into research and innovation and the core infrastructure.

Add to this those national markets themselves are small, with

“multiple operators offering commoditized communication services characterised by low levels of diversification. Consequently, insufficient value creation occurs within these national markets depressing the investment in advanced networks which are essential for a competitive economic landscape.” (p.55).

Thus, Letta’s conclusion is

“Given this scenario, the mere establishment of a Single Market would not yield a discernibly different outcome unless it facilitates the growth of operators. Such growth is imperative to achieve economies of scale and scope, enabling cost reduction and fostering innovation.” (p.55)

And here comes the decisive paragraph, which for clearness we reproduce in its entirety:

“As markets still remain primarily national, cross-border consolidation could involve domestic markets making sure that competition law is respected. This must be viewed as a step in the development of European dimension cross-border operators. Establishing a Single Market for electronic communications with European operators capable of a global role is an objective which is not in contrast with the objective of keeping markets open and competitive. The scale of investments necessary in new technologies (for example edge/cloud, 6G, AI) implies that due consideration should be given to the necessity of some level of consolidation within national markets or strategic alliances between market players including pro-competitive sharing of investments in key network elements.” (p.55) [our highlighting]

This paragraph leaves no doubt that what Letta proposes is to create the conditions for successful cross-border operators with a European dimension, starting with regulatory governance: “…the fragmentation of how common rules are implemented in each domestic market hinders the ability of operators to penetrate other EU markets…” (p.56). But he pointed out before that

“Establishing an effective Electronic Communications Networks and Services can help to fix many of the current failures in a way that remains coherent with European values, and citizens’ rights and market economy principles. The process to get there is complex and a progressive approach is preferable: it has to be unrolled along some key issues.” (p.53)

The top key issue is consumer welfare, followed by infrastructure and services – not the other way round; that is, clearly, he sees national (as opposed to cross-border) consolidation either as a necessary bad, to be compensated by stronger competition from cross-border competitors, or as an option to be compared to allowing pro-competitive sharing of network investment.

Nothing is better than to have the author explain his report. A VoxEU/CEPR seminar on June 3rd, 2024, provided the opportunity.[6] There Letta said that Europe first needed to create a single market in electronic communications, starting with the key issue of radio spectrum integration, to be followed by the redefinition of the relevant markets at EU level. Then a process of consolidation can take place, towards a midway point between the present EU scenario and the US market outcome with only three continental operators.

What is the market reality?

The realities on the ground are a bit muddied, and presently we are seeing some contrasting movements. To start with, a few years back, before the tight regulation of EU call and data roaming prices and the appearance of OTTs, there was a pan-European business model based on frequent travellers and businesses, through offers of lower charges for international and roaming calls and data, the prime example being Vodafone. This business model was actually based on the market distortions created by excessively high wholesale and retail prices for international and roaming calls and duly faded away with the Roaming Regulation and wide OTT usage.

On the other hand, retail demand is fundamentally local: Purchasing power (average wages are three times higher in Germany than in Portugal, for example) and cultural traits vary strongly, and competitors vary. Thus, retail offers must be tailored to local conditions, and on the retail demand side there do not seem to be any benefits for pan-European operators.

Maybe not by chance what we have observed in recent years is consolidation at national level and deconsolidation at EU level: Deutsche Telekom and Orange merged in the UK, then sold out to BT; the challenger Hutchison merged its business in Italy, Ireland, Austria, and is now attempting to merge with Vodafone in the UK. Vodafone on the other hand is retrenching and just sold its Italian and Spanish units, i.e., its businesses in two of the largest EU states. Orange just merged with MásMóvil in Spain, etc.

A closer analysis of these cases may support the conclusions of Letta’s report – or may not. Is it a question of these markets being too small, or being too competitive? If an EU-sized market were even more competitive, what would the outcome be? In the end, operators might prefer cosy national markets, especially if they are allowed to merge.

There are some indications of movements in the opposite direction, of course. To start with, several tower companies have been buying up mobile operators’ towers, building up a trans-EU presence. Either this is a sign of significant returns to scale at infrastructure holding level that were waiting to be materialized, or it is the outcome of a financial bubble created by low interest rates and operators need for liquidity that has now burst.

Finally, new operators keep coming, though they are few. Free/Iliad, a French company, now also operates in Italy, Ireland, and Poland, though in the latter two markets it entered though acquisitions. Digi, a Romanian company, entered Spain and Italy and is preparing its launch in Portugal and Belgium, having announced that they would not copy the existing operators’ business model. Clearly, some operators continue to see cross-border opportunities — the game continues.

[1] Enrico Letta, “Much more than a market – Speed, Security, Solidarity Empowering the Single Market to deliver a sustainable future and prosperity for all EU Citizens,” April 2024, https://www.consilium.europa.eu/media/ny3j24sm/much-more-than-a-market-report-by-enrico-letta.pdf

[2] https://www.bloomberg.com/news/articles/2024-04-16/eu-report-calls-for-telecom-consolidation-strong-energy-market

[3] https://www.euractiv.com/section/digital/news/lettas-report-aligns-with-views-of-major-telecoms-on-market-integration/

[4] https://www.ft.com/content/f6200dc5-e42b-4356-9951-70ca3a94cd0a

[5] https://www.promarket.org/2024/06/05/competition-not-consolidation-is-the-key-to-a-resilient-and-innovative-europe/

[6] “Competition Policy RPN – New Industrial Policy, Competitiveness, Competition: Framing the Trade-Offs,” https://www.youtube.com/watch?v=jIduIUOILAY.

The role of Artificial Intelligence in the tourism sector

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Artificial intelligence is already opening up new opportunities in the tourism industry, and major players are eager to experiment with ChatGPT and other forms of generative AI to offer tailored services to their customers and make the travel experience easier and more exciting.

Artificial Intelligence in the EU accomodation market

According to the European Accomodation Barometer Fall 2023 published by Statista in collaboration with Booking, Austria was the European country with the highest share of accommodation businesses (44%) that considered AI as a key opportunity over the next six months. Just 13% of the sample in Greece and 16% in France believed the same. The EU average stood at 23%.

