Innovation is the engine of sustainable economic growth

In a global context marked by economic and geopolitical uncertainties, technological innovation continues to be the driving force of sustainable economic growth. According to Marco van Lent, Portfolio Manager at Robeco, areas such as artificial intelligence, nuclear fusion and quantum computing are accelerating rapidly, attracting significant investment and profoundly transforming industry and work. From advances in automation and robotics to enhanced cybersecurity, technology is not only fueling economic growth, but is also increasingly becoming a strategic element for national security.

Below is the analysis by Marco van Lent, Portfolio Manager at Robeco.

While the evolving trade war has fueled uncertainty about the global economic order and disrupted markets, humanity’s ability to overcome obstacles through innovation endures . From the millstone of the agrarian age to the integrated circuit of the information age, humanity continues to reshape the world around us. As the late economist Robert Solow observed, “Innovation is the driving force of sustainable economic growth. Without new ideas, economies stagnate.” While macroeconomic factors can sometimes accelerate technological investment and other times thwart plans, the direction forward is inevitably one of progress.

Recent developments in artificial intelligence , nuclear fusion, and quantum computing demonstrate that the pace of innovation is accelerating. Notably, investment and advances in AI have not been affected by market turbulence, as companies and nations race to gain a competitive edge. Advances in automation and robotics technologies will also play a key role in renewed efforts to bring manufacturing back home. At the same time, rising geopolitical tensions are placing increased focus on cybersecurity systems, as risks to critical infrastructure increase. Although AI is still in its early stages of adoption, the technology is already generating significant revenue. AI is also accelerating the growth of smaller companies . According to payment processor Stripe, the average time it took for AI startups to reach $5 million in annual revenue was 24 months in 2024, compared to 37 months for Software as a Service (SaaS) startups in 2018.

Manufacturing challenges, labor shortages, and safety concerns have renewed interest in automation and manufacturing reshoring, long before U.S. President Trump introduced his unprecedented import tariffs. While the desire to revive domestic manufacturing is not new, significant investment in support of that goal has until recently been modest.

In the United States, investment in manufacturing facilities has more than tripled in the past four years, reaching nearly $235 billion in 2024. According to the Peterson Institute for International Economics, the United States will have invested more in technology-based manufacturing facilities in 2024 than in the previous 20 years combined. It is important to note that these figures include only facilities and equipment, not the capital goods used in manufacturing. Given the typical lag between construction and equipping new facilities with machinery and labor, the stage is set for an acceleration of spending in robotics, automation, and capital goods. Although the Trump administration has shifted its focus to tariffs rather than fiscal policy to stimulate manufacturing, many key investments are already well underway.

These investments are aimed not only at creating new capacity, but also at modernizing the production process. In addition to increasing margins through greater efficiency, industrial automation systems address a key issue: the talent shortage due to an aging workforce. According to the report Taking Charge: Manufacturers Drive Growth with Active Workforce Strategies by Deloitte and The Manufacturing Institute, 1.9 million manufacturing jobs could go unfilled over the next decade if the challenges of the talent shortage are not addressed. As a result, robotics has continued its steady advance in factories.

Currently, robots are either controlled by humans or follow predefined programming to function. More recently, autonomous and semi-autonomous robotics enable dynamic actions that take into account real-time circumstances and conditions. By learning from human commands and receiving input from sensors and cameras, robotic manufacturing is set to become more efficient and flexible. For example, Google DeepMind’s RT-2 model was trained with both robotics-specific data and data from the web. This system allows robots with computer vision to perform tasks that were not pre-programmed.

According to the International Monetary Fund, increasing digitalization, system fragmentation, and rising geopolitical tensions have more than doubled cyberattacks in the past four years. Alarmingly, cyberattacks are increasingly targeting government networks and critical infrastructure. While digital transformation offers the potential for greater efficiency, connected systems are subject to an increasingly hostile cyber threat environment.

While AI also enables more adaptive and efficient security systems, attackers have demonstrated their ability to cleverly incorporate this technology. Similarly, recent advances in quantum computing have raised concerns that this technology could break existing encryption algorithms. With cybersecurity remaining a top priority, IDC predicts that global cybersecurity spending will modestly increase from 13% in 2024 to 14% in 2025, reaching $274 billion.

Cyber ​​threats have also risen to the top of the national security agenda, as state-sponsored actors appear to be behind a myriad of recent attacks. For example, in December 2024, state-sponsored Chinese hackers breached the U.S. Treasury Department’s network, stole documents, and even accessed Treasury Secretary Janet Yellen’s computer, according to the U.S. Cybersecurity and Infrastructure Security Agency. Over the past year, governments around the world, including Canada, Germany, Japan, and the United Kingdom, have reported similar incidents of state-sponsored cyber breaches, according to the Center for Strategic International Studies. Worryingly, critical infrastructure has also been targeted. Unlike cybercrimes motivated by profit or espionage to steal state secrets, attacks on infrastructure herald major disruption. At a time of rising geopolitical tension , experts warn that cyberattacks on infrastructure could not only disrupt daily life, but also compromise the ability to respond in the event of a military conflict. In this sense, in January 2024, the FBI announced that it had identified malware that, according to the United States, had been inserted into communications, transportation and energy networks.