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Data-intensive innovation and the state: evidence from AI firms in China

Beraja, Martin, Yang, David Y. and Yuchtman, Noam (2022) Data-intensive innovation and the state: evidence from AI firms in China. Review of Economic Studies. ISSN 0034-6527 (In Press)

[img] Text (Yuchtman-REStud) - Accepted Version
Pending embargo until 1 January 2100.

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Abstract

Developing AI technology requires data. In many domains, government data far exceeds in magnitude and scope data collected by the private sector, and AI firms often gain access to such data when providing services to the state. We argue that such access can stimulate commercial AI innovation in part because data and trained algorithms are shareable across government and commercial uses. We gather comprehensive information on firms and public security procurement contracts in China’s facial recognition AI industry. We quantify the data accessible through contracts by measuring public security agencies’ capacity to collect surveillance video. Using a triple-differences strategy, we find that data-rich contracts, compared to data-scarce ones, lead recipient firms to develop significantly and substantially more commercial AI software. Our analysis suggests a contribution of government data to the rise of China’s facial recognition AI firms, and that states’ data collection and provision policies could shape AI innovation.

Item Type: Article
Additional Information: © 2022 Oxford University Press
Divisions: Management
Subjects: Q Science > QA Mathematics > QA76 Computer software
J Political Science > JQ Political institutions Asia
H Social Sciences > HD Industries. Land use. Labor
JEL classification: O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development > O30 - General
P - Economic Systems > P0 - General > P00 - General
E - Macroeconomics and Monetary Economics > E0 - General > E00 - General
L - Industrial Organization > L5 - Regulation and Industrial Policy > L50 - General
L - Industrial Organization > L6 - Industry Studies: Manufacturing > L63 - Microelectronics; Computers; Communications Equipment
O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General
Date Deposited: 17 Jan 2022 11:00
Last Modified: 25 Mar 2022 17:24
URI: http://eprints.lse.ac.uk/id/eprint/113443

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