The Critical Infrastructures

Artificial Intelligence: the Critical Infrastructures
By
John W. Bagby & Kimberly A. Houser2
1
Abstract:
Artificial Intelligence (AI) innovation is most strongly impacted by AI Critical
Infrastructures. These are the conditions, capacities, assets and inputs that create
an environment conducive to the advancement of the AI technologies. Close
inspection of AI’s generalized architecture reveals a supply chain that implies
six AI critical infrastructures. There are at least seven necessary steps or
processes contained in a generalized AI architecture. These steps are: (1)
occurrences, events, facts or conditions transpire enabling the creation of
potentially useful data, (2) these data are logged through capture and
(increasingly computer and telecommunications enabled) initial storage, (3)
such data are aggregated, often by numerous data repositories or AI operators,
(4) human intelligence performs iterative analysis as derived from deployment
of algorithms, (5) initial machine learning occurs, (6) near constant feedback
loops are deployed by many AI applications that adapt the underlying model as
new data is incorporated, and (7) based on insights resulting from AI, decision-
making occurs, both automatically by computer or by human intervention,.
Successful Machine Learning requires ample supply of the six broad AI critical
infrastructures: (i) strategic insight/vision largely expressed as regional and/or
national Industrial Policy, which is paramount in impacting all four other AI
critical infrastructures, (ii) human intellect is needed to foster a deep-bench,
from a competent AI Workforce, (iii) R&D Investment in AI, (iv) AI Hardware,
both Computing Power and Connectivity (ICT), (v) bountiful and ever growing
supply of Accessible Data, and (vi) market receptivity as sustainable demand for
AI knowledge to monetize successful AI innovation. This article provides an
initial foundation for a comparative of the three world economies (regions)
seemingly best positioned to make substantial AI advancements. Predictably,
significant differences among the political and cultural drivers in these three
regions are likely to impact needed commitment to AI critical infrastructures:
China (Asia) vs. the United States (North America) vs. European Union (EU).
The harsh reality of AI innovation is that delays in commitment and deployment
of AI critical infrastructures will relegate the losing region(s) to become, at best,
a chronic AI customer rather than a major successful AI supplier.
Introduction
AI Critical Infrastructures are all those necessary conditions to any
national or multi-national/regional economy to produce AI innovation
1
Professor Emeritus, Colleges of Information Sciences & Technology and Smeal College
of Business, the Pennsylvania State University.
2
Clinical Assistant Professor, University of North Texas, and Visiting Scholar, Indiana
University Bloomington, Ostrom Workshop.
Electronic copy available at: https://ssrn.com/abstract=3924512

Critical Infrastructures of AI
competitive with other regions and supportive of the industries and
government operations likely to become dependant on AI. AI Critical
Infrastructures are innovation factors that support successful Machine
Learning.3 Ample supplies of the six broad AI Critical Infrastructures are
essential to competitive progress, these include:
(i) strategic insight/vision largely expressed as regional and/or

national Industrial Policy, which is paramount in impacting all
other AI Critical Infrastructures,
(ii) human intellect is needed to foster a deep-bench, from a
competent AI Workforce,
(iii) Research and Development (R&D) Investment in AI and its
necessary inputs (data),
(iv) AI Hardware, both Computing Power and Connectivity (ICT),
and
(v) bountiful and ever growing data supply - Replete Accessible
Data.
(vi) Demand-side uses critical to sustainable AI success; this
includes pre-existing or certain-to-develop receptivity that will
monetize successful AI innovation.
This article builds a foundation for the comparison of AI’s potential

among three world regions, ostensibly those best positioned to make
substantial AI innovation advancements. There are obvious and predictable
differences among these three regions’ political and cultural drivers and
these are expected to significantly impact AI Critical Infrastructure
developments. Here is compared China (Asia), the United States (North
America) and the European Union (EU). The harsh reality of AI innovation
is that delays in commitment and deployment of these AI Critical
Infrastructures will relegate the losing region(s) to become, at best, a
chronic AI customer of the other two regions while inhibiting that region as
a major or successful AI supplier.
3
AI is a general term and machine learning is one of the more successful components of
AI. Machine learning uses algorithms, finite programmable steps, that build dynamic
models, initially based on sample a/k/a “training data.” Machines can continuously learn as
new, more complete data guides the revision of the model. Machine learning is an
important AI tool to predict outcomes or provide decision support in many fields of use or
domains, see e.g., Tom Mitchell, MACHINE LEARNING (1997 McGraw Hill). AI also
includes techniques such as expert systems, fuzzy logic, neural networks, robotics and
natural language processing. However, there are numerous AI typologies or ontologies, the
differentiation of which is well beyond the scope of this work.

