Christine Lagarde: The transformative power of AI

It is a pleasure to welcome you to our conference on the transformative power of AI.

In the early stages of a new technological breakthrough, it is often hard to discern fact from fiction. We struggle to imagine the ways in which the new technology will be used. And even if we predict the direction of technological change correctly, we rarely get the timeline or the size of the impacts right.

Today, we sometimes hear claims that AI is improving so fast that we are only a few years away from the nature of work being radically reformed. But we also hear arguments that the same barriers that slowed down the adoption of all past technologies will also delay AI adoption.

I cannot claim to know which vision will prove to be correct. But the early evidence is promising and, in my view, we must act on the basis that we are facing an economic revolution. This attitude will be particularly important here in Europe.

On this side of the Atlantic, we are still paying the price for having been too slow to capitalise on the last major digital revolution, the internet. The tech sector explains around two-thirds of the productivity gap between the EU and the United States since the turn of the century.

And now we are faced with a technology that can improve its own performance through self-learning mechanisms and feedback loops, enabling even more rapid advances and innovations. The risks of underestimating the potential of AI, and falling behind again, are simply too great to be ignored.

What's more, we are facing a new geopolitical environment in which we can no longer be sure that we will have frictionless access to new technologies developed overseas. This new reality strengthens the case for Europe to establish itself at the technological frontier.

There are two main areas where we should expect, and prepare for, major changes in the economy.