Accommodations that considered AI as a key opportunity in Europe, by country (% of respondents, 2023)

In the EU, Germany held the highest share of accommodation businesses that already used AI. Overall, 2 out of the 10 German surveyed companies reported using AI, whereas in Italy and Spain only 8% and 4%, respectively.

Customer chatbots (58%) and dynamic pricing (52%) are the most popular applications of accommodation businesses in the EU, followed by customer review management (47%) and content marketing (45%).

Use of AI by accommodation businesses in Europe, by country (% of respondents, Aug 2023)

Use cases and opportunities of generative AI in the tourism sector

Therefore, artificial intelligence, and especially generative AI, is emerging as a revolutionary technology that is reshaping the travel and tourism landscape in Europe and in the rest of the world.

Tourism companies are now making a lot of investments in these technologies to gain a competitive edge and to create new opportunities in terms of enhancing customer experiences, efficient content generation, streamlining customer support, and optimizing marketing strategies.

For example, airlines and travel agencies are leveraging generative AI to create virtual travel assistants that can assist customers with booking flights, hotels and activities, making the booking process more convenient and user-friendly, and enhancing customer satisfaction. Moreover, online travel platforms are using Generative AI to offer personalized travel recommendations. By analyzing user preferences and historical data, these platforms suggest destinations, accommodations, and activities tailored to individual traveller tastes, enhancing the overall travel experience.

Finally, hotels and airlines are utilizing generative AI to optimize pricing strategies. These models analyze demand patterns, competitor pricing, and other factors in real-time to adjust prices dynamically, maximizing revenue while ensuring competitiveness.

Generative AI in the tourism market

Given the growing interest in generative artificial intelligence, tourism has been witnessing a significant market growth in recent years, and lucrative growth prospects are expected throughout the forecast period. Specifically, the size of generative AI in the tourism market was globally valued at $3647.43 million in 2023, and the total generative AI in tourism revenue is expected to grow at a CAGR of 17.5% from 2024 to 2030, reaching by the end of the current decade an estimated value of $11278.53 million.

 Challenges in implementing AI in the tourism sector

However, the integration of AI in the tourism sector is not without challenges. Concerns about data privacy, security and ethical use of AI are critical issues. Compliance with data protection regulation is essential. Organizations must implement stringent security measures to safeguard sensitive data from unauthorized access, breaches, or cyber threats.

Training and upskilling professionals in the sector to effectively use and manage AI tools is another critical challenge. Ongoing training programs are essential to keep tourism professionals abreast of the evolving capabilities of AI and to ensure they can leverage these technologies to enhance their roles.

Finally, the availability and quality of data is a key factor in enabling such technologies. Inaccurate or incomplete data can compromise the effectiveness of AI algorithms, leading to erroneous conclusions and decisions. Addressing these issues requires a robust data governance framework, data validation processes, and continuous monitoring to ensure the accuracy and completeness of the data used by AI systems.

Triple strategy for the revised technological policy of the European Union in the next mandate (2024-2029): regulation, investments, and international agenda

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The elections of the European Parliament (June 9, 2024) brought a close to a political and legislative cycle within the European Union that began in 2019. This period has been marked by ever-increasing geopolitical rivalry between China and the United States, across technological, economic, and commercial spheres; by a world health crisis of the first order (COVID-19), which prompted the acceleration of digitization; and by the situation of technology as a line of international action that can lead to both fractures and new windows for cooperation.

The top priority of the next mandate will be to establish a common European approach to innovative digital technologies based on principles of efficiency, coherence, effectiveness, agility, impact, and coordination, to keep the European market innovative, meanwhile enabling solidarity and the prioritization of instruments that foster open economic security. To achieve those ends, the next mandate must rethink its current paradigm in three technological areas: regulationinvestments, and foreign policy.

Regulatory simplification will be an axis of action in the coming years. The first step will be implementation of the more than 50 legislative files currently existing in the digital sector. The second step will be to guarantee that implementation of said regulation be carried out in an effective, efficient, and coherent manner throughout the national Public Administrations, which will require training at the human resources level for both technical and regulatory authorities. As an example, application of the European Regulation on Artificial Intelligence and of eIDAS2 (the second version of the regulation for Electronic Identification, Authentication, and Trust Services, the objective of which is to promote secure digital interactions within and among the EU Member States) will together assume over 60 implementing acts at the national level.

In its latest Conclusions (May 21, 2024), the Council of the European Union itself speaks of “the future of EU digital policy” and indicates the need to comprehensively evaluate the repercussions of any new legislative initiative, to guarantee a “balance between innovation and the regulatory burden” and to avoid the risk of hindering an agile, innovation-friendly European digital single market, all without losing sight of the risks posed by technological advances.

Through the five years of the next mandate, the regulatory focus must be on the implementation of rules in a simplified way, coordinated between the European Commission and the Member States and with the guarantee that rights be respected while ensuring innovation throughout the productive fabric. It is estimated that 25 industrial segments (from the chemical sector to railways and hospitality) will need to increase their legal operations to comply with these regulations.

The second challenge of the next mandate will be the economic competitiveness of the European Union. In the final years of the current mandate, both the Commission and certain Member States have promoted industrial policy strategies aimed at channeling increased public financing toward strategic and critical sectors within the digital, climate, and energy fields, as well as for defense. In the first area, the launch of STEP (the Strategic Technologies Platform for Europe) has sparked great interest and support, driving investment in digital and deep technology, clean and green technology, and biotechnology. The initial proposal of June 2023, presented within the package of measures for mid-term review of the Multiannual Financial Framework for the 2021-2027 period, called for a total of 10 billion euros. However, as the months passed, this ambition diminished to 1.5 billion euros, a reduction of more than 85% below original expectations.

