Who Will Challenge Silicon Valley, Shenzhen in AI?

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The 21st century has seen unprecedented growth in technological progress, with artificial intelligence emerging as a global transformative force 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 led to significant changes, leading to increased efficiency, innovation and economic growth.

Analyzes so far have shown that AI-driven economic growth, like other high-tech waves, tends to be concentrated in specific areas such as the San Francisco Bay Area and the Washington-Boston Northeast Corridor, as well as in Shenzhen. . It is called the Silicon Valley of China.

All are centers of innovation with vibrant tech ecosystems and home to leading global tech companies, such as Google, Apple and many AI startups in the case of Silicon Valley, and Huawei and Tencent in the case of Shenzhen. Instead of replacing human talent in such centers, new job opportunities have arisen to augment the potential of AI-based technologies.

This suggests that regions that actively support the development of these technologies are likely to see a positive relationship between workforce turnover and economic growth.

Technology and creativity

There are two main points that urban theorist Richard Florida makes about the dynamics of regional development related to AI-based technologies and regional development. First, areas that want to grow economically need to attract what it has produced the creative class: professionals, including university professors, scientists, and engineers but who Not limited to

Second, it is important to attract these individuals 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 the main drivers of regional economic growth and development.

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

As regional economists, my colleagues and I studied the use of AI-based technologies and regional economic development. Our analysis sheds light on this important question by simply examining how AI-related technologies benefit regional economies and those who produce creative goods in the short and long term.

A robot painting demonstration, showcasing artificial intelligence projects, at a high-tech fair in Shenzhen, China. Photo: Xinhua/Mao Seqian

AI and economic growth

We examined a hypothetical region depicting creative hubs such as Silicon Valley, Shenzhen and the Toronto-Waterloo corridor, focusing on people using AI-based technology to create products such as smartphones, autonomous vehicles and smart speakers. was concentrated. These technologies augment smartphones with features such as facial recognition, assist in the development of autonomous vehicles through AI-driven design and simulations, and smart speakers and personal assistants through natural language processing and machine learning algorithms. Ability to understand and respond to commands.

Using AI-based technology allows creative people in a region to increase 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 a point where 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 impact do initial differences in the use of AI-based technologies, for example, between San Francisco and Seattle have on long-term economic growth in the same cities?

Long-term growth

Consider two areas, A and B. Let A be the San Francisco Bay Area and B be Seattle. A is able to save twice as much as B invests in advanced AI-based technology, and A also invests twice as much as B in improving the skills of its creative workforce.

Our research shows that A saved twice as much as B on AI and skill development, but this small initial difference would have resulted in a 32-fold difference in long-term output per creative worker between the two regions. Is. Simply put, even initially small differences in savings rates can lead to significant differences in the economic output of each creative individual over time.

Similarly, our research also shows that although creative region A saves twice as much as creative region B to develop more powerful AI-based technology and skills, the initial gap between the two regions doubles by 64 times. Makes a difference. Long-term accumulation of skills per creative individual between the same two regions. Again, the relatively small initial differences in the two savings rates have a large effect on the long-term values โ€‹โ€‹of the skills per creative person.

Some policy lessons

For a creative region like the Toronto-Waterloo Corridor in Canada, taking steps now to develop more powerful AI-based technologies will likely have far greater long-term benefits in terms of increased productivity and productivity per creative person. .

Second, consider a creative region that lags behind another creative region in terms of output and skill per creative person. 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 investment in building and improving AI-based technologies, the current highly fragmented nature of AI activity in the U.S. is likely to continue to create large pools of highly skilled workers in some regions while creating a “brain drain” for other regions. Faces that leave. Low-skilled workers behind.

This effect is remarkable, but it is also a double-edged sword. It promises to boost productivity and growth, but also widens the gap between creative regions that make the initial investments to improve AI-based technologies and skills โ€“ currently the coastal regions of the US โ€“ and those in the US. are not in a wide area.

Amitrajit A. Battabal is Distinguished Professor, Arthur J. Gosnell Professor of Economics and Interim Chair of the Department of Sustainability at Rochester Institute of Technology.

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

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