Ai-Tocracy

83 Pages Posted: 8 Nov 2021 Last revised: 14 May 2022

See all articles by Martin Beraja

Martin Beraja

Massachusetts Institute of Technology (MIT)

Andrew Kao

Harvard University

David Y. Yang

Harvard University

Noam Yuchtman

London School of Economics & Political Science (LSE) - London School of Economics

Date Written: November 2021

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.

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Suggested Citation

Beraja, Martin and Kao, Andrew and Yang, David Y. and Yuchtman, Noam, Ai-Tocracy (November 2021). NBER Working Paper No. w29466, Available at SSRN: https://ssrn.com/abstract=3958653

Martin Beraja (Contact Author)

Massachusetts Institute of Technology (MIT) ( email )

77 Massachusetts Avenue
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Cambridge, MA 02139-4307
United States

Andrew Kao

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

David Y. Yang

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

Noam Yuchtman

London School of Economics & Political Science (LSE) - London School of Economics ( email )

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