In a scenario where other regions are likewise channeling increased public investments into key private sectors, the next mandate of the European Union should focus on three aspects. First, it should ensure that investments be combined and coordinated at the European Union level. Currently in existence are Industrial Alliances, Joint Undertakings, and instruments such as IPCEIs (Important Projects of Common European Interest). As relates to the 10 IPCEIs approved since 2018, only 20% of participating companies are SMEs. In the current context of increasing concentration of technological companies, it is important that the EU enhance its support to SMEs, to guarantee their competitiveness and economic activities with larger companies. On the other hand, of these same 10 projects, only one is dedicated to infrastructure; the rest are dedicated to R&D or to projects for early industrial deployment. The next step should be to channel R&D into tangible economic effects along European value chains.

The second aspect in terms of investments will be to evaluate the impact of both public and private investments along the same technological vertical. In 2022, levels of public investment increased – for example, in the area of quantum technologies, China announced 15.3 billion dollars of investment, the EU 7.2 billion, the U.S. 1.9 billion, and Japan 1.8 billion. Meanwhile, the private sector in the EU continues to exhibit quantitatively low market capitalization. Currently, 10 of the 15 largest quantum computing companies in the world are from the U.S., while only one is of European origin (France). Hence the need to explore why, within certain emerging verticals, the increase in public aid has not led to greater private investment.

The third aspect is to establish prioritization of funding, instruments, and incentives according to existing or potential technological capabilities. The report entitled Resilient EU2030, launched during the Spanish Presidency of the Council of the EU, articulates three scenarios from which to decide the extent to which the EU’s internal capacities need to be strengthened: technologies where a competitive advantage is present; those showing certain potential for forefront positioning; and those where leadership is not possible, but where a minimum critical capacity is required in case of supply chain disruptions or external shocks. The next step – above all for the Member States, including for the Spanish Administration – is to guarantee that Spain submits a mapping of critical technologies that will be truly coordinated, consulted, and compared between Ministries and actors from the private sector and civil society, with a view to the Strategy for Economic Security. The establishment of the first Office of Artificial Intelligence in the EC coincides with a review of the National Strategy for Artificial Intelligence 2024 from the Government of Spain. Nevertheless, it is necessary to move other technological areas in this same direction, as with the expected National Strategy for Quantum Technologies, or for Spain to obtain a joint position on the Commission’s Recommendation on the Security and Resilience of Submarine Cables.

This latter point leads to the third aspect of the revised technological policy of the European Union. One cannot speak of a digital agenda by referring to regulation or economic competitiveness alone – partnership with like-minded countries and allies is also fundamental. Since 2019, the EU has advanced rapidly in the configuration of three models: Trade and Technology Councils (with the United States and with India), Digital Cooperation Agreements (or DPAs, with South Korea, Japan, and Singapore), Digital Alliances (with Latin America and the Caribbean), and Digital Economy Packages with individual countries such as Nigeria. The next step is to strengthen the EU’s technological diplomacy structures within the institutions themselves, as well as in the Member States, including Spain, which still lacks a structured and coordinated strategy for technological diplomacy.

The coming 2024-2029 mandate of the European Union is not expected to create more instruments, regulations, or initiatives. Rather, the road map will consist of: implementation of what already exists; effectiveness and coordination in the use of the instruments and processes created; evaluation of the real impact of said initiatives; and greater structuring and dialogue between Member States and the European Union. All of this will guarantee the application of existing regulations, the promotion of innovation and economic competitiveness, and ongoing association with trusted third countries.

PromethEUs Position Paper analysing the role of Digital for Growth for Reviving the Single Market and EU Competitiveness

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The network recently presented its position paper Digital for Growth: Strengthening the Single Market and Reviving EU Competitiveness, analysing the role played by digital innovation and transformation and related policies and regulation in driving EU growth.

Considering the findings of the soon to be published Letta report on the state of the art of the EU internal market and to also contribute to Draghi’s report on EU competitiveness beyond sketching an agenda for the next EU mandate, the paper highlighted the challenges to EU digital competitiveness as well as the importance of working towards a functioning single market to foster the emergence of innovative EU players.

  1. Why are digital technologies so strategic for EU competitiveness?

Digital technologies, particularly Information and Communication Technology (ICT) impact various sectors due to their pervasiveness, continuous improvement, and ability to stimulate further innovation. Moreover, historically, technological revolutions have shaped economic progress.

Studies highlight the importance of ICT in driving productivity, with the US experiencing a productivity revival driven by ICT-intensive industries, while the EU has faced challenges due to insufficient ICT investments and adoption. The EU’s Digital Decade agenda aims to unlock significant economic value, as evidenced by estimates and studies projecting substantial benefits.

  1. The EU tech gap with the US and China.

Although Europe has many high-performing companies, in the aggregate European enterprises are growing more slowly, displaying lower returns, and investing less in R&D than their US and Chinese counterparts. This reflects the fact that Europe substantially missed the last technology revolution, delaying in terms of value extracted by ICT and other technological advancements. A wide range of data, such as patents and investments, confirms this analysis.

  1. Still no single market in place.

The level of European market integration in the service area remains low. The absence of a functioning single market in key aspects, such as in the digital and financial areas, hinders the emergence of innovative EU players by restricting access of EU startups to funding. Additionally, it increases the costs of operating outside the country of origin, does not allow for the full exploitation of economies of scale, reduces talent mobility, and does not provide R&D organisations with the opportunity to achieve the necessary critical mass to succeed at global level.

The slowness in achieving the single market is mainly due to the differences in each of the Member States in approaches, priorities, resources and mapping of capabilities, because of regional imbalances arising from structural factors.

4. EU Regional imbalances and the role of the Recovery and Resilience Facility.

The absence of a well-functioning single market and the growing distance to other countries is reflected by an uttermost heterogeinity among EU member states in terms of digital outcomes. These regional imbalances seem dependent not only on structural factors like employment rates or educational attachment, but also on the quality of a country’s digital policy.

Alongside already existing EU funds, the NGEU programme has been a timely opportunity to address some of the regional imbalances, thanks to the redistributive mechanism providing more resources to poorer Member states, which offered an occasion to accelerate the digital transition.

