Tech casts shadow over European industry
October 12, 2019
Despite the idyllic surroundings, a sense of urgency permeated the Tatra Summit over the weekend, creating an atmosphere that spurred discussions on the challenges of disruptive technologies and the future of industry in Central and Eastern Europe (CEE).
It was no coincidence that the gathering took place in Slovakia, dubbed the most vulnerable country to automation and digitization in the EU. Last year, an OECD study said that "the median worker in Slovakia has 62% probability of being automated."
Marian Gazdik, a partner at the London-based IPM Growth investment firm, sees opportunities, though.
"Statistically, if you have an under-invested region, you are likely to have good companies coming out of them," Gazdik said. Despite lagging in certain areas, the region has the opportunity to leapfrog technological advances and catch up with major players in the field, added Hungarian philanthropist and former investment banker Peter Kulloi.
Industry forecasts suggest that Slovakia — like other countries in the region — has as little as four years to adapt to anticipated changes to traditional industries, such as the automotive sector, or face macroeconomic fallout. But the demands of election cycles have fostered a deficit of political will to prepare for and mitigate the risks — at least from the viewpoint of the private sector.
'Germany is crucial'
Calls for bold efforts to pool knowledge, rethink approaches and bolster expertise rang out at the summit. The Lighthouse Initiative launched on Saturday proposed a cross-industry approach to tackling these challenges by gathering leading talent from Bucharest to Berlin to form strategic policy ahead of Germany's EU presidency in the latter half of 2020. Given Germany's economic weight in the region, it envisioned an active role from the country's leading industrial voices.
"Germany is crucial," Juraj Corba, technology and society fellow at GLOBSEC Policy Institute, told DW. He noted that German interests are at risk, especially those concerning the supply chain in the CEE region, such as the automotive industry. Despite the challenges, however, Corba was optimistic about the initiative's ambitious approach.
"We invite the far-sighted German industrialists, politicians and policymakers who care about the fate of the region, those who remember the value we built over the last 30 years, to together create an actionable toolkit of policies that governments and the EU can put to use," Corba added.
China's shadow
But the view from the High Tatras can at times be obstructed by challenges unique to the region. Further east, China is engaged in what some would describe as a "tech war," seeking technological supremacy in industries destined to reshape the global economy. That endeavor has so far left Europe behind in such fields as artificial intelligence and 5G. Although Europe leads in research and development, it often loses out because of its inability to capitalize on research.
Germany has tried to shield its economic prowess by pledging to invest €3 billion ($3.3 billion) in implementing its national strategy on AI, an approach that grounds the technology's prospects in an ethical brand that safeguards German competitiveness. Several other EU countries have put forward national AI strategies but some observers fear that the fractured response across the bloc will prove insufficient in the face of Chinese competition.
"We have become too complacent by believing that because we have been technology heavy-hitters for the past 100 years, that it'll carry on," Jörg Wuttke, president of the EU Chamber of Commerce in China and vice president of German chemical giant BASF, told DW.
For Wuttke, the challenges posed by China's state-driven technological competition require a unified European response, one that bridges gaps across EU member states. He described Chinese industrial ambitions as a "great wake-up call for us" and a "Sputnik moment" of sorts.
"We need the government to create a more unified market in digital, in telecommunications, in 5G," Wuttke said. "We cannot have island solutions; it has to be across Europe."
In the CEE region, that urgency is taken up by Corba and Globsec's Lighthouse Initiative, albeit adapted to the private sphere. Only time will tell if it is enough to mitigate the game-changing momentum of China's technology industry — and that uncertainty lingers on the minds of policymakers and the region's elite.