Economic Analysis of the New Regulation of the European Parliament and Council on Artificial Intelligence

This paper presents a comprehensive economic analysis of the new regulation on Artificial Intelligence (AI) proposed by the European Parliament and Council. The regulation aims to establish a harmonized framework for the development and deployment of AI across member states, ensuring safety, transparency, and ethical standards. We evaluate the potential economic impacts of this regulation, focusing on innovation, market competitiveness, and compliance costs for businesses. Additionally, the paper explores the concept of the "Brussels Effect," a phenomenon where European Union regulations influence global standards beyond the EU’s borders. By exploring how this new AI regulation might shape international norms and practices, we assess its implications for global trade and the international AI landscape. We examine the ways in which the regulation could set benchmarks for AI governance worldwide, potentially affecting non-EU companies and markets. Through this dual examination, the paper provides insights into the economic opportunities and challenges posed by the EU’s proactive regulatory approach to AI.