5. A decalogue of digital policy priorities for the next EU legislative term.

This last paragraph is an opportunity for the PromethEUs network to set a list of 10 policy recommendations to address the issues of the digital transition at the EU level.

Please find the position paper and the digital policy decalogue attached:

PromethEUs Conference “Digital for Growth: Strengthening the Single Market and Reviving EU Competitiveness”

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[vc_tta_tabs active_section=”1″ no_fill_content_area=”true”][vc_tta_section title=”Contents” tab_id=”contentsfd2c-2c46″]

I-Com, on behalf of the PromethEUs network, organised the conference “Digital for Growth – Strengthening the Single Market and Reviving EU Competitiveness”.

The event will took place on Tuesday 9 April, from 17:30-19:00 CET in Brussels.

About the event:

The conference was the occasion for the PromethEUs network to present its position paper analysing the challenges to EU digital competitiveness as well as the importance of working towards a functioning single market to foster the emergence of innovative EU players. Furthermore, several guest speakers joined the event in a panel discussion on the EU path towards the Digital Single Market and the EU competitiveness on the global stage.

Please find attached the programme of the event.

[/vc_tta_section][vc_tta_section title=”Speakers” tab_id=”speakersfd2c-2c46″]

Speakers:

Pablo ARIAS ECHEVERRÍA 

[modal_popup_box width=”800″ btnalign=”center” titletext=”Pablo ARIAS ECHEVERRÍA , MEP and member D-US and ITRE Committees (TBC)” titleline=”3″ contentpad2=”20″ btntext=”Bio” bodybg=”#000000″ titlebg=”#ffffff” titleborder=”#ffffff” bgclr=”#ffffff” btnbg=”#174e96″ btnclr=”#ffffff”]Pablo Arias Echeverría is a Spanish politician, serving as member of the European Parliament for the European People’s Party (EPP) from 2009 to 2014 and since 2019.Throughout his time in the EP, Arias Echeverría has been serving on the Committee on the Internal Market and Consumer Protection(IMCO). In addition, he is part of the parliament’s delegation for relations with the United States.[/modal_popup_box]

Stefano DA EMPOLI

[modal_popup_box width=”800″ btnalign=”center” titletext=”Stefano DA EMPOLI, President I-Com” titleline=”3″ contentpad2=”20″ btntext=”Bio” bodybg=”#000000″ titlebg=”#ffffff” titleborder=”#ffffff” bgclr=”#ffffff” btnbg=”#174e96″ btnclr=”#ffffff”]Stefano da Empoli is president and principal policy analyst at I-Com, the Institute for Competitiveness, a think tank based in Rome and Brussels which he founded in 2005.He has authored numerous publications on economic themes and served in a key advisory or expert positions on a number of task forces and scientific boards, and he is Professor of political economy at the Università di Roma Tre.[/modal_popup_box]

Giulia DEL BRENNA

[modal_popup_box width=”800″ btnalign=”center” titletext=”Giulia DEL BRENNA, HoU Single Market and Industrial Policy, DG GROW” titleline=”3″ contentpad2=”20″ btntext=”Bio” bodybg=”#000000″ titlebg=”#ffffff” titleborder=”#ffffff” bgclr=”#ffffff” btnbg=”#174e96″ btnclr=”#ffffff”]Giulia Del Brenna is the Head of Unit for the DG for Internal Market, Industry, Entrepreneurship and SMEs at European Commission. Del Brenna has has had a long career at the Commission,having held various portfolios since 2008.[/modal_popup_box]

Alessandro GROPELLI

[modal_popup_box width=”800″ btnalign=”center” titletext=”Alessandro GROPELLI, Deputy Director General, European Telecommunications Network Operators’ Association (ETNO)” titleline=”3″ contentpad2=”20″ btntext=”Bio” bodybg=”#000000″ titlebg=”#ffffff” titleborder=”#ffffff” bgclr=”#ffffff” btnbg=”#174e96″ btnclr=”#ffffff”]Alessandro Gropelli is an expert of tech, telecom and digital policy. His notable career includes  working as public relations officer at the European Parliament, where he implemented the information campaign for the European Elections in Northern Italy in 2009.[/modal_popup_box]

Raquel JORGE

[modal_popup_box width=”800″ btnalign=”center” titletext=”Raquel JORGE, Policy Analyst, Elcano Royal Institute” titleline=”3″ contentpad2=”20″ btntext=”Bio” bodybg=”#000000″ titlebg=”#ffffff” titleborder=”#ffffff” bgclr=”#ffffff” btnbg=”#174e96″ btnclr=”#ffffff”]Raquel Jorge is an Analyst at the Elcano Royal Institute working on the technology and digital agenda. Her notable career includes working on the planning process of the National Strategy on Technology and Global Order at State Secretariat for Global Spain at Spain’s Ministry of Foreign Affairs, European Union and Cooperation.[/modal_popup_box]

Maria-Manuel LEITÃO-MARQUES 

[modal_popup_box width=”800″ btnalign=”center” titletext=”Maria-Manuel LEITÃO-MARQUES, Vice-Chair IMCO Committee (TBC)” titleline=”3″ contentpad2=”20″ btntext=”Bio” bodybg=”#000000″ titlebg=”#ffffff” titleborder=”#ffffff” bgclr=”#ffffff” btnbg=”#174e96″ btnclr=”#ffffff”]Maria-Manuel Leitão Marques is a Portuguese MEP, member of the Group of the Progressive Alliance of Socialists and Democrats (S&D).  As vice chair of the Committee on the Internal Market and Consumer Protection (IMCO), she is the parliament’s rapporteur on the European Commission’s 2022 proposal for a ban on the import and export of products made using forced labour.[/modal_popup_box]

