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The Political Economy of Artificial Intelligence: Innovation Systems, Labor Markets, and Development Outcomes Across Market Economies
Abstract
This analysis explores how varying market structures and institutional frameworks shape both the development trajectory of artificial intelligence (AI) technologies and their subsequent impact on labor markets and economic development across different market economies. Building upon the varieties of capitalism framework, the study examines how institutional configurations in liberal market economies (LMEs) and coordinated market economies (CMEs) create distinct patterns of AI innovation, labor market adaptation, and power dynamics. The findings reveal that AI development is not a technologically determined phenomenon but is rather institutionally mediated, leading to divergent socioeconomic outcomes. LMEs exhibit rapid, breakthrough innovations in AI alongside skill-biased technological change and labor market disruption, while CMEs demonstrate more systematic integration of AI technologies with incremental adaptation strategies and stronger worker protection mechanisms.
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