Who will win
the race in Artificial Intelligence (AI)? Recent articles have focused on this big battle between China
and the US. Arguments appear in favour of both countries. China has huge
amounts of data and a more relaxed framework regarding privacy, whereas the US attracts a vast amount of
talent to develop software computing and has the good climate to let digital
firms with new ideas flourish.
Frankly, I
think this issue is slightly more nuanced.
Arguments
on both sides in favor of a strong AI based does not year, however, make clear
who of the two will profit best from long-run economic benefits using AI. For
instance, it is often pointed out that China has more data than the US and
therefore would win the race. To me, it seems that both countries own large
amount of data. And due to strong network effects, the fact of having large
sets of data just simply points out that the focus is on these two countries,
and not for instance on the EU. Hence, both can win.
The question
who will reap greater long-run benefits from AI is a bit more complicated to
answer. Who of the two will have sustainable specialization patterns in AI depends
on what economists call comparative advantage. China may be big and therefore have large network effects in AI, but that does not yet mean
comparative advantage. For that to determine, one needs to have a look at what
sectors are most amenable to AI.
The figure below sets out the most AI-intensive
sectors based on current usage of data and software out of a much wider range
of industry and services sectors. The figure reveals some interesting insights.
For instance, it shows that mainly services appear to be most open to AI such
as internet and software services, finance and insurance, computer systems, and
logistics. But a couple of manufacturing sectors are also stands out such as
chemicals, motor vehicles, computer and electronics and electrical equipment.
Source:
author’s calculations; US Census; US BLS.
