AI generation as a development tool in Europe : A double-edged sword?

Zhuoying You, Andrés Rodríguez‐Pose · Tér és Társadalom · 4 Nov 2026

Where this sits in the debate

Will AI actually boost productivity and growth? · its finding: it depends (why studies differ)
Will AI destroy more jobs than it creates?
Will AI widen inequality? · its finding supports the claim (why studies differ)

Direction of the finding as read from the abstract by an AI model (AI-written).

Abstract

Europe is losing economic ground. Sluggish dynamism and deepening territorial polarisation have eroded its global standing just as artificial intelligence (AI) is rewriting the rules of the world economy. While AI is widely viewed as a potential source of productivity growth, competitiveness, and new economic opportunities, its regional consequences remain uncertain. Could AI generation - the innovation activity behind AI technologies - help reverse Europe’s slide? We use a panel dataset of 224 NUTS2 regions across 26 European Union member states during the period 2011–2019 to investigate whether regional AI-related inventive capacity contributes to economic and employment growth and whether these effects are evenly distributed across space. The empirical analysis combines several complementary approaches. We estimate region and year fixed-effects panel models to account for unobserved regional characteristics and common temporal shocks, while random-effects models are used as a benchmark. To address potential endogeneity arising from reverse causality and omitted time-varying factors, we employ System-GMM estimators. We further apply fixed-effects quantile regression to examine whether the effects of AI generation differ across the regional growth distribution. In addition, spatial econometric models are estimated as robustness checks to account for geographical dependence and potential spillover effects between neighbouring regions. The results reveal three main findings. First, AI generation is positively associated with both regional economic growth and employment growth. Regions with stronger AI related inventive capacity experience higher subsequent GDP per capita growth and employment expansion, suggesting that AI may be an important source of technological upgrading and regional development potential. Second, the benefits of AI generation are not distributed evenly across European territories. The strongest economic links are concentrated among regions alrea

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Published: 2026 (recently)
Citations: 0 (OpenAlex)

0 citations recorded by OpenAlex — too few 2026 papers in this collection for a fair comparison.

Reaches a different conclusion

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AI generation as a development tool in Europe : A double-edged sword?

Abstract

About this publication

Reaches a different conclusion

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