Professor Carolin Häussler holds the Chair of Organisation, Technology Management and Entrepreneurship at the University of Passau. For the past five years, she has been one of the innovation experts on the Berlin-based Commission of Experts for Research and Innovation (EFI). This commission provides scientific policy advice to the German government and publishes an annual report on Germany’s research, innovation and technological performance (press release). In the video interview, Professor Häussler provides a general explanation of the topics in the current report and discusses the recommendations on one of this year’s central issues, artificial intelligence, in particular.
What topics does the EFI Commission address in the 2024 report?
In the first part of the report, we comment on current developments and challenges in research and innovation policy, focusing in particular on the profound transformations in the economy and society. In the second part, we select topics that we believe are important for Germany now and in the future – in the 2024 report we view these as: New technologies for sustainable agriculture – a very current and volatile issue, as the recent farmer protests have shown. We have focused on smart digital technologies and green biotechnology. International mobility in the science and innovation system: Here we looked at whether Germany succeeds in attracting and retaining highly qualified skilled workers. Social innovations, which are of considerable importance because the major societal challenges such as climate change, demographic ageing and digitalisation cannot be tackled by technological change alone. Artificial intelligence – with a focus on where we stand in Germany and Europe with this key technology and what needs to be done.
Keyword: Transformations – what are the current challenges for research and innovation policy?
A Herculean task for the federal government is the fundamental transformation of the economy and society – I cite the energy revolution, the mobility revolution and digitalisation as examples. It is clear – and other countries are already positioning themselves – that those economies that successfully position themselves here will be able to realise comprehensive economic potential. Why? Because they will build up valuable know-how and have innovative products and business models that will be in demand worldwide. Investing in transformations will therefore pay off – not only in terms of sustainability, but also in economic terms. Yet, at the moment, Germany is still a long way from positioning itself as a model of success. Today’s decisions – including political ones – define where Germany will be tomorrow. To achieve this, we need a transformative research and innovation policy.
The search for innovative solutions must be left to the business community. We need solutions that are developed and found in the market context. Policy can at most initiate a change of direction.
What does a transformative research and innovation policy look like?
It needs a clear compass so that even necessary short-term measures contribute to long-term goals. I’ll give you two examples. For example, the Bundeswehr’s special funds should also be used for research in the field of cyber security and artificial intelligence. There is a relatively high degree of overlap between military and civilian research here, with a direct link to digital transformation. Another example is political support for investments as a means of securing technological sovereignty, as in the case of the US semiconductor company in Magdeburg. Irrespective of how this type of industrial policy is assessed, it should always be designed in such a way that self-sustaining structures are created locally and can continue to operate even if the investor withdraws from Germany. To this end, public funds should be invested primarily in infrastructure and skills development.
The change emerging with the transformation should not only be supported financially; we urgently need deregulation and simplification to make the economy agile again. And when something is regulated, we need clear, straightforward rules. This is the only way to remove uncertainty from the markets and open up options – both of which are prerequisites for private investment and innovation decisions, without which nothing works!
Because, and this is my third point: The search for innovative solutions must be left to the business community. We need solutions that are developed and found in the market context. Policy can at most initiate a change of direction. The advantage of such a policy is that it stimulates market-driven innovation and search work. This is in contrast to a policy of orders and prohibitions, where politically prescribed solutions have to be implemented. Finally, and most importantly: a high level of education and training is necessary, also to secure the potential of skilled workers in the long term.
Transformation comes with costs that test the patience of citizens and businesses – what is your advice?
We can’t just flip a switch – the costs of transformation are enormous. Climate-friendly technologies and CO2 pricing fall disproportionately on low-income households. The transformation will also make some old business models obsolete. But new business models will also emerge. Social compensation is needed to manage these transitions. It is important for policymakers to consider such compensation from the outset in policies for transformative change. An example of how this should not be done is the Building Energy Act [Gebäudeenergiegesetz]. Quite apart from the fact that this law represents inefficient double regulation in the context of rising CO2 prices, it demonstrates how quickly the disregarding of social aspects can significantly damage societal readiness for transformation. A well-founded assessment of private households’ ability to pay, combined with socially graduated compensation, could have eased social tensions here.
Where does Germany stand on artificial intelligence?
China and the US dominate technological development in the field of artificial intelligence, while Germany and the EU lag behind. We see this in an international comparison of countries. Germany and the EU are also not leading in the development of large language models and multimodal models, i.e., models that process information from images, videos and text. This is highly problematic, as these models form the basis for a wide range of AI applications, and there is a risk of losing technological sovereignty.
We, the EFI Commission, still see opportunities for Germany and the EU to continue to play an important role. However, this requires a strong and European-networked ecosystem in the field of artificial intelligence.
Why is this particularly problematic in the case of artificial intelligence?
Artificial intelligence is a key technology that will decisively shape technological and economic development in the coming years. AI can unlock innovation and growth potential in many areas of technology and industries, with manufacturing technology and the pharmaceutical industry as just two examples. But for this to happen, it needs to be widely used across the economy. And our study shows that this is not yet the case.
Can Germany and the EU still position themselves in the field of artificial intelligence?
Unfortunately, we don’t have large corporations that can simply invest billions in an AI model. But we, the EFI Commission, still see opportunities for Germany and the EU to play an important role. However, this requires a strong and European-networked ecosystem in the field of artificial intelligence. By this we mean a network based on excellent basic research, a high-performance and competitive data infrastructure, and qualified specialists with AI skills. Open source, in particular, holds great potential for strengthening the technological sovereignty of Germany and Europe. This could enable the development of basic AI models that are transparent and in line with European values. However, there is a significant lack of computing capacity in Germany, which is a prerequisite for the training and application of AI models. Microsoft’s recently announced billion-dollar investment in Germany to build up computing capacity shows the need and the economic potential. But we must be cautious – our economy runs the risk of becoming even more dependent in the field of digitalisation. In short: the race to catch up must begin now, and artificial intelligence must be widely deployed across the economy – without dependence on a few non-European providers and with a strong networked ecosystem. If we succeed, I am very confident that Germany and Europe can play a leading role.
The Commission of Experts for Research and Innovation (EFI) provides scientific policy advice to the German government and publishes a regular report on Germany’s research, innovation and technological performance.
