The United States and China are the two hotbeds of global artificial intelligence, with Silicon Valley and Shenzhen being the focal points within these hotbeds.

The 21st century has witnessed unprecedented technological advancements, with artificial intelligence emerging as a force for global economic transformation. The integration of AI-based technologies into regional economies through the manufacturing and design of products such as smartphones and smart speakers has triggered significant changes, thereby enhancing efficiency, innovation, and economic growth.

Analysis to date indicates that economic development driven by artificial intelligence, like other high-tech waves, tends to be concentrated in specific regions, such as the San Francisco Bay Area and the Northeast Corridor from Washington to Boston, as well as Shenzhen, often referred to as China's Silicon Valley.

All of these are innovation hubs with vibrant tech ecosystems and are home to leading global technology companies, such as Google, Apple, and numerous AI startups (Silicon Valley), as well as Huawei and Tencent (Shenzhen). AI-based technologies have the potential to augment rather than replace human capabilities in these centers, thereby creating new job opportunities.

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This suggests that regions that actively support the development of these technologies may witness a positive correlation between labor transformation and economic growth.

Technology and CreativityUrban theorist Richard Florida has proposed two important perspectives on regional growth dynamics related to technology based on artificial intelligence and regional growth. First, regions that want to prosper economically need to attract the creative class he has created: professionals, including but not limited to university professors, scientists, and engineers.

Second, attracting these individuals is crucial because they possess creative capital, or the ability to generate new ideas, technologies, business models, cultural forms, and entirely new industries, thereby improving regional economies and life. This means that members of the creative class are the fundamental driving force behind regional economic growth and development.

How does artificial intelligence play a role in this technology-driven regional development, leading to winners and losers?

As a regional economics expert, my colleagues and I have studied the use of technology based on artificial intelligence and regional economic growth. Our analysis clarifies this key question by examining how artificial intelligence technologies benefit regional economies and those who produce creative products in both the short and long term.

Artificial Intelligence and Economic Growth

We studied a hypothetical region reflecting creative centers such as Silicon Valley, Shenzhen, and the Waterloo Corridor in Toronto, focusing on individuals who use technology based on artificial intelligence to create products like smartphones, self-driving cars, and smart speakers. These technologies enhance smartphones with features such as facial recognition, assist in the production of self-driving cars through artificial intelligence-driven design and simulation, and enable smart speakers and personal assistants to understand and respond to user commands through natural language processing and machine learning algorithms.

The use of technology based on artificial intelligence allows creative individuals in a region to enhance their own creative capital, knowledge, and skills' impact on the production of these goods. Our research indicates that an artificial intelligence-driven regional economy will reach a balanced growth path, or in other words, the productivity of each creative individual is positive and stable.

So, how do initial differences in the use of technology based on artificial intelligence among creative regions affect long-term economic growth? For instance, what is the impact of the initial differences in the use of technology based on artificial intelligence between San Francisco and Seattle on the long-term economic growth of these cities?Long-term Growth

Consider two regions, A and B. Let's regard A as the San Francisco Bay Area and B as Seattle. Region A is able to save twice the amount invested in advanced artificial intelligence-based technologies compared to B, and A also invests twice as much in enhancing the skills of its creative workforce as B does.

Our research indicates that although A saves twice the amount in artificial intelligence and skill development compared to B, this minor initial gap leads to a 32-fold difference in long-term output per creative worker between the two regions. In simple terms, even a small difference in early savings rates can lead to a significant disparity in the economic output of each creative individual over time.

Similarly, our research also shows that despite Creative Region A saving twice the amount in creating more robust artificial intelligence-based technologies and skills compared to Creative Region B, this dual initial difference between the two regions results in a 64-fold disparity in long-term skill accumulation per creative individual. The relatively small initial difference in savings rates has a profound impact on the long-term value of skills for each creative professional.

Some Policy Lessons

For specific creative regions like the Toronto-Waterloo Corridor in Canada, taking measures now to generate more powerful artificial intelligence-based technologies may bring significantly amplified benefits in terms of increasing the output and skills of each creative individual in the long run.

Secondly, consider a creative region that lags behind another in terms of output and skills per creative individual. For such a region to succeed, it is necessary to increase investments in artificial intelligence-based technologies and skills.

Research shows that the United States' artificial intelligence assets and capabilities are concentrated in San Francisco, San Jose, New York, Los Angeles, Boston, and Seattle. Without targeted investments in building and improving artificial intelligence-based technologies, the current high skewness of AI activities in the United States may continue to create a large number of high-skilled workers in some areas, while other regions suffer from "brain drain," leaving behind low-skilled workers.

This impact is noteworthy, but it is also a double-edged sword. It promises to increase productivity and growth, but it also widens the gap between creative regions that have made initial investments to improve artificial intelligence-based technologies and skills (currently the coastal areas of the United States) and those that are not in the vast heartland of the United States.