WHITE PAPER: AI’s Impact on Regional Economic Development
December 3, 2024Artificial intelligence (AI) is rapidly transforming regional economic landscapes, bringing both significant opportunities and challenges. A new white paper by the Center for Regional Economic Competitiveness (CREC) examines how AI is not only reshaping economies, but how it could transform the practice of economic development. The white paper emphasizes the need for policymakers and practitioners to embrace a few strategic approaches to leverage AI’s potential while addressing its risks to the work that economic developers do.
Opportunities and Challenges of AI Integration
AI offers numerous benefits for regional economies, such as boosting productivity, fostering innovation, and supporting economic diversification. It can also help refine economic development strategies to identify emerging industry clusters, optimize supply chains, and enhance workforce training programs. Economic developers should also consider how AI could streamline licensing and permitting, reduce administrative burdens for companies, and increase transparency in how government uses tax dollars. Even so, automation of many administrative and basic research tasks will displace jobs, especially in activities that involve routine tasks. This could widen economic disparities. So, economic development practice will require proactive measures to reskill workers and build ethical practices to govern AI implementation.
Practical Applications in Regional Development
Economic development agencies should use AI to improve their program outcomes by analyzing growth patterns and identifying high-potential businesses. Rural areas can benefit from AI to optimize agricultural practices or stabilize existing businesses. When used to review and refine tax incentives and streamline regulatory processes, AI can make economic development programs more effective and impactful.
Balancing Innovation with Inclusive Growth
As AI advances, it is crucial for economic development professionals consider both its impacts on the adoption of innovation as well as its impact on workforce inclusion. Integrating AI responsibly in our economic development work and our understanding of our economies are changing can position regions for sustainable growth, fostering competitive advantages and building resilient, future-ready communities. But, we must take proactive action to incorporate AI into our industries and the day-to-day work of economic development practitioners and not wait for someone to tell us what to do.
To read more about these insights and strategic recommendations, download our white paper (PDF) on the opportunities and risks associated with AI.