Artificial intelligence (AI), which is driving the Industry 4.0 revolution, has put several questions center stage for converging economies, such as Slovakia. Will AI help the main pillars of the Slovak economy, such as FDI-owned manufacturing industries? Which policy challenges and risks will it bring to the fore?
AI introduction will likely be both good and bad news for Slovakia. AI technologies will drive down labor-to-output ratios at the company level and will mean labor costs will become much less important for investment decisions. It will be good news, as AI introduction will lead to the reduction of the importance of labor costs in certain sectors as a competitive factor and will lower incentives for existing manufacturing plants to leave Slovakia due to convergence.