Is Distance from Innovation a Barrier to the Adoption of Artificial Intelligence?
By Jennifer Hunt, Iain Cockburn, and James Bessen
The extent to which geographic distance is a barrier to technological knowledge transfer is of interest to governments of countries distant from centers of knowledge creation or technology production; to entrepreneurs deciding where to locate a new firm that will need to remain abreast of technological developments; and to national or local policy-makers seeking to influence the decisions of such entrepreneurs. These agents may value knowledge transfer as an input to further knowledge creation, or as a prerequisite for the adoption of new technology practices. In this paper, we provide insight into a little-studied aspect of knowledge transfer, by examining the geography of U.S. firms’ adaptation and adoption of Artificial Intelligence (AI) in response to AI innovation.
Using AI publications data gathered for this project merged with Burning Glass job vacancy data for 2007-2019, we investigate whether online vacancies for jobs requiring AI skills grow more slowly in U.S. locations farther from pre-2007 AI innovation hotspots. We find that a commuting zone which is an additional 200km (125 miles) from the closest AI hotspot has 17% lower growth in AI jobs’ share of vacancies. This is driven by distance from AI papers rather than AI patents. Distance reduces growth in AI research jobs as well as in jobs adapting AI to new industries, as evidenced by strong effects for computer and mathematical researchers, developers of software applications, and the finance and insurance industry. Distance from an AI hotspot has much less effect on the adoption of AI, such as use of image processing.
Twenty percent of the overall effect is explained by the presence of state borders between some commuting zones and their closest hotspot. This could reflect state borders’ impeding migration and thus flows of tacit knowledge. Distance does not capture the difficulty of in-person or remote collaboration, since travel time has no effect conditional on distance. Nor does distance capture knowledge and personnel flows within multi-establishment firms hiring in computer occupations.
The results are consistent with a literature finding that distance is a barrier to the diffusion of inventive activity and to cross-country technology adoption, and with prior work showing U.S. state borders are barriers to citations of patents and to migration. The results are inconsistent with studies showing cross-location collaboration and citing of academic papers and patents has been increased by shorter travel times. The contrast between the effects of the (highly correlated) distances to A.I. papers and to A.I. patents suggests that studies focusing on spillover effects or other geographic aspects of AI patents alone may be mistaking the effect of scientific papers for an effect of patents.