by The 21st century saw an unprecedented surge in technological progress, with artificial intelligence emerging as a global force of transformation across the economy. The integration of AI-based technologies into regional economies through the manufacturing and design of goods such as smartphones and smart speakers has spurred significant changes, leading to increased efficiency, innovation and economic growth.
So far, analyzes by urban theorist Richard Florida and others have shown that AI-driven economic development, like other high-tech waves, has tended to concentrate in specific areas, such as the San Francisco Bay Area and the Washington- to-. Boston’s Northeast Corridor, along with Shenzhen, is often referred to as China’s Silicon Valley.
All are centers of innovation with vibrant technology ecosystems and are the leading global technology companies, such as Google, Apple and many AI startups in the case of Silicon Valley, and Huawei and Tencent in the case of Shenzhen. New employment opportunities have been created due to the ability of AI-based technologies to augment rather than replace human potential in these hubs. This suggests that regions that actively support the development of these technologies are likely to see a positive relationship between workforce transformation and economic growth.
Technology and creativity
There are two significant points that Florida makes regarding regional growth dynamics related to AI-based technologies and regional growth. First, regions that want to prosper economically must attract what he invented the creative class: professionals, including but not limited to universities professors, scientists and engineers.
Secondly, it is important to attract these people because they have creative capital, or the ability to create new ideas, technologies, business models, cultural forms and whole new industries that can improve regional economies and lives. This means that members of the creative class are a fundamental driver of regional economic growth and development.
How does AI relate to this established dynamic of technology-led regional development that produces winners and losers?
As an expert in regional economics, my colleagues and I studied the use of AI-based technologies and regional economic growth. Our analysis sheds light on this critical question by examining how AI-infused technologies benefit regional economies and those that produce creative goods in the short and long term.
AI and economic growth
We explored a hypothetical region representing creative hubs like Silicon Valley, Shenzhen and the Toronto-Waterloo Corridor, targeting individuals who use AI-based technology to create products such as smartphones, autonomous vehicles and smart speakers. These technologies enhance smartphones with features like facial recognition, help produce autonomous vehicles through AI-driven design and simulations, and enable smart speakers and personal assistants to understand and respond to user commands through natural language processing algorithms and machine learning.
The use of AI-based technology allows creative people in a region to increase the impact of their own creative capital, knowledge and skills on the production of these goods. Our research shows that a regional economy powered by AI will reach an even growth path, or the point at which the productivity of all creative people is positive and stable.
So how do initial differences between creative regions in the use of AI-based technologies affect long-term economic growth? What are the initial effects of initial differences in the use of AI-based technologies between, for example, San Francisco and Seattle on long-term economic growth in these same cities?
Long term growth
Consider two regions, A and B – think of A as the San Francisco Bay Area and B as Seattle. A is able to save twice as much as B by investing in advanced AI-based technology, and A invests twice as much as B in upskilling its creative workforce.
Our research shows that while A saved twice as much as B on AI and skills development, this small initial gap results in a 32-fold difference in long-term output per creative worker between the two regions. Simply put, even small differences in savings rates can soon lead to significant gaps in economic output per creative person over time.
Similarly, our research also shows that while creative region A saves twice as much as creative region B to create more powerful AI-based technology and skills, this bilateral initial difference between the two regions arises a 64-fold difference in the long-term accumulation of skills per creative person between these same two regions. Once again, the relatively small initial differences in the two savings rates have a large impact on the long-run values of skills per creative person.
Some policy lessons
In the case of a particular creative region such as the Toronto-Waterloo Corridor in Canada, taking steps now to deploy more powerful AI-based technologies is likely to have large benefits in terms of increased output and increased skills per creative person in the long term. generate.
Second, consider a creative region that lags behind another creative region in terms of creative output and skills. For such a region to thrive, it will need to increase its investment in AI-based technology and skills.
Research shows that AI assets and capabilities in the US are concentrated in San Francisco, San Jose, New York, Los Angeles, Boston and Seattle. Without targeted investments in building and improving AI-based technologies, the highly skewed nature of AI activity in the US is likely to continue to create large pools of highly skilled workers in some regions while other regions experience a “brain drain” that leaves . low-skilled workers behind.
This influence is remarkable, but it is also a double-edged sword. It promises to raise productivity and growth but also widen the gap between creative regions that make initial investments to improve AI-based technologies and skills—currently the coastal regions of the US—and those not in America’s great heartland.
This article is republished from The Conversation, a non-profit, independent news organization that brings you reliable facts and analysis to help you make sense of our complex world. It was written by: Amitrajeet A. Batabyal, Rochester Institute of Technology
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Amitrajeet A. Batabyal does not work for, consult with, own shares in, or receive funding from any company or organization that would benefit from this article this article, and did not disclose any relevant affiliations after their academic appointment.
