Data-intensive innovation and the state: evidence from AI firms in China

Martin Beraja, David Y. Yang and Noam Yuchtman

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Developing artificial intelligence (AI) technology requires data. In many domains, government data far exceed in magnitude and scope data collected by the private sector, and AI firms often gain access to such data when providing services to the state. We argue that such access can stimulate commercial AI innovation in part because data and trained algorithms are shareable across government and commercial uses. We gather comprehensive information on firms and public security procurement contracts in China’s facial recognition AI industry. We quantify the data accessible through contracts by measuring public security agencies’ capacity to collect surveillance video. Using a triple-differences strategy, we find that data-rich contracts, compared to data-scarce ones, lead recipient firms to develop significantly and substantially more commercial AI software. Our analysis suggests a contribution of government data to the rise of China’s facial recognition AI firms, and that states’ data collection and provision policies could shape AI innovation.

Keywords: data; innovation; artificial intelligence; China; innovation policy; privacy; surveillance (search for similar items in EconPapers)
JEL-codes: E00 L50 L63 O30 O40 P00 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2022-08-13
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Published in Review of Economic Studies, 13, August, 2022, 90(4), pp. 1701 - 1723. ISSN: 0034-6527

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http://eprints.lse.ac.uk/124859/ Open access version. (application/pdf)

Related works:
Journal Article: Data-intensive Innovation and the State: Evidence from AI Firms in China (2023)
Working Paper: Data-intensive innovation and the State: evidence from AI firms in China (2021)
Working Paper: Data-intensive innovation and the State: evidence from AI firms in China (2021)
Working Paper: Data-intensive innovation and the State: evidence from AI firms in China (2021)
Working Paper: Data-intensive Innovation and the State: Evidence from AI Firms in China (2020)
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