2
How Critical Infrastructure Supports AI

AI innovations might proceed apace if supplied with sufficient
resources. These innovation factors are resources, herein called “AI-Critical
Infrastructures” necessary to the achievement of AIs promise for future
efficiency and functional effectiveness. Machine learning enables analysis
of large data sets potentially revealing insights that inform better judgments
than without such decision support. This ostensibly enables heretofore
impossible decision-making, both speculative projections as well as
exceptional decisions that result in reasonable accuracy. Productivity gains
are widely touted, approaching the hype typical to other transformative
technologies.4 AI arguably benefits business by reducing costs, improving
customer experience and/or developing new revenue sources.5 Governments
can accomplish their statutory goals as they endure shrinking budgets,
automate tedious tasks, enhance mission-critical capabilities (e.g.,
situational awareness, decision-making, public safety, national defense) and
enable research breakthroughs.6 AI will likely guarantee that all forms of
security (e.g., traditional, national, cyber) remains locked in a cat and mouse
game between threats and defenses as both sides deploy machine learning.7
However, hype over AI remains palpable, having endured over at

least seven decades, and still fuels predictions of AI’s promise.8 Indeed, AI
4
Horgan, John, Will Artificial Intelligence Ever Live Up to Its Hype? SCI.AM. (Dec. 4,
2020) accessible at: https://www.scientificamerican.com/article/will-artificial-intelligence-
ever-live-up-to-its-hype/
5
See e.g., DeLima, Anthony, Achieving The Promise of AI, FORBES (Nov 25, 2019)
accessible at: https://www.forbes.com/sites/forbestechcouncil/2019/11/25/achieving-the-
promise-of-ai/
6
See e.g., The Coming AI Productivity Boom, ACCENTURE (June 2020) accessible at:
https://www.accenture.com/_acnmedia/PDF-126/Accenture-Federal-AI-Productivity-
Boom.pdf
7
See generally, Kelley M. Sayler, Artificial Intelligence and National Security-Updated,
CONG.RES.SERV. No.R45178 (Nov.10, 2020) accessible at:
https://fas.org/sgp/crs/natsec/R45178.pdf See also, Aimee Laurence The Impact of
Artificial Intelligence on Cyber Security, CPO MAG. (Aug. 22, 2019) accessible at:
https://www.cpomagazine.com/cyber-security/the-impact-of-artificial-intelligence-on-
cyber-security/ (arguing high costs of deploying AI as a cyber security tool when pitted
against the risks of hacker use of AI) and --How AI Battles Security Threats without
Humans, WIRED (Oct.2019) accessible at:
https://www.wired.com/wiredinsider/2019/10/how-ai-battles-security-threats-without-
humans/ (arguing AI both enables and combats security threats and AI progress fuses
academic research with private sector investment).
8
Frederick Hayes-Roth, The Knowledge-Based Expert System: A Tutorial, 17 COMPUTER
11-28 (Sept.1984) (predicting AI would replace most professions including law, medicine,
finance and others).

3
development has endured several wax and wane oscillations over the past
70 years.9 It is emerging that some of the world’s regions, cultures or sites
of innovation leadership are in superior positions to develop, feed, and
benefit most from the ability of machines to learn using algorithms. This
article examines the AI Critical Infrastructure elements that are required to
coalesce thereby enabling greater AI productivity. Arguably, some
nations/world regions are in clearly better positions to foster AI
development and achieve balance between political and economic forces
that threaten to curb AI deployment.
Innovation Factors that AI Most Needs

