00:00Coming up, we'll be joined by the 2025 Nobel Prize in Economics winner, the French economist
00:05Philippe Agion. Known for spearheading the theory of innovation-driven growth and creative
00:10destruction, he's a professor at the Collège de France and is the chair of innovation and growth
00:15at INSEAD Business School. Good morning, Professor, and congratulations on your prestigious win,
00:20and of course, to your co-winners. Thanks for joining us.
00:24Thank you so much. Thanks for being with you.
00:26Look, you advocate for this idea of creative destruction, a concept that could alarm our viewers this morning.
00:33Just remind us what exactly it is.
00:36Creative destruction is the process whereby new innovations displace old technologies.
00:42So the new replaces the old. And progress has always gone through.
00:47You know, when you invented the computer, the typewriter became obsolete.
00:51And, you know, we keep the new, the new continuously replaces the old.
00:58And you see innovation as a means to sustain long-term economic growth.
01:04How can the EU copy and paste this thinking?
01:07Well, the EU, there is not enough creative destruction in the EU because, you know, for example, in the U.S.,
01:14if you look at the five most innovating firms in the U.S. nowadays, they are not the same as they were 25 years ago.
01:24In the EU, they are essentially the same because we remain stuck in mid-tech incremental innovation,
01:30whereas they do much more breakthrough high-tech innovation in the U.S. and even in China now.
01:37So the EU is lagging behind China and the U.S. when it comes to breakthrough frontier innovation.
01:43And that's what Mario Draghi, of course, warned in his report.
01:46He called it a wake-up call for the EU.
01:48So how can we prevent the slow agony, to quote Mario Draghi?
01:52I think you need first, you know, a true single market for goods and services,
01:58because when you do a big innovation, you want a big market.
02:01And also, with a big market, with a single market, you have more competition.
02:06And competition boosts frontier innovation.
02:08I innovate to escape competition with you.
02:11So you need a single market.
02:12We don't have that.
02:13Each country, each member state has its own regulation to the European regulation.
02:19We call that gold plating.
02:20The second thing is that you need a good financial ecosystem of innovation.
02:25Venture capital, institutional investors like pension funds, mutual funds,
02:30we don't have enough of those.
02:32And those, they induce risk-taking.
02:34Because, you know, in Europe, we don't take enough risk.
02:37We don't, you know, forgive short-term failure.
02:41You know, to innovate breakthrough, you need to tell people,
02:45no problem if you fail.
02:46We encourage you to fail, because if you fail, it's that you tried.
02:50And we don't have financial institutions that encourage risk-taking sufficiently.
02:56And the third thing, we don't have anything like the DARPA, this modern way to do industrial policy.
03:01You see that the pro-competition way.
03:03They did that for defense and space in the U.S., DARPA.
03:06They did that for vaccines.
03:07It was the BARDA.
03:08We don't have anything equivalent in Europe.
03:11In Europe, in the name of competition policy, we precluded industrial policy.
03:16But what about people who fear change?
03:18They fear technology.
03:19They're afraid of the future, especially with AI developments as well.
03:22You see what I mean?
03:26They are, you know, yeah, they, Europe is a regulatory giant and a budgetary dwarf.
03:37We regulate too much and we don't invest enough.
03:40Indeed, and that's why they always say that here we regulate.
03:45In China, they replicate.
03:46And, of course, in the United States, they innovate.
03:48They more than replicate now in China.
03:50They now are a frontier.
03:52They became frontier innovation.
03:53They are ahead of us in several, you know, several technologies.
03:57And the problem is that Europe is declining when it comes to frontier innovation.
04:02China is rising and the U.S. is above.
04:05And that's where we need to wake up.
04:07But there's a drive, of course, in Brussels now to simplify.
04:09That is the word of the day.
04:10Do you welcome this?
04:11And how do you find the balance?
04:13Yeah, we have too many regulations.
04:15I think we need regulations.
04:16For example, on AI, we have too many regulations.
04:19And regulation discourages new firms.
04:22Large incumbent firms can cope with regulation.
04:25New entrants are discouraged by regulation.
04:28So we need to regulate, but we over-regulate in Europe.
04:31That's the problem.
04:32That's a big barrier.
04:34And, yeah, so that's something we need to work on.
04:37Particularly for AI.
04:38If we want to, you know, to harness the AI revolution, that's what we need to do.
04:44Okay, Professor Philippe Agion, thank you so much for speaking to us here this morning on Europe Today from Paris.
04:51Thank you so much.
04:52Have a lovely day.
04:53Bye-bye.
04:54Bye-bye.
04:54Bye-bye.
04:54Bye-bye.
04:54Bye-bye.
04:54Bye-bye.
04:54Bye-bye.
04:54Bye-bye.
04:54Bye-bye.
04:55Bye-bye.
04:55Bye-bye.
04:55Bye-bye.
04:55Bye-bye.
04:55Bye-bye.
04:55Bye-bye.
04:55Bye-bye.
04:55Bye-bye.
04:55Bye-bye.
04:56Bye-bye.
04:56Bye-bye.
04:56Bye-bye.
04:56Bye-bye.
04:56Bye-bye.
04:57Bye-bye.
04:57Bye-bye.
04:57Bye-bye.
04:58Bye-bye.
04:58Bye-bye.
04:58Bye-bye.
04:59Bye-bye.
04:59Bye-bye.
04:59Bye-bye.
05:00Bye-bye.
05:00Bye-bye.
05:00Bye-bye.
05:01Bye-bye.
Comments