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AI-tocracy

Author

Listed:
  • Martin Beraja
  • Andrew Kao
  • David Y. Yang
  • Noam Yuchtman

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.

Suggested Citation

  • Martin Beraja & Andrew Kao & David Y. Yang & Noam Yuchtman, 2021. "AI-tocracy," NBER Working Papers 29466, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:29466
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    More about this item

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • P00 - Political Economy and Comparative Economic Systems - - General - - - General

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