IDEAS home Printed from https://ideas.repec.org/p/mde/wpaper/181.html
   My bibliography  Save this paper

EU-funded investment in Artificial Intelligence and regional specialization

Author

Listed:
  • Anabela Marques Santos

    (European Commission, Joint Research Centre, Sevilla, Spain)

  • Francesco Molica

    (European Commission, Joint Research Centre, Brussels, Belgium)

  • Carlos Torrecilla Salinas

    (European Commission, Joint Research Centre, Sevilla, Spain)

Abstract

Artificial Intelligence (AI) is seen as a disruptive and transformative technology with the potential to impact on all societal aspects, but particularly on competitiveness and growth. While its development and use has grown exponentially over the last decade, its uptake between and within countries is very heterogeneous. The paper assesses the geographical distribution at NUTS2-level of EU-funded investments related to AI during the programming period 2014-2020. It also examines the relationship between this specialization pattern and regional characteristics using a spatial autoregressive model. Such an analysis provides a first look at the geography of public investment in AI in Europe, which has never been done before. Results show that in the period 2014-2020, around 8 billion EUR of EU funds were targeted for AI investments in the European regions. More developed regions have a higher specialization in AI EU-funded investments. This specialization also generates spillover effects that enhance similar specialization patterns in neighboring regions. AI-related investments are more concentrated in regions with a higher concentration of ICT activities and that are more innovative, highlighting the importance of agglomeration effects. Regions that have selected AI as an innovation priority for their Smart Specialization Strategies are also more likely to have a higher funding specialization in AI. Such findings are very relevant for policymakers as they show that AI-related investments are already highly spatially concentrated. This highlights the importance for less-developed regions to keep accessing to sufficient amounts of pre-allocated cohesion funds and to devote them for AI-related opportunities in the future.

Suggested Citation

  • Anabela Marques Santos & Francesco Molica & Carlos Torrecilla Salinas, 2024. "EU-funded investment in Artificial Intelligence and regional specialization," GEE Papers 181, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Jul 2024.
    • Handle: RePEc:mde:wpaper:181
    as