Scott MARCUS

[modal_popup_box width=”800″ btnalign=”center” titletext=”Scott MARCUS, Associate Senior Research Fellow Global Governance, Regulation, Innovation and Digital Economy Unit, CEPS” titleline=”3″ contentpad2=”20″ btntext=”Bio” bodybg=”#000000″ titlebg=”#ffffff” titleborder=”#ffffff” bgclr=”#ffffff” btnbg=”#174e96″ btnclr=”#ffffff”]J.Scott Marcus’ works entail economics, political science / public administration, policy analysis, and engineering.  He is author of numerous papers, a book on data network design. He either led or served as first author for numerous studies for the European Parliament, the European Commission, and national governments and regulatory authorities around the world. He also serves as member of the Scientific Committee of the Communications and Media program at the Florence School of Regulation (FSR), a unit of the European University Institute (EUI).[/modal_popup_box]

Sandra PARTHIE

[modal_popup_box width=”800″ btnalign=”center” titletext=”Sandra PARTHIE, President of the Section for the Single Market, Production and Consumption (INT), European Economic and Social Committee (EESC)” titleline=”3″ contentpad2=”20″ btntext=”Bio” bodybg=”#000000″ titlebg=”#ffffff” titleborder=”#ffffff” bgclr=”#ffffff” btnbg=”#174e96″ btnclr=”#ffffff”]Sandra Parthie is a member of the EESC since 2020. Moreover, since 2015, she is running the Brussels Liaison office for private German economic think tank ‘IW’ (Institut der deutschen Wirtschaft/ German Economic Institute), presenting economic research by the Institute to stakeholders in Brussels.[/modal_popup_box]

Vincenzo RENDA

[modal_popup_box width=”800″ btnalign=”center” titletext=”Vincenzo RENDA, Director for Single Market and Digital Competitiveness, Digital Europe” titleline=”3″ contentpad2=”20″ btntext=”Bio” bodybg=”#000000″ titlebg=”#ffffff” titleborder=”#ffffff” bgclr=”#ffffff” btnbg=”#174e96″ btnclr=”#ffffff”]Vincenzo Renda has a 10-year experience in digital policy. Before joining DIGITALEUROPE, he was was Innovation Policy Officer at CECIMO, the European association of the machine tool industries and related manufacturing technologies, representing the organization in a variety of EU-funded projects on industrial technologies.[/modal_popup_box]

Aggelos TSAKANIKAS

[modal_popup_box width=”800″ btnalign=”center” titletext=”Aggelos TSAKANIKAS, Scientific Advisor, IOBE” titleline=”3″ contentpad2=”20″ btntext=”Bio” bodybg=”#000000″ titlebg=”#ffffff” titleborder=”#ffffff” bgclr=”#ffffff” btnbg=”#174e96″ btnclr=”#ffffff”]Aggelos Tsakanikas is  heading the Entrepreneurship Observatory, at the Foundation for Economic and Industrial Research (FEIR/IOBE), the leading private think tank for economic research in Greece. Moreover , he is Associate Professor in the field of Economic Evaluation of Systems of Technology, Innovation and Entrepreneurship, Director at the Laboratory of Industrial and Energy Economics (LIEE), National Technical University of Athens (NTUA).[/modal_popup_box]
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A renewed approach to the European Single Market and the role of the Digital Networks Act

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The end of the current mandate by the European Commission is partially marked by the two expected reports from Draghi (on economic competitiveness) and Letta (on the future of the European Single Market). Amid this context, the European Commission has indicated that it will propose a Digital Networks Act (DNA), which aims to redefine the governance of the telecommunications sector in the EU, what may have an enormous impact on the role of Big Tech companies in European soil as well as the economic future of telcos, thus influencing in the policy guidance that the Digital Single Market that is foreseen will bring in the future.

Initial efforts to transform the approach to telecommunications services

As a first step, the European Commission launched an open consultation which compiled 437 responses and 164 position papers. Main feedback was made up of three areas. First, the need to address emerging technologies such as network virtualization, edge cloud, artificial intelligence, and open networks. The transition towards software-based, cloud-native networks will require the transformation of business and regulatory models, security of vendors and investments. Second, for the EU Single Market to happen, the EU needs to streamline and simplify administrative requirements and facilitate cross-border consolidation, as one of the main challenges in the telecoms sector is its fragmentation into national markets. Third, there is a need to ensure security of telecoms sector, as it is a major strategic area.

After this consultation, the European Commission has launched a White Paper on the future of the telecommunications sector, by setting out future scenarios for the EU’s infrastructure and how to address problems in several areas: connectivity, spectrum acquisition and management, investment needs, legacy networks’ sustainability, and security.

Main challenges faced by telecoms companies

The need to address the European telecommunications scenario is not carried out by chance. While network innovation and investments are increasing, the sector still faces a large number of challenges, that the EU aims to address through these initiatives. Lower profitability and investment are major problems. Also, 5G in Europe reached 80% of the population, a high but still low figure compared to other countries, such as South Korea and the United States (98%). Also, gigabit-capable coverage is still far from the EU’s Digital Decade Targets (79.5% in Europe compared to 98.5% in China or 89.6% in the United States).

Also, the Important Project of Common European Interest (IPCEI) on Next Generation Cloud Infrastructure and Services is facing delays and limitations in its implementation due to an expectations mismatch in funding and governance issues across the participating Member States.

The increase of usage of technologies will require higher devoted efforts to the speed, volume and capacity of digital infrastructure. If the Metaverse is to spread, estimates point to an increase between x5 and x40 with respect to the streaming of HD videos. According to the European Investment Bank’s estimates for 2014 to 2020, the investments needs in that period to reach a global benchmark for broadband services required €75 billion and faced a gap of €30 billion. The European Commission estimates an investment gap of €65 billion by 2025 Public funding VS private funding.

Additionally, EU telco markets are fragmented. In the EU the general rule of at least four telco operators by Member State deprives telco companies of the financial means to keep up with increasing investment needs. The financial situation of EU telco companies is far from ideal. For instance, the Compound Annual Growth Rate of the Average Revenue per User since 2015 for EU telcos has been -1% for both fixed and mobile services. Another proof of a challenging financial situation is the evolution of the share price of the six main big techs and the Eurostoxx 600-Telcos. This is also reflected in the market capitalization of EU telcos and big techs: whereas EU telco market capitalization is below €0.3 trillion that of the six largest big techs is above €7 trillion.