Successful AI development requires several Critical Infrastructure
elements-an abundance of at least these six major inputs: (i) Strategic
Insight/Vision deployed as industrial policy, (ii) Human Intellect fostering
the AI Workforce (iii) R&D investment, (iv) AI Hardware: Computing
Power and Network Connectivity, (v) Data Accessibility, (vi) demand-side
receptivity in multiple Fields of Use/Application Domains.
Stated negatively, highly AI-restrictive cultural, legal or political

constraints, scarcity of AI-literate human capital and data, inadequate
computing capacity or connectivity are among the major factors that will
throttle AI growth as well as its effective exploitation. Not unsurprisingly,
the three competing world regions identified here: China, the EU and the
The Gartner Hype Cycle is one proprietary model visually standardizing the
repetitive, near-identical stages in the widespread expectations about various technologies’
development through: (i) technological breakthrough that initially triggers public interest,
(ii) a quick, steep rise in optimism to a peak of inflated expectations, (iii) a plummeting
disappointment that successful prospects fail to materialize quickly enough, plunging into
the trough of disillusionment, (iv) a recovery towards a more gently, rising-slope of
enlightenment as the technology achieves some sustainable, yet limited success, and (v)
settling on a plateau of productivity as the technology attains some mainstream viability.
See generally, Dedehayir, Ozgur & Martin Steinert, The hype cycle model: A review and
future directions, 108 TECH.FORECAST.& SOC.CHANGE 28-41 (July 2016) accessible at:
https://doi.org/10.1016/j.techfore.2016.04.005 (subscription required) (analyzing hype
cycle models of innovation maturity useful in describing history, current conditions, and
forecasting that informs strategic planning).
9
See generally, McCorduck, Pamela, MACHINES WHO THINK, 2nd ed., (2004, A. K. Peters,
Ltd.). There may be 7 identifiable phases of AI history: the birth of AI (1952-1956), AI’s
Golden Years (1956-1974), AI’s first winter (1974-1980), the 1980s AI boom (1980-1987),
the second AI winter (bust) (1987-1993), (1993-2011) and the present (2011-present). See
also, Buchanan, Bruce G., A (Very) Brief History of Artificial Intelligence. 26 A.I. MAG. 53
(Winter 2005). accessible at: https://doi.org/10.1609/aimag.v26i4.1848

4
United States,10 It seems unlikely any region will clearly dominate in
supplying AI with optimal, Critical Infrastructure inputs. However, not
unsurprisingly, some AI Critical Infrastructures durably reside in, or are
strongly attracted to, only one or two of these regions. Furthermore, R&D
investment and human capital are sufficiently fluid such that borders may
be inadequate to contain migration of these resources between regions.11
Still, the industrial policies and markets of particular nations or regional
trading groups can assert strong AI sponsorship. Such conditions may
become a prodigious, if not insurmountable, critical mass of AI resources.
AI Supply Chain Analysis Reveals its Needs

As with most dynamic systems, an AI “system” should be
recognized as a flow-through structure12 of diverse elements: investment,
design, intelligent human innovation, data, controlling software, and
hardware for communications and computer processing. This comprises a
supply chain architectural approach, the analysis of which requires
marshalling all non-trivial elements, identifying necessary conditions,
predicting results, measuring the impact of influences, mapping the flow of
necessary activities, generating alternatives, identifying precedence,
ordering causation and devising the necessary control systems.13 A supply
chain analytical approach reveals elements, precedence, and causation
10
It is reasonable to project that Russia and India might become meaningful AI players as
early as the near to medium term. Nevertheless, this article focuses on the world’s three
largest regional economies, but the observations contained herein will likely apply
eventually to other candidate AI developers or to other pockets of AI research,
development and deployment.
11
See generally, Kimberly A. Houser, The Innovation Winter Is Coming: How the U.S.-
China Trade War Endangers the World, 57 SAN DIEGO L. REV. 549 (2020).
Available at: https://digital.sandiego.edu/sdlr/vol57/iss3/2 (arguing data, computing power,
and technological advances have created a favorable environment (“AI Spring”) that is
jeopardized by industrial policy confusion inherent in trade wars).
12
Of course, feedback loops must be considered flows through.
13
See, e.g., Kelvin Lui & Jeff Karmiol, AI Infrastructure Reference Architecture, IBM
SYSTEMS (June 2018) accessible at: https://www.ibm.com/downloads/cas/W1JQBNJV
(enumerating AI architectural elements); Debauche, Olivier, Saïd Mahmoudi, Sidi Ahmed
Mahmoudi, Pierre Manneback & Frédéric Lebeau,, A New Edge Architecture for AI-IoT
Services Deployment, 175 PROCEDIA COM.SCI. 10-19 (2020) accessible at:
https://www.sciencedirect.com/science/article/pii/S1877050920316859 and Wu, Yulei,
Cloud-Edge Orchestration for the Internet-of-Things: Architecture and AI-Powered Data
Processing, IEEE INTERNET OF THINGS J. (subