The artificial intelligence (AI) sector is gaining popularity across the world. Tech firms like Google, Microsoft and Apple are integrating the technology across its offerings. Countries like US and China have always been on the forefront at the AI game but smaller nations are also pushing for its adoption.

According to a report released on 27 September by McKinsey Global Institute, South Korea has “strong comparative strength” in terms of readiness for AI technologies along with Canada, France, and Sweden. These countries are relatively well positioned to capture the benefits of AI, given their generally robust foundation of enablers, says the study, “Notes From The Frontier Modeling The Impact Of AI On The World Economy”, which surveyed 41 countries using various indicators for the macro dimensions. The study found that there may be four groups of countries that share relatively similar degrees of preparedness, based on currently available data.

Technology Readiness

Many of these economies are highly motivated to embrace AI because they have been experiencing slowing productivity growth, says the study.

Another incentive is that labour costs tend to be high in these economies, especially advanced ones. Several large economies belong to this group—including Germany, Japan, and the UK—that have the capacity to drive innovation on a major scale and to accelerate the commercialization of AI solutions. Smaller, globally connected economies such as Finland, Singapore, South Korea, and Sweden typically score highly on their ability to foster productive environments where novel business models can thrive.

The Frontrunners

As per the study, the US and China are active global leaders. They are currently leading the race to supply AI and have unique strengths that set them apart from all others. Scale effects enable more significant investment, and network effects enable these economies to attract the talent needed to make the most of AI. Together, they are responsible for the vast majority of AI-related research activities, says the study.

US and China are also a long way ahead of other countries on AI-related patents, publications, and citations, says the study. They also make a substantial investment in AI. In terms of external investment, including venture capital, private equity, and mergers and acquisitions (M&A), in 2016 the US accounted for 66 per cent, while China was a distant second with 17 per cent. However, China’s share is growing rapidly. These nations also have solid enablers. In 2016, they invested about 2 to 3 per cent of gross domestic product (GDP) in overall research and development (R&D). Depending on national priorities and business opportunities, these huge investment capacities could be channeled into AI.