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AI-tocracy

Beraja, Martin, Kao, Andrew, Yang, David Y. and Yuchtman, Noam (2021) AI-tocracy. CEP Discussion Papers (1811). Centre for Economic Performance, LSE, London, UK.

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Abstract

Can frontier innovation be sustained under autocracy? We argue that innovation and autocracy can be mutually reinforcing when: (i) the new technology bolsters the autocrat's power; and (ii) the autocrat's demand for the technology stimulates further innovation in applications beyond those benefiting it directly. We test for such a mutually reinforcing relationship in the context of facial recognition AI in China. To do so, we gather comprehensive data on AI firms and government procurement contracts, as well as on social unrest across China during the last decade. We first show that autocrats benefit from AI: local unrest leads to greater government procurement of facial recognition AI, and increased AI procurement suppresses subsequent unrest. We then show that AI innovation benefits from autocrats' suppression of unrest: the contracted AI firms innovate more both for the government and commercial markets. Taken together, these results suggest the possibility of sustained AI innovation under the Chinese regime: AI innovation entrenches the regime, and the regime's investment in AI for political control stimulates further frontier innovation.

Item Type: Monograph (Discussion Paper)
Official URL: https://cep.lse.ac.uk/_new/publications/discussion...
Additional Information: © 2021 The Authors
Divisions: Management
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
T Technology > T Technology (General)
J Political Science > JQ Political institutions Asia
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: 25 Feb 2022 14:15
Last Modified: 26 Feb 2022 00:03
URI: http://eprints.lse.ac.uk/id/eprint/113834

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