Silicon Valley and Shenzhen, China, will get all the growth from AI if other regions don’t invest now to compete

🌈 Abstract

The article discusses the impact of artificial intelligence (AI) on regional economic growth and development. It examines how the integration of AI-based technologies into regional economies has led to increased efficiency, innovation, and economic growth, particularly in tech hubs like Silicon Valley, Shenzhen, and the Toronto-Waterloo Corridor. The article also explores the role of the "creative class" in driving regional economic growth and how AI can enhance their creative capital and skills.

🙋 Q&A

[01] Technology and Creativity

1. What are the two significant points the article makes about regional growth dynamics related to AI-based technologies?

• Regions that want to thrive economically need to attract the "creative class" - professionals like university professors, scientists, and engineers.
• Attracting these individuals is important because they possess "creative capital", the ability to create new ideas, technologies, business models, and industries that can improve regional economies and lives.

2. How does the article say AI plays into the established dynamic of tech-led regional development?

• The article states that the use of AI-based technologies allows creative people in a region to enhance the impact that their own creative capital, knowledge, and skills have on the production of goods like smartphones, autonomous vehicles, and smart speakers.

[02] AI and Economic Growth

1. What did the researchers examine in their analysis of AI-based technologies and regional economic growth?

• The researchers examined a hypothetical region reflective of creative hubs like Silicon Valley, Shenzhen, and the Toronto-Waterloo Corridor, focusing on individuals using AI-based technologies to create products such as smartphones, autonomous vehicles, and smart speakers.

2. What did the research show about the impact of an AI-powered regional economy?

• The research shows that an AI-powered regional economy will reach a balanced growth path, where the productivity of each creative person is positive and stable.

[03] Long-term Growth

1. What did the research indicate about the long-term effects of initial differences in the use of AI-based technologies between two regions?

• The research indicates that even small differences in savings rates early on can lead to significant gaps in economic output per creative individual and the long-run accumulation of skills per creative person over time between the two regions.

2. What policy lessons does the article derive from the research findings?

• For a given creative region, 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.
• A region lagging behind another in terms of output and skills per creative person will need to increase its investment in AI-based technology and skills to catch up.