The geography of AI firms
Summary
Focus
Artificial intelligence (AI) is advancing rapidly, yet relatively little is documented about the global distribution of AI production. This gap is especially important for policymakers, as many economies are evaluating their strategic priorities in AI production and some are considering sovereign AI strategies. We map AI firms globally using novel data and large language model-based textual analysis.
Contribution
We provide a new data set of 1,246 AI-producing firms located across 32 economies. We map these firms into the five layers of the AI supply chain: compute, cloud and related infrastructure, data tools, AI models and AI applications. We document new stylised facts on the geography of AI production, the evolution of AI firms' economic footprint in their jurisdictions and regional specialisations in AI. We also document domestic and cross-border investment patterns of AI firms and make available the underlying country-level data set.
Findings
The biggest markets for AI production are the United States and China with 700 and 250 AI-producing firms, respectively. Most economies specialise in only a few supply chain layers and many focus largely on compute. AI firms in most economies exhibit strong home bias in investment activity, with a focus on downstream applications. Finally, venture capital inflows are strongly correlated with the presence and density of AI firms in a given economy.
Abstract
In this paper, we trace the geography and economic characteristics of firms that produce artificial intelligence (AI) products and services. Many economies around the world are evaluating their strategic priorities in AI, yet relatively little is documented about the global distribution of AI production. We construct a new database that identifies 1,246 AI-producing firms across 32 economies. We map these firms in each economy into the five layers of the AI supply chain: compute, cloud and related infrastructure, data tools, AI models and AI applications. The biggest markets for AI production are China and the US. Most economies specialise only in a few supply chain layers and many focus largely on compute. AI firms in all economies exhibit strong home bias in investment activity, with a focus on downstream applications. Finally, we find that venture capital inflows are strongly correlated with the presence and density of AI firms in a given economy.
JEL classification: O33, C81, L86, F23, L16
Keywords: artificial intelligence, AI supply chain, firm geography, AI measurement
