The economic opportunity of generative AI in Luxembourg

Capturing the next wave of benefits from generative AI

11 June 2024

Generative AI will boost global economic growth in the coming decade. It can increase productivity and boost Luxembourg’s competitiveness. To capture the next wave of AI benefits across society, Luxembourg needs to promote innovation, invest in skills and ensure clear rules.

An Implement Consulting Group study commissioned by Google has estimated generative AI’s GDP contribution and implications on jobs in Luxembourg. Capturing the full potential of generative AI, however, depends on a number of drivers of AI adoption – from a robust operating environment to the availability of skilled AI practitioners.

Key findings of the study

  • Economic opportunity: Generative AI could boost Luxembourg’s annual GDP by EUR 6-8 billion, amounting to +9% GDP in the peak year if widespread adoption is achieved. Generative AI technology is developing faster than previously anticipated, and the peak economic contribution could come sooner than expected, already in aboutten years.

    The gains come from three sources, including productivity increases from people working with generative AI, freed-up time from generative AI’s automation potential and the re-employment of time for other value-creating activities.

  • Job implications: In Luxembourg, 72% of jobs are expected to work together with generative AI, 22% of jobs are likely to remain unaffected by generative AI, and only 6% of jobs are deemed highly exposed to generative AI, leading to some job closures. However, new jobs in the AI-powered economy are expected to replace those lost due to automation, resulting in unchanged employment levels.

  • Key sectors benefitting: Around 90% of generative AI’s economic potential lies in service sectors, while manufacturing and other sectors can also benefit from other types of AI.

  • AI readiness: Drivers of AI adoption suggest that Luxembourg performs well on basic adoption. For instance, Luxembourg leads Northern European frontrunners on AI infrastructure and is well-placed for generalised AI use and early phases of AI adoption. However, like the other Northern European frontrunners, Luxembourg lags behind globally when it comes to complementary innovations, investments and AI-related skills. Here, the United States is far ahead globally, which is largely due to the scale of AI capacity.

Luxembourg can leverage its strong position on fundamental AI adoption drivers, but needs more talent and innovation to capture its potential.