Department of Business & Management Corporate Strategies Artificial Intelligence: towards a new economic paradigm Supervisor: Student: Federica Brunetta Alessio Gosciu 685761 Co-supervisor: Karynne Turner 2017/2018 2 Table of Contents Introduction .................................................................................. 7 I. Definition ................................................................................. 12 I.1. General Definition ............................................................................................................. 12 I.2. Application ........................................................................................................................ 17 I.3. Why Now? ........................................................................................................................ 19 II. Economics of Artificial Intelligence .................................... 23 II.1. Artificial Intelligence and Enterprises ........................................ 26 II. 1. A. Artificial Intelligence Business Application .......................................................... 31 II.2. Labor .............................................................................................. 40 II.2.a. Skepticals .................................................................................................................. 44 II.2.b. The end of work? ...................................................................................................... 47 II.2.c. Employment in the Twenty-First Century ................................................................ 53 II.2.d. Skill-biased technological change ............................................................................ 58 II.2.e. Superstar-biased technological change ..................................................................... 61 II.2.f. The future nature of work ......................................................................................... 62 II.2.g. Technology under human control: Institutions and Policies .................................... 65 II.3. The role of institutions .................................................................. 68 1. Invest in AI. ..................................................................................................................... 69 2. Re-educate workers for updated skills ............................................................................ 70 3. Capital endowment .......................................................................................................... 71 4.Social security aid for displaced workers ......................................................................... 72 4. Universal Basic Income .................................................................................................. 74 5. Taxation and robots ......................................................................................................... 76 3 III. Elaisian business case .......................................................... 79 III.1.Elaisian’s story ................................................................................ 79 III.1.a.Company overview ................................................................................................... 79 III.1.b. Market analysis ....................................................................................................... 81 III.1.c. Competition analysis ............................................................................................... 84 III.1.d. SWOT analysis ........................................................................................................ 86 III.2. Technological Readiness ................................................................ 88 III.3. Artificial intelligence and the Elaisian case ................................... 88 IV. Artificial intelligence: the global challenge ....................... 91 IV.1. Where does Europe stand? ............................................................. 95 IV.1.a. Support .................................................................................................................... 97 IV.1.b. Education ................................................................................................................ 99 IV.1.c. AI enforcement ...................................................................................................... 100 IV.1.d. Steering a human-centered approach .................................................................... 101 IV.1.e. European national AI strategic plans .................................................................... 101 IV.2. China and the United States: the global race for AI supremacy .. 103 IV.2.a. Abundant data availability .................................................................................... 104 IV.2.b. Entrepreneurial AI environment ........................................................................... 105 IV.2.c. Growing AI expertise ............................................................................................ 107 IV.2.d. The government and AI ........................................................................................ 109 IV.2.d. The future AI leadership ....................................................................................... 111 Towards a new economic paradigm ....................................... 113 Bibliography ............................................................................. 120 Attachments .............................................................................. 132 4 List of Figures Figure 1 ........................................................................................................................... 20 Figure 2 ........................................................................................................................... 21 Figure 3 ........................................................................................................................... 25 Figure 4 ........................................................................................................................... 29 Figure 5 ........................................................................................................................... 31 Figure 6 ........................................................................................................................... 42 Figure 7 ........................................................................................................................... 42 Figure 8 ........................................................................................................................... 43 Figure 9 ........................................................................................................................... 55 Figure 10 ......................................................................................................................... 58 Figure 11 ......................................................................................................................... 59 Figure 12 ......................................................................................................................... 61 Figure 13 ......................................................................................................................... 66 Figure 14 ......................................................................................................................... 67 Figure 15 ......................................................................................................................... 77 Figure 16 ......................................................................................................................... 81 Figure 17 ......................................................................................................................... 82 Figure 18 ......................................................................................................................... 83 Figure 19 ......................................................................................................................... 84 Figure 20 ......................................................................................................................... 89 Figure 21 ......................................................................................................................... 91 Figure 22 ......................................................................................................................... 92 Figure 23 ......................................................................................................................... 93 Figure 24 ......................................................................................................................... 99 Figure 25 ....................................................................................................................... 106 Figure 26 ....................................................................................................................... 107 Figure 27 ....................................................................................................................... 108 5 List of Tables Table 1 ............................................................................................................................ 13 Table 2 ...........................................................................................................................