The Impact of Artificial Intelligence on Economic Productivity: An Empirical Analysis Using Panel Data From Eu Countries

This study examines the influence of artificial intelligence (AI) adoption on economic productivity across 27 European Union countries over the period 2015–2023. Using a fixed-effects panel regression model, the analysis incorporates AI investment indices, patent filings, and digital infrastructure metrics as key explanatory variables, while controlling for human capital, R&D expenditure, and institutional quality. The dataset includes 243 observations sourced from Eurostat, OECD, and the European Patent Office. Results indicated a statistically significant positive effect of AI adoption on total factor productivity (TFP), with a 1% increase in AI investment associated with a 0.32% rise in TFP (p < 0.01). Heterogeneity tests reveal stronger impacts in high-income economies and sectors with advanced digitalization. The findings underscore AI's role in enhancing resource efficiency and innovation diffusion, although disparities persist due to uneven infrastructure development. Policy implications include targeted investments in broadband networks and workforce reskilling to maximize gains. Limitations arise from potential endogeneity in AI measures, addressed via instrumental variable estimation. Overall, the research confirms AI as a driver of sustainable growth in knowledge-based economies, providing evidence-based guidance for strategic planning. (218 words)