    Download full text from publisher

    File URL: https://www.gee.gov.pt//RePEc/WorkingPapers/GEE_PAPERS_181.pdf
    File Function: First version, 2024
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Erik Brynjolfsson & Daniel Rock & Chad Syverson, 2021. "The Productivity J-Curve: How Intangibles Complement General Purpose Technologies," American Economic Journal: Macroeconomics, American Economic Association, vol. 13(1), pages 333-372, January.
    2. Anabela Santos & Michele Cincera & Paulo Neto & Maria Manuel Serrano, 2018. "Competition effect on innovation and productivity - The Portuguese case," GEE Papers 0102, Gabinete de Estratégia e Estudos, Ministério da Economia, revised May 2018.
    3. Daron Acemoglu & Pascual Restrepo, 2020. "The wrong kind of AI? Artificial intelligence and the future of labour demand," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 13(1), pages 25-35.
    4. Daron Acemoglu & David Autor & Jonathon Hazell & Pascual Restrepo, 2022. "Artificial Intelligence and Jobs: Evidence from Online Vacancies," Journal of Labor Economics, University of Chicago Press, vol. 40(S1), pages 293-340.
    5. Philippe Aghion & Céline Antonin & Simon Bunel, 2019. "Artificial Intelligence, Growth and Employment: The Role of Policy," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 510-511-5, pages 149-164.
    6. Duch-Brown, Néstor & Gomez-Herrera, Estrella & Mueller-Langer, Frank & Tolan, Songül, 2022. "Market power and artificial intelligence work on online labour markets," Research Policy, Elsevier, vol. 51(3).
    7. Florax, Raymond J. G. M. & Folmer, Hendrik & Rey, Sergio J., 2003. "Specification searches in spatial econometrics: the relevance of Hendry's methodology," Regional Science and Urban Economics, Elsevier, vol. 33(5), pages 557-579, September.
    8. Krzysztof Mieszkowski & Javier Barbero, 2021. "Territorial patterns of R&D+I grants supporting Smart Specialisation projects funded from the ESIF in Poland," Regional Studies, Taylor & Francis Journals, vol. 55(3), pages 390-401, March.
    9. Gloria Cicerone & Alessandra Faggian & Sandro Montresor & Francesco Rentocchini, 2023. "Regional artificial intelligence and the geography of environmental technologies: does local AI knowledge help regional green-tech specialization?," Regional Studies, Taylor & Francis Journals, vol. 57(2), pages 330-343, February.
    10. Gianmarco I. P. Ottaviano & Diego Puga, 1998. "Agglomeration in the Global Economy: A Survey of the ‘New Economic Geography’," The World Economy, Wiley Blackwell, vol. 21(6), pages 707-731, August.
    11. Bernardo S Buarque & Ronald B Davies & Ryan M Hynes & Dieter F Kogler, 2020. "OK Computer: the creation and integration of AI in Europe," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 13(1), pages 175-192.
    12. Julius Tan Gonzales, 2023. "Implications of AI innovation on economic growth: a panel data study," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 12(1), pages 1-37, December.
    13. Frank Crowley & Declan Jordan, 2017. "Does more competition increase business-level innovation? Evidence from domestically focused firms in emerging economies," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 26(5), pages 477-488, July.
    14. Nicola Francesco Dotti & André Spithoven, 2018. "Economic drivers and specialization patterns in the spatial distribution of Framework Programme's participation," Papers in Regional Science, Wiley Blackwell, vol. 97(4), pages 863-882, November.
    15. Da Xu & Ye Guo & Mengqi Huang, 2021. "Can Artificial Intelligence Improve Firms’ Competitiveness during the COVID-19 Pandemic: International Evidence," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 57(10), pages 2812-2825, August.
    16. Billings, Stephen B. & Johnson, Erik B., 2012. "The location quotient as an estimator of industrial concentration," Regional Science and Urban Economics, Elsevier, vol. 42(4), pages 642-647.
    17. Andre Torre, 2008. "On the Role Played by Temporary Geographical Proximity in Knowledge Transmission," Regional Studies, Taylor & Francis Journals, vol. 42(6), pages 869-889.
    18. Jan Fagerberg & Bart Verspagen & Marjolein Caniëls, 1997. "Technology, Growth and Unemployment across European Regions," Regional Studies, Taylor & Francis Journals, vol. 31(5), pages 457-466.
    19. Ajay Agrawal & Joshua Gans & Avi Goldfarb, 2019. "Economic Policy for Artificial Intelligence," Innovation Policy and the Economy, University of Chicago Press, vol. 19(1), pages 139-159.
    20. Igna, Ioana & Venturini, Francesco, 2023. "The determinants of AI innovation across European firms," Research Policy, Elsevier, vol. 52(2).
    21. Scotti, Francesco & Flori, Andrea & Pammolli, Fabio, 2022. "The economic impact of structural and Cohesion Funds across sectors: Immediate, medium-to-long term effects and spillovers," Economic Modelling, Elsevier, vol. 111(C).
    22. Mariagrazia Squicciarini & Heike Nachtigall, 2021. "Demand for AI skills in jobs: Evidence from online job postings," OECD Science, Technology and Industry Working Papers 2021/03, OECD Publishing.
    23. Ron Martin & Peter Sunley, 2006. "Path dependence and regional economic evolution," Journal of Economic Geography, Oxford University Press, vol. 6(4), pages 395-437, August.
    24. Arntz, Melanie & Gregory, Terry & Zierahn, Ulrich, 2017. "Revisiting the risk of automation," Economics Letters, Elsevier, vol. 159(C), pages 157-160.
    25. Diego D’Adda & Enrico Guzzini & Donato Iacobucci & Roberto Palloni, 2019. "Is Smart Specialisation Strategy coherent with regional innovative capabilities?," Regional Studies, Taylor & Francis Journals, vol. 53(7), pages 1004-1016, July.