Further policy needs for the telecoms sector and next steps

The European Commission has raised the “fair share” proposal, which aims to make OTTs (main traffic users as companies) and telcos (main network providers) share the costs of the development and deployment of new networks in Europe. In this post, we argue that telecoms companies are a strategic, if not critical, sector in the EU, and they should be protected and promoted. The sustainability of economic services, the security guarantees and consumers’ rights remain an important topic.

However, the fair share proposal also brings some issues when it comes down to EU’s goal of achieving strategic autonomy. As Elcano Royal Institute argues in its Policy Paper “A Connectivity Package for the EU: Considerations on digital strategic autonomy”, there are some issues to take into consideration. First, there is a competition across Member States. First, there is a geographical: some northern European countries, which also have strategic telco companies, opt for a centrally managed fund, while southern European countries advocate a ‘fair share’ direct payment mechanism. The direct payment would mostly benefit telco companies that have a greater level of network deployment in Europe. This is the case of companies from Southern and Western Europe, but not from Northern Europe, which have less network penetration.

Second, there are differing interests: Member States do not all have the same interest in this topic because not all have large, strategic, national telco companies. Meanwhile, some countries contribute state shareholdings to some operators that result in them having two ‘chairs’ in this discussion. Also, bandwidth coverage and deployment rates show major differences across Member States. Some countries, such as Ireland, host a large number of big tech headquarters in EU territory, which might disincentivize Irish participation in this discussion.

Third, there is a divide in the approach to either national or EU-level oversight: countries proposing the ‘fair share’ mechanism have advocated for different oversight procedures. For example, the French telco association has proposed an SPNP model based on a gigabyte tariff at the European level, so that national authorities can rely on it to adapt their own decisions.

Fourth, the peer-review process: this PRP mechanism is not part of the ‘fair share’ proposal. However, the Digital Decade 2030 Policy Program stipulates the promotion of this peer-review process across Member States, by which they might exchange best practices on specific aspects of policies, measures and actions, and might help to improve the attainment of certain targets of the Digital Decade.

Fifth, industrial policy: the Digital Decade 2030 aims to foster multi-country projects and European Digital Infrastructure Consortiums (EDICs) with at least three Member States. However, this public support for multi-country projects should be used in case of market failures or sub-optimal investment situations. How market failure is defined in scope, resources, ex ante or ex post might vary greatly across Member States.

We argue that measures need to be taken to reinforce the position of EU telcos, if the targets of the Digital Decade are to be reached. In particular, we consider it necessary to reform the EU’s telco regulatory framework and to introduce efficiency obligations for data traffic, while not invoking large obligations to big tech and OTT providers.

Common European Data Spaces and the EU Vision of Data Markets

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On January 24th the EU Commission published its second Staff Working Document on the development of common European data spaces, reporting on the progress towards fulfilling their unifying purpose: guaranteeing an EU-values-compliant single market for data.[1] This short article reports what news it brings.

The European strategy for data and its descendants

In February 2020, the European Commission issued a Communication “A European strategy for data”[2] (the Strategy), identifying access to data as a crucial pillar for the future of the EU economy and society: “Data should be available to all (…) [and that this] will help society to get the most out of innovation and competition and ensure that everyone benefits from a digital dividend”. The EU vision as described in this Communication differs both from that of the US, where “the organisation of the data space is left to the private sector, with considerable concentration effects”, and from China’s, where “a combination of government surveillance with a strong control of Big Tech companies (…) [hold] massive amounts of data without sufficient safeguards for individuals”. Since 2020, the EU has stepped forward with several crucial pieces of legislation to form a coherent framework for a data-driven economy consistent with EU values, such as the Open Data Directive[3], the Data Governance Act[4], the Data Act[5], the Digital Markets Act[6], the Digital Services Act[7], the Implementing Act on High-Value Datasets[8], and the AI Act[9] (currently in an advanced stage of discussion). Along with the Strategy, these documents not only set the groundwork for a single market for data, but they also protect it from threats from the outside, guaranteeing the application of EU values and principles in how market actors deal with data.

The Common European data spaces

One specific initiative foreseen in the Communication is the creation of common European data spaces. The Strategy mentioned 9 strategic sectors where real-time data will be accessible. The Staff Working Document (SWD) of January 2024 adds 5 to the previous 9 and now identifies 14 areas: agriculture, cultural heritage, energy, finance, green deal, health, industry, language, media, mobility, public administrations, research and innovation, skills, and tourism. The EU seeks to create a common data space for each of these areas with similar infrastructure and governance frameworks to promote interoperability across sectors and borders. According to the Strategy, the goal is to interlink the data spaces to form a single market for data in the EU, in which data flows in a secure and trustworthy manner. The idea of a single market for data provides the groundwork for other EU digital policy priorities, such as AI: “[t]here are limits to the ability of machines to predict (…). [T]he limits relate to lack of data.” (Agrawal, Gans & Goldfarb, Prediction Machines). Through the Digital Europe and Horizon Europe programmes, the EU has been funding coordination, support, and deployment actions, as well as innovation and research initiatives related to the EU data spaces. The Digital Europe 2021-2022 work programme also proposed the creation of the Data Spaces Support Centre, to “coordinate all relevant actions on sectorial data spaces and make available (blueprint) architectures and data infrastructure requirements for the data spaces”[10], and of “a large-scale modular and interoperable open-source smart European cloud-to-edge middleware platform”[11], which is now being developed under the name of Simpl.[12] Both through regulation and funding, the EU is proposing to create solid, permanent, and open-access data for all actors, and common data spaces are an essential part of this collaborative environment.

