Artificial intelligence industry development fortifies regional economic resilience: evidence from Chinese cities

The AI industry is currently a high ground for industrial competition between countries in the context of globalization. Against this backdrop, many economics and economic geography studies have explored the effect of AI industry development on the economic benefits, without paying sufficient attention to their impact on economic sustainability. In this paper, we follow the vein of evolutionary economic geography literature, and take economic resilience as an indicator of sustainable economic growth. On the basis of firm registration database, our empirical results indicate that every 1% increase in the number of AI-related firms in China’s prefectures leads to the increase of regional economic resilience increases by approximately 0.1. Moreover, such an effect is more pronounced in regions with a lower GDP per capita, higher R&D and human capital investments, and a stronger manufacturing base. This pattern also varies across regions, with the effect being more pronounced in central and northeastern cities, and in cities outside traditional industrial bases. We also demonstrate that AI industry development is associated with higher urban economic productivity, industrial diversification and labor supply resilience, which serve as key influencing channels. Furthermore, we find that governmental support amplifies the positive effect of AI industry development, but local AI development may be associated with lower resilience in neighboring areas. Overall, our research is geared towards SDG-8 and SDG-9, and underscores the need for policymakers and urban planners to adopt a coordinated approach to regional AI development, thus contributing to a sustainable economic growth.