The German federal government has announced a sweeping new initiative with the stated goal of making “Germany and Europe the worldwide leader in the field of artificial intelligence.” In so doing, Germany is following in the footsteps of Japan, China, and South Korea, whose governments have adopted ambitious national AI strategies since the beginning of 2017. The plan, dubbed “AI Made in Germany,” marks the latest salvo in a battle for global supremacy in the realm of AI and automation, which is reshaping workplaces and labor markets the world over.

AI Made in Germany follows up on Germany’s “Industrie 4.0” strategic initiative, which focused primarily on robotics and “smart manufacturing.” The new German initiative shifts its focus squarely to the rapidly advancing AI sector while broadening its scope to include industries other than manufacturing. Under the plan, the German federal government will spend more than €3 billion ($3.93 billion) over the next seven years.

The move is designed to help position Germany as a leader in a sector that Peter Altmaier, Germany’s Federal Minister for Economic Affairs and Energy, predicts will generate economic growth “more than any other fundamental innovation has achieved since the steam engine was invented." Germany has been fighting a growing perception that despite its position as the leader of the world’s largest single market, its leaders in government and industry are falling behind their counterparts in China and Silicon Valley in the latest AI-powered wave of tech innovation. Helge Braun, Chancellor Angela Merkel’s Chief of Staff, explained the necessity of the plan by noting “China has said they want to become the leading power in AI, and the largest investments in the field are still made by American companies.” The plan identified the car industry, manufacturing, and health care sectors—all central components of the German economy—as the three areas that will be most immediately affected by recent developments in artificial intelligence.

The German government will devote €3 billion in funding between now and 2025 under the plan, with anticipated matching funds from the private sector bringing the total investment to €6 billion. The funds are expected to be devoted primarily to research, including funding for 100 new professor positions to stop an “AI brain drain” that has hampered Germany’s efforts to compete with China and Silicon Valley. In addition to spurring additional AI research, the plan laid out a number of additional goals:

  • Accelerating the transfer of research results into industry
  • Putting in place data infrastructure as a central basis for new AI applications
  • Enhancing the availability of experts and specialists
  • Actively shaping structural change in businesses, on the labor market and within authorities
  • Creating an environment for the ethical use of artificial intelligence
  • Expanding European and international cooperation on AI
  • Using AI to make life and work areas safer, more efficient, and more sustainable
  • Fostering a dialogue across society on the opportunities and impacts of AI

Politico also reported that AI Made in Germany includes “a plan to make vast troves of data available to German researchers and developers.” If true, this will undoubtedly create tension with the EU’s drive to enhance data privacy and give individuals control over whether and how their data is used, to say nothing of German’s own “national obsession with privacy,” which “has made German citizens particularly wary of AI and its strong reliance on data.”

Germany’s blending of public and private investment to spur AI innovation provides a potential model for other free-market economies, where governments are loathe to engage in the centrally administered AI strategy that has helped spur China’s rise as an AI power. The federal government in the United States has recently begun examining these issues more closely in recent months, with the issuance of an executive order establishing a workforce council and advisory board to help employers and workers transition to the twenty-first century economy.