Philippe Aghion, awarded the Nobel Prize in Economics last year for his research on the impact of technology and innovation on economic development, visited Barcelona. There, he received the Hipatia European Science Award from the Barcelona Knowledge Hub of the European Academy of Sciences, in an event also organized by the Catalan Foundation for Research and Innovation (FCRI).
Aghion, a professor at renowned institutions such as the Collège de France, Insead, and the London School of Economics, currently focuses his research on the role of artificial intelligence (AI) in economic growth. He also explores how Europe can improve its policies to reduce dependence on the major Chinese and North American tech giants.
The Nobel laureate explained his 'creative destruction' theory, which posits that new innovations replace older technologies. According to his model, economic growth stems from new talents who innovate and create companies, but he warns of the need to ensure that established large corporations do not hinder the entry of new competitors through government pressure.
Aghion criticized European competition policy, describing it as 'narrow-minded and static,' as it focuses on market shares without considering the impact on future innovation or global competition. He cited the blocked merger between Alstom and Siemens as an example, arguing that the possibility of purchasing Chinese trains was not taken into account. This lack of industrial policy, he believes, has led Europe to fail to generate disruptive innovation, a fact that is now being 'paid for dearly'.
The professor points out that Europe's innovation challenges extend beyond competition policy, encompassing an ecosystem with low research investment, a scarcity of long-term funding, and insufficient venture capital. He also criticizes the lack of European institutional investors willing to back disruptive innovation, who often prefer investing in the United States due to a lack of confidence in the European market.
Despite these challenges, Aghion highlights European values such as democracy, freedom, and a more robust social model than the North American one, aspects he considers fundamental for addressing the labor changes that AI will bring. He also positively assesses the European environmental model.
Regarding European science, he acknowledges the existence of 'very good' scientists, mathematicians, and engineers, despite underfunding in research. He notes that Europe has the potential to lead in ethical AI aligned with its values, although he regrets that the EU is a 'regulatory giant and a budgetary dwarf,' which hinders disruptive innovation.
On the possibility of an AI 'bubble,' Aghion remains cautious, stating he does not foresee a short-term burst but emphasizes the importance of avoiding excessive debt. He underscores the need for coordinated European industrial policy, possibly through a 'European DARPA' that unites public and private capital, and suggests a coalition of volunteer countries to implement it.
Aghion also commented on the productivity gap between Europe and the United States, attributing it to Europe's inability to fully integrate information technologies. Nevertheless, he expressed his impression of the vitality of Barcelona and Catalonia as 'knowledge hubs,' considering they will play a key role in Europe's technological recovery.
In relation to taxation, he partially disagrees with his colleague Gabriel Zucman on taxes for unrealized wealth, arguing they could disincentivize innovation. He proposes a system based on foundations for billionaires, with a high tax if a significant portion is not allocated to social or research purposes.
Defining himself as a social democrat and a 'combative optimist,' Aghion advocates for inclusive growth, universal educational quality, and social dialogue. He believes taxation should be progressive but without hindering innovation, and that competition policy is key to ensuring the arrival of new talent.
Finally, regarding the possibility of Europe catching up with the USA and China technologically, he states that the key is disruptive innovation. If Europe embraces it, it will inevitably catch up, especially due to its social model, which is more adapted to AI. He warns of the risk of populism in Europe, similar to what he observes in the USA, when citizens feel abandoned.
