Prof. Dr. Leo Brecht
Member of the Board, Partner
Prof. Dr. Leo Brecht
Member of the Board, Partner
Prof. Dr. Leo Brecht is a mathematician and economist with a PhD in mathematical statistics and a professorship in innovation and technology management at the University of Liechtenstein. With over 20 years of experience in management consulting and applied research, and more than 10 years in investment management, he is a leading expert in the fields of innovation, technology and product management. Leo Brecht has supported more than 100 projects for SMEs and multinational companies in various industries, from strategic consulting to technology assessments. He is also the founder of ALPORA, where he and his team have developed innovative investment products that have led to over €700 million in assets under management. Over the last ten years, he has given more than 1,000 investor presentations. He was a partner at Andersen and Arthur D. Little, the author of several books and a conference speaker. As an active investor and serial entrepreneur, he is particularly involved in the FINTECH, SUSTTECH and EDUTECH sectors. In his free time, Leo Brecht is a passionate regatta sailor and skier and enjoys spending time with his family.
Productivity gains are among the most potent forces in an economy, constituting a genuine “double win” for both investors and the economy in its entirety.
- Firstly, increasing productivity rates enables investors to generate excess returns. It has been demonstrated that companies that employ more efficient production methods can achieve greater output at the same or lower costs. This dynamic results in higher margins, increasing cash flows, and above-average profit growth over time. Consequently, investors are presented with the prospect of identifying companies that are implementing such efficiency gains and distinctly differentiating themselves within the market. Productivity, therefore, emerges as a pivotal factor in generating sustainable excess returns.
- Secondly, it is important to note that productivity gains have the dual effect of promoting growth and curbing inflation simultaneously. An increase in productivity, resulting in a higher real gross domestic product (GDP), occurs because more value is created per hour worked. Concurrently, cost pressures on prices are mitigated as companies enhance their efficiency, thereby avoiding the complete transference of rising wages or input costs to consumers. This approach serves to mitigate inflationary pressures without the necessity of constraining demand or investment.
However, an examination of contemporary data underscores the significant value and rarity of productivity gains. In the European Union (EU), labor productivity has exhibited a modest uptick following declines in previous years. However, with growth rates remaining below one percent annually, it persists at a historically low level. The phenomenon of growth is characterized by a high degree of fragmentation among member states. A similar phenomenon has been observed in Liechtenstein, where rising employment, particularly among cross-border commuters, has been the primary driver of economic growth recently. Concurrently, productivity per hour worked has remained stagnant. This development underscores the pivotal role of genuine efficiency gains in fostering sustainable growth.
The role of artificial intelligence—important, but not exclusive
The field of artificial intelligence (AI) is frequently regarded as a pivotal catalyst for future productivity gains. Indeed, it offers considerable potential, for example, through process automation, better decision support, and economies of scale in knowledge-intensive activities. Measurable efficiency gains have already been observed in individual companies.
Concurrently, the role of AI should be evaluated through a realistic and critical lens. Productivity gains rarely result from technology alone; rather, they are the result of technology's consistent integration into processes and organizations. Furthermore, the repercussions of AI frequently manifest with a time lag and disparity across various economic sectors.
Consequently, while AI can be regarded as a catalyst, it cannot be considered a guaranteed success. The determining factor is the extent to which technological innovation is translated into sustainable productivity and earnings gains for companies, investors, and the economy as a whole.
