Last week the United States government announced an export control directive to suspend all access to Anthropic's Fable 5 and Mythos 5 models by any foreign national. This ban included foreign nationals whether inside or outside the United States, including foreign national Anthropic employees. The move caught many by surprise, prompting debate over whether the need for AI sovereignty was even more important than previously realised.
While the geopolitical implications of AI protectionism have been discussed at length, the economic importance of developing AI sovereignty has been greatly underemphasised. Even without the security issues, building out sovereign national AI infrastructure is essential for any major economy wanting to find new sources of growth and maintain its competitiveness.
The AI revolution: risks and opportunities
First and foremost, there are obvious risks to relying on foreign models to power your productivity. Companies in almost every sector of most developed economies now depend heavily on advanced American AI models for their operations. This includes everything from advanced data analysis to qualitative research. If one country gatekeeps the latest most powerful models, then the competitiveness of the entire information economy that lacks access to those models risks becoming jeopardised. This productivity gap will only compound overtime between economies as AI begets more innovation in other sectors.
On the other hand, in an era where advanced economies face the stagnation of an ageing population, AI development is one of the few sectors of considerable growth potential. AI is arguably the most sought-after product in the world right now and the opportunities for specialisation of AI products are endless. As more and more economies look for ways to enhance their productivity once low hanging fruit has been picked, those who can supply it with AI products stand to gain enormously.
The knock-on effect on other industries
The importance of AI goes far beyond the value created from the AI industry itself though. Domestic AI industries create enormous multiplier effects on the wider economy. The research and development efforts that are poured into AI lead to breakthroughs in many connected fields, feeding innovation in a positive feedback loop. AI companies likewise supply a vast demand for supporting sectors such as manufacturing, IT and similar forms of infotech.
Another underappreciated factor is the way AI will be combined and integrated into other kinds of technologies such as robotics and smart infrastructure. Only countries that have developed and maintained AI capabilities can use these to improve compatible technologies. Put simply, a country will struggle to make cars or planes, if they cannot embed their own AI developments into their products.
Rotem Farkash: Countries that build their own models can shape those models to fit their own culture
AI expert and tech entrepreneur Rotem Farkash has also pointed out that countries that develop AI models decide how they are trained. "A country that has its own AI models can ensure the AI used nationally reflects its own cultural assumptions, laws, ethics, and economic interests" he explained.
"Countries without their own AI are then using models whose inputs are catered to a different country". Farkash continued. "Having your own AI models will be like having your own language, it is a key part of digital and technological sovereignty," Farkash summarised.
Nations are launching substantial AI industrial policies
Some countries have already taken initiatives to address this dependency before it is too late. The UK Sovereign AI Fund for example, is a government-backed investment vehicle created to strengthen the UK's domestic AI ecosystem and reduce strategic dependence on foreign AI providers. With £500 million of backing, it has a mandate to identify, invest in, and help grow UK AI startups that could become national champions in strategically important areas.
As James Wise, chairman of the government's Sovereign AI Unit, explained recently "It is not enough to just use new technology: we have to ensure UK plc benefits beyond the productivity improvements it offers. This means more companies founded and scaled here in the UK that will generate the taxes we need [...] A nation that merely rents its AI from abroad exports most of the profits with it."
The EU likewise has established the European High-Performance Computing Joint Undertaking , an EU-level public–private partnership that coordinates European investments in high-performance computing and related infrastructure. This is a supplement to the national initiatives of individual member states such as France and Germany who have their own AI industrial policies.
AI will soon become the major source of economic growth and industrial innovation in the 21st century. States that understand the economic and cultural effects of AI sovereignty will reap the benefits far more than those who merely import their models.