The SWD reports that the data spaces are in different stages of development, and many require different approaches. For instance, the Commission presented a draft Regulation for the European Health data space in May 2022. [13] In December 2023, the EU Council agreed to begin negotiations with the European Parliament, which had issued its first amendments to the proposed regulation, the trilogue being the next step. The development of other data spaces is underway, though each area requires different approaches. Take the example of the energy data space: A necessary Implementing Act for access to electricity metering and consumption data was adopted in June 2023, and expert groups are now being established to advise the Commission. The SWD mentions other milestones for 2024 on the energy data space, and support from DIGITAL Europe Work Programme 2023-2024 to actions for the deployment of the first operational version of the energy data space is envisioned.

Potential problems

However, not all the difficulties reside in differences between data spaces. Two of the problems the SWD identifies are internal to the EU: the engagement of the participants with the data spaces, and their de facto use. The first problem is free riding. This is not new – we have previously identified it: In the July 2023 PromethEUs publication “The EU’s Data Strategy from a multifaceted perspective: Views from Southern Europe”, we noted that “[v]oluntary contributions to sectoral data spaces, in the expectation that the other companies will also contribute, are an invitation to free riding” (p. 23). As is well-known, the expectation of free riding reduces the incentives to contribute in the first place.

The second challenge that the SWD identifies is the promotion of the use of the data spaces. Although data might be available, it will not be unconditionally open to everyone. Data holders will remain in control over to whom grant access. Except in the cases of publicly held data (ODD), high-value datasets, and data altruism (DGA), data reuse is granted against remuneration. At first glance, this control by data holders may limit free riding if, for example, data altruists decide only to concede access to their data to other data altruistic organisations. Still, the de facto use of the data spaces relies ultimately on the assumption that businesses expect more revenue to arise from the commercial value of their data than the potential costs of sharing the data and of engaging with the data spaces. The commercial value depends on data quality and accuracy, which are meant to be guaranteed by governance and data treatment standards defined for all data spaces. However, it is not clear whether SMEs (99% of the businesses in the EU), even if willing to share data, will see enough commercial value in these data spaces to justify installing the capacity to treat their data or to process others’ data (or to pay for data processing services).

A long bet by the EU?

The fact is that both China and the US are developing a clear vision and strong strategic frameworks to deal with data. Their companies will certainly benefit, at their citizens’ expense, both from high levels of data concentration and from the lack of privacy and personal data protection measures enshrined in the EU legal framework. Additionally, regardless of the EU vision to create a single market for data, due to international competition, it is highly likely that major data holders in the EU will not go along with data altruism and instead protect their data as much as they can.

Still, the EU has managed to prevent and solve many of the issues described above by involving key sectoral stakeholders in the development of each data space. The project of the data spaces is no doubt fundamental to the creation of a single market for data in the EU and (more importantly) according to EU values, as was envisioned in the Commission’s Communication of 2020. The common European data spaces are designed to act as the groundwork not only for other EU policy priorities, such as AI, but also for all economic, political, and social sectors, as they promote data usage (through their mediating function between data holders, data services providers, businesses, public authorities, and all the other data actors). Counterintuitively, the mere act of defining clear rules, trustworthy standards, and safe procedures may serve as a wake-up call to avoid data absenteeism among EU businesses and governments. Common European data spaces may not be such a long bet, after all.

[1] https://digital-strategy.ec.europa.eu/en/library/second-staff-working-document-data-spaces

[2] https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52020DC0066

[3] https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32019L1024

[4] https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52020PC0767

[5] https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:L_202302854

[6] https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32022R1925

[7] https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32022R2065

[8] https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32023R0138

[9] https://eur-lex.europa.eu/resource.html?uri=cellar:e0649735-a372-11eb-9585-01aa75ed71a1.0001.02/DOC_1&format=PDF

[10] https://ec.europa.eu/newsroom/repository/document/2021-46/C_2021_7914_1_EN_annexe_acte_autonome_cp_part1_v3_x3qnsqH6g4B4JabSGBy9UatCRc8_81099.pdf

[11] https://ec.europa.eu/newsroom/repository/document/2021-46/C_2021_7914_1_EN_annexe_acte_autonome_cp_part1_v3_x3qnsqH6g4B4JabSGBy9UatCRc8_81099.pdf

[12] https://digital-strategy.ec.europa.eu/en/policies/simpl

[13] https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52022PC0197

Generative AI in Healthcare: opportunities and challenges

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In recent years, with a noticeable acceleration in 2023, the artificial intelligence (AI) market has become increasingly driven by generative AI, a new technological frontier that uses machine learning and deep learning applications to generate new data, including images, music and text, that had not previously existed.

There are now many fields of application for this new technology, ranging from the ICT sector to the legal and professional services sector, and the health sector, with important impacts on the activities of companies and public administrations, as well as on people’s lives.

THE POTENTIAL OF GENERATIVE AI IN THE HEALTHCARE SECTOR

Specifically, according to health tech experts, generative AI is poised to affect research capabilities, clinical decision support, patient care, healthcare administration, communication, and clinician education and training.

For  example, generative AI can assist throughout the drug discovery process, from helping design new compounds to selecting drug trial participants to optimizing searches through vast volumes of data. Therefore, according to the experts, generative AI’s use in research could reduce the cost and time required for breakthroughs by 20% to 30%.

As reported by the Boston Consulting Group, there are many use cases that testify to the potential of generative AI for health. NVIDIA is offering a set of generative AI cloud services that enable customization of AI foundation models to accelerate drug discovery and research in genomics, chemistry, biology and molecular dynamics. The services provide pretrained models and enable researchers to fine-tune generative AI applications on their own proprietary data. The offering has been adopted by drug discovery startups such as Evozyne and Insilico Medicine, as well as by incumbents such as Amgen.

In healthcare services, generative AI can be particularly useful in data analytics and software optimization. In fact, it could help medtech companies create more personalized and patient-centered devices incorporating software that allows for preventive maintenance and repairs.

The UK’s National Centre for Additive Manufacturing is applying generative AI to enhance the design of medical devices such as prosthetics and implants, tailoring them to the needs of individual patients. And the medtech company Implicity is using the technology to incorporate remote monitoring in pacemakers and implantable defibrillators.