    26. Righi, Riccardo & Samoili, Sofia & López Cobo, Montserrat & Vázquez-Prada Baillet, Miguel & Cardona, Melisande & De Prato, Giuditta, 2020. "The AI techno-economic complex System: Worldwide landscape, thematic subdomains and technological collaborations," Telecommunications Policy, Elsevier, vol. 44(6).
    27. Becker, Bettina & Roper, Stephen & Vanino, Enrico, 2023. "Assessing innovation spillovers from publicly funded R&D and innovation support: Evidence from the UK," Technovation, Elsevier, vol. 128(C).
    28. Philippe Aghion, 2017. "Entrepreneurship and growth: lessons from an intellectual journey," Small Business Economics, Springer, vol. 48(1), pages 9-24, January.
    29. repec:hal:spmain:info:hdl:2441/7n49nkmngd8448a5ts5gt5ade0 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cincera, Michele & Ince, Ela & Santos, Anabela, 2024. "Revisiting the innovation-competition nexus: Evidence from worldwide manufacturing and service industries," Structural Change and Economic Dynamics, Elsevier, vol. 69(C), pages 586-603.
    2. Igna, Ioana & Venturini, Francesco, 2023. "The determinants of AI innovation across European firms," Research Policy, Elsevier, vol. 52(2).
    3. Flavio Calvino & Luca Fontanelli, 2023. "Artificial intelligence, complementary assets and productivity: evidence from French firms," LEM Papers Series 2023/35, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    4. Czarnitzki, Dirk & Fernández, Gastón P. & Rammer, Christian, 2023. "Artificial intelligence and firm-level productivity," Journal of Economic Behavior & Organization, Elsevier, vol. 211(C), pages 188-205.
    5. Kristina McElheran & J. Frank Li & Erik Brynjolfsson & Zachary Kroff & Emin Dinlersoz & Lucia Foster & Nikolas Zolas, 2024. "AI adoption in America: Who, what, and where," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 33(2), pages 375-415, March.
    6. Rathi, Sawan & Majumdar, Adrija & Chatterjee, Chirantan, 2024. "Did the COVID-19 pandemic propel usage of AI in pharmaceutical innovation? New evidence from patenting data," Technological Forecasting and Social Change, Elsevier, vol. 198(C).
    7. Nils Grashof & Alexander Kopka, 2023. "Widening or closing the gap? The relationship between artificial intelligence, firm-level productivity and regional clusters," Bremen Papers on Economics & Innovation 2304, University of Bremen, Faculty of Business Studies and Economics.
    8. Pedota, Mattia & Grilli, Luca & Piscitello, Lucia, 2023. "Technology adoption and upskilling in the wake of Industry 4.0," Technological Forecasting and Social Change, Elsevier, vol. 187(C).
    9. Duch-Brown, Néstor & Gomez-Herrera, Estrella & Mueller-Langer, Frank & Tolan, Songül, 2022. "Market power and artificial intelligence work on online labour markets," Research Policy, Elsevier, vol. 51(3).
    10. Matthias Firgo & Peter Mayerhofer, 2015. "Wissens-Spillovers und regionale Entwicklung - welche strukturpolitische Ausrichtung optimiert des Wachstum?," Working Paper Reihe der AK Wien - Materialien zu Wirtschaft und Gesellschaft 144, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik.
    11. Rosina Moreno & Ernest Miguélez, 2012. "A Relational Approach To The Geography Of Innovation: A Typology Of Regions," Journal of Economic Surveys, Wiley Blackwell, vol. 26(3), pages 492-516, July.
    12. Zhu, Jun & Zhang, Jingting & Feng, Yiqing, 2022. "Hard budget constraints and artificial intelligence technology," Technological Forecasting and Social Change, Elsevier, vol. 183(C).
    13. Jurgita Bruneckiene & Robertas Jucevicius & Ineta Zykiene & Jonas Rapsikevicius & Mantas Lukauskas, 2019. "Assessment of Investment Attractiveness in European Countries by Artificial Neural Networks: What Competences are Needed to Make a Decision on Collective Well-Being?," Sustainability, MDPI, vol. 11(24), pages 1-23, December.
    14. Usabiaga, Carlos & Núñez, Fernando & Arendt, Lukasz & Gałecka-Burdziak, Ewa & Pater, Robert, 2022. "Skill requirements and labour polarisation: An association analysis based on Polish online job offers," Economic Modelling, Elsevier, vol. 115(C).
    15. Johan Lundberg, 2006. "Using spatial econometrics to analyse local growth in Sweden," Regional Studies, Taylor & Francis Journals, vol. 40(3), pages 303-316.
    16. Matthias Firgo & Peter Mayerhofer, 2015. "Wissensintensive Unternehmensdienste, Wissens-Spillovers und regionales Wachstum. Teilprojekt 1: Wissens-Spillovers und regionale Entwicklung – Welche strukturpolitische Ausrichtung optimiert das Wach," WIFO Studies, WIFO, number 58342, July.
    17. Martín, Carmela & Mulas-Granados, Carlos & Sanz, Ismael, 2005. "Spatial distribution of R&D expenditure and patent applications across EU regions and its impact on economic cohesion," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 6, pages 41-61.
    18. Dario Guarascio & Jelena Reljic & Roman Stollinger, 2023. "Artificial Intelligence and Employment: A Look into the Crystal Ball," LEM Papers Series 2023/34, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    19. Ron Boschma, 2022. "Evolutionary Economic Geography and Policy," Papers in Evolutionary Economic Geography (PEEG) 2220, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Oct 2022.
    20. Fossen, Frank M. & McLemore, Trevor & Sorgner, Alina, 2024. "Artificial Intelligence and Entrepreneurship," IZA Discussion Papers 17055, Institute of Labor Economics (IZA).

    More about this item

    Keywords

    Artificial intelligence; Public subsidy; Territorial specialization; Europe;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mde:wpaper:181. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joana Almodovar (email available below). General contact details of provider: https://edirc.repec.org/data/geegvpt.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.