THE INTERNATIONAL ECONOMY, The magazine of international economic policy, SPRING 2022 issue
“Global analysts say that the United States and China are in a race to achieve the most advanced technological breakthroughs. The winner will likely dominate the global economy through the end of the century. Sometimes India and Japan are mentioned as third players in this fierce global competition. But the European Union is barely mentioned, if at all……”
The Biggest Loser
Is the European Union on course to become the big loser in the global tech race?
A symposium of views COPY
Featuring commentary by Marco Annunziata, Marjory S. Blumenthal, Marek Dabrowski, James E. Glassman, Joseph V. Kennedy, Michael Lind, Thomas Mirow, Holger Schmieding, Gunther Schnabl, Stan Veuger, and Klaus F. Zimmermann.
Klaus F. Zimmermann
“Europe can no longer stay on the sidelines of U.S.-Chinese hostility to enjoy trade benefits with China. Europe will lose or win together with the United States.
Europe is considered to be lagging behind in the global tech race, in particular while striving for an edge in artificial intelligence innovations. While an invention needs a challenge, innovation requires a large responsive market and risk-open societies. A common observation is that Europe, and Germany in particular, has great inventive capital but less prowess in establishing marketable products than the United States. The recent successful cooperation of Pfizer and BioNTech in the Covid-19 pandemic has shown some elements of this divide. Hence, the established view is that the United States leads in research and development, while Europe relies on talent. A further European deficit is the large dependence on foreign-owned technology providers for artificial intelligence, cloud computing, and 5G technologies.
Under Presidents Obama and Trump, the United States has turned from Europe to Asia to focus on the race with China for the most advanced technological breakthroughs. China has won some legs of this race already. It has announced its challenge to the primacy of the United States (to become number one by 2049), in particular on the technology front. It needs this success to satisfy its enormous need for imported natural resources and nutrition to feed the growing wellbeing of its large population, and to satisfy its ambition for global hegemony.
In the face of a squandered alliance of the United States with Europe, the Chinese Belt and Road Initiative has been a powerful strategy to access resources and to develop a global market to sell powerful technological innovations. China’s envisioned success badly depends on technology and trade.
The recent Russian military aggression in Ukraine makes China’s strategic partnership with Russia a doubtful venture, damaging the Belt and Road strategy. A world of bipolar globalization with economic decoupling (Zeitenwende) may arise, confronting democracies with autocratic regimes: pushing for a reformed transatlantic alliance by developing trade and innovations internally in more intense and more open common markets while regulating and restricting trade and technological exchange elsewhere. This would weaken the global rise in wellbeing, but may change the nature of the technology race considerably. China could become the big loser, at least in terms of its huge ambitions.
Since the United States needs Europe in the upcoming global political bipolar divide of the world, this requires a revival of common trade and technology policies. Europe can no longer stay on the sidelines of U.S.-Chinese hostility to enjoy trade benefits with China.
The potential of Europe is creativity and inventive capital derived from diversity and huge markets. Examples include cooperation of the London-based artificial intelligence venture InstaDeep with Germany’s BioNTech to identify and fight dangerous virus variants early on. And the European commitment to accelerating the energy transition implies technological advances. Such a reformed transatlantic alliance makes the question of whether the European Union may be the big loser of the tech race largely irrelevant. Europe will lose or win together with the United States. However, this alliance should seek strong collaborations with Japan, South Korea, and India.”
THE INTERNATIONAL ECONOMY, The magazine of international economic policy, The Bigest Loser. Is the European Union on course to become the big loser in the global tech race? SPRING 2022 issue, pp. 47-48.
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