In brain health, DiagnaMed recently announced the development of a platform leveraging generative AI to analyze electroencephalography signals in order to predict and monitor brain aging and provide insights and tools in the diagnosis, prevention, or mitigation of cognitive decline in patients with mental health and neurodegenerative disorders.

Generative AI can also aid clinicians in patient care and clinical decision-making. For example, it can offer enhanced medical image reading, assisted disease diagnosis and more personalized therapeutic plans.

Moreover, as reported in the recent white paper “Patient First Health with Generative AI: Reshaping the Care Experience” by the World Economic Forum, generative AI is proving to be a valuable tool in improving patient engagement in the care journey and changing how the patient can access health information, receive care and manage their health conditions.

Beyond the advantages in terms of diagnosis, personalized treatments, new drugs, nowadays, generative AI has come to the attention of many health systems worldwide, which are exploring its potential to solve current challenges. These include rising costs, physician burnout, workforce shortages, inflation and high interest rates  to improve administrative efficiency and help make healthcare more accessible and sustainable.

According to a recent report by Deloitte, world leaders see promise in generative AI for improving efficiency (92%) and enabling quicker decision-making (65%). In addition, 75% of leading healthcare organizations are experimenting or planning to scale generative AI across the enterprise, while 82% have or plan to implement governance and oversight structures for generative AI.

HEALTH CARE CONSUMER SURVEY 2023: WHAT DO CONSUMERS THINK ABOUT GENERATIVE AI IN HEALTH?

Not only doctors and patients, but also consumers in general are particularly interested in the potential of generative AI to improve healthcare.

According to Deloitte’s 2023 Health Care Consumer Survey, which surveyed 2,014 U.S. adults, more than half of the respondents (53%) believe generative AI could improve access to healthcare, and 46% said it has the potential to make healthcare more sustainable. People who had had experience with generative AI were more optimistic with 69% thinking it could improve access, and 63% saying it had the potential to make healthcare more affordable.

Respondents also believe that generative AI is particularly trustworthy. Among those who have accessed generative AI for health and wellness, 19% say they have used it to learn about medical conditions, 16% to understand treatment options, and 15% to decipher the technical language. As well, the vast majority of these users (69%) rated the information as either very reliable or extremely reliable.

In general, consumers who have tried the technology for health and wellness appear to be the most optimistic about its potential. Slightly more than 70% of generative AI-users thought the technology could revolutionize care delivery, versus just 50% of consumers who have not used it.

GENERATIVE AI IN THE GLOBAL HEALTHCARE MARKET

Healthcare interest in generative AI is also confirmed by market data. A recent report by market.us reports that in 2022, the global Generative AI in Healthcare Market was valued at USD 0.8 billion and is expected to be valued at USD 17.2 billion in 2032. Between 2023 and 2032, this market is estimated to register the highest CAGR of 37%.

Dominating the market, with a revenue share of more than 65% in 2022, are mainly clinical applications (compared to system applications) used in various medical fields, including cardiovascular, dermatology, infectious diseases and oncology.

THE POTENTIAL RISKS OF GENERATIVE AI IN HEALTHCARE

Although the potential is great,  generative AI in the healthcare sector, as well as in all other sectors, can give rise to several risks.

The main ones include:

  • Biased Outputs. Generative AI results can reflect inherent biases in the underlying data. In response, generative AI companies need to assign experts to review the data and results and correct for bias through oversampling and other statistical techniques;
  • False Results. Because the models are still evolving, they can sometimes generate results that are simply wrong (known as hallucinating in AI). Providers will need to make their models more transparent and emphasize the need for human review of outputs;
  • Patient Privacy. Patient health data is sensitive and needs to be handled with extreme care. Companies with generative AI solutions should clarify data ownership with partners, strengthen cybersecurity, and look beyond existing data to the development of synthetic data.

Beyond the risks described above, an additional obstacle to the implementation of such technology are the excessive costs. While generative AI has the potential to reduce costs, experts have said, on the other hand, it requires significant resources, including time and money, to develop, train, optimize, manage and update models.

CONCLUSIONS

In conclusion, generative AI offers a powerful tool to address the many healthcare challenges and, in general, to increase efficiency, improve the quality of care, and create value for healthcare organizations.

However, the successful integration of these technologies in healthcare depends on the ability to balance the potential benefits and risks. Thus, first and foremost, it is essential, apart from a solid ethical framework, to invest in the skills and competencies of all the actors involved, so as to use technology in an informed and conscious manner and obtain information that is accurate, complete and reliable.

PromethEUs Workshop | Digital Transformation in Southern Europe: Innovation, Competitiveness, and the EU Internal Market

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In light of the upcoming report of Enrico Letta on the state of the art of the EU internal market and Mario Draghi’s report on EU competitiveness, IOBE on behalf of PromethEUs network organized a workshop to discuss the state of the art of the digital transformation process in its four countries of interest – Greece, Italy, Portugal, and Spain -, following the implementation of various reforms under the EU Recovery and Resilience Facility (RRF) and the respective Recovery and Resilience Plans of Southern EU countries, focusing in digital transition.

The workshop explored the progress so far, the lessons learned and the challenges ahead focusing on the link between innovation and competitiveness and the special role of digital technologies in fostering economic, social, cultural and sustainable growth. It also addressed the technological gap between the EU and US, as well as China, in terms of patents, venture capital expenditure, startups’ scaling-up and the strategic autonomy. The network also touched upon the regional imbalances among EU member states and the role of digital transformation on the single market that has yet to be achieved.

The event ended with proposals from a Southern European perspective on the common industrial policy at EU level, the effectiveness of capital markets union and cross-border access to venture capital, as well as the need for workforce upskilling and reskilling and digital uptake of SMEs, for a streamlined regulatory framework and a strengthened geopolitical agenda.

Please find attached the programme and the output document with the conclusions from the workshop:

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