Who's To Challenge Silicon Valley, Shenzhen In AI?

Second, attracting those individuals is important because they possess 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 creative class members are a basic driver of regional economic growth and development.

How does AI play into this established dynamic of tech-led regional development that produces winners and losers?

As experts on regional economics, I and my colleagues studied the use of AI-based technologies and regional economic growth. Our analysis sheds light on this critical question by examining just how AI-infused technologies benefit regional economies and those that produce creative goods in the short and long term.

We examined a hypothetical region reflective of creative hubs like Silicon Valley, Shenzhen and the Toronto-Waterloo Corridor , focusing on individuals using AI-based technology to create products such as smartphones, autonomous vehicles and smart speakers . These technologies enhance smartphones with features such as facial recognition , assist in the production of autonomous vehicles through AI-driven design and simulations and enable smart speakers and personal assistants to understand and respond to user commands via natural language processing and machine learning algorithms.

The use of an AI-based technology permits creative people in a region to enhance the impact that their own creative capital, knowledge and skills have on the production of these goods. Our research shows that an AI-powered regional economy will reach a balanced growth path , or the point at which the productivity of each creative person 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 effects do initial differences in the use of AI-based technologies between, for instance, San Francisco and Seattle have on long-term economic growth in these same cities?

Consider two regions, A and B. Think of A as the San Francisco Bay area and B as Seattle. A is able to save double the amount that B does investing in an advanced AI-based technology, and A also invests twice as much as B in improving the skills of its creative workforce.

Our research indicates that while A saved twice as much as B on AI and skill development, this small initial gap results in a 32-fold difference in long-term output per creative worker between the two regions. In simple terms, even small differences in savings rates early on can lead to significant gaps in economic output per creative individual over time.

Similarly, our research also demonstrates that even though creative region A saves twice the amount that creative region B does to create a more powerful AI-based technology and skills, this twofold initial difference between the two regions leads to a 64-fold difference in the long-run accumulation of skills per creative person between these same two regions. Once again, the relatively minor initial differences in the two savings rates translate into a greatly magnified impact on the long-run values of skills per creative person.

For a given creative region such as the Toronto-Waterloo Corridor in Canada, taking steps now to generate more powerful AI-based technologies is likely to result in substantially magnified benefits in terms of increased output and skills per creative person in the long run.

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Second, consider a creative region that is lagging behind another creative region in terms of output and skills per creative person. For such a region to get ahead, 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 present highly skewed nature of AI activity in the US is likely to continue to create large pools of high-skilled workers in some regions while other regions suffer a“brain drain” that leaves lower-skilled workers behind .

This influence is noteworthy, but it is also a double-edged sword. It promises to raise productivity and growth but also to increase the gap between creative regions that make initial investments to improve AI-based technologies and skills – currently coastal regions in the US – and those that do not in the vast American heartland.

Amitrajeet A. Batabyal is a distinguished professor, the Arthur J. Gosnell professor of economics and the interim head of the Department of Sustainability at the Rochester Institute of Technology .

This article is republished from The Conversation under a Creative Commons license. Read the original article .