Distance From Innovation is a Barrier to the Adoption of Artificial Intelligence

Distance from AI innovation hubs poses a barrier to the adoption and job growth of Artificial Intelligence across regions.

While distance may seem unimportant in the face of technological progress in transportation and communication, several studies have found that distance is a barrier to the diffusion of inventive activity and technology adoption. This column examines US firms’ adaptation and adoption of artificial intelligence in response to AI innovation. The authors find that distance from innovation hotspots reduces growth in AI research jobs as well as in jobs adapting AI to new industries, with the effect driven by AI publications rather than AI patents. Twenty percent of the overall distance effect is explained by the presence of state borders, which may impede migration and thus flows of tacit knowledge.

The extent to which geographic distance is a barrier to technological knowledge transfer is of interest to governments of countries distant from centres of knowledge creation or technology production; to entrepreneurs deciding where to locate a new firm that will need to remain abreast of technological developments; and to national or local policymakers seeking to influence the decisions of such entrepreneurs. These agents may value knowledge transfer as an input to further knowledge creation, or as a prerequisite for the adoption of new technology practices.

Distance may seem unimportant in the face of technological progress including the telephone, modern means of transportation, email, texting, the worldwide web, and video conferencing. Yet, several studies have found that distance is a barrier to the diffusion of inventive activity and to the cross-country diffusion of technology adoption, and prior work has also shown that US state borders are barriers to citations of patents.¹Cross-location collaboration and citing of academic papers and patents have been increased by shorter travel times, other papers have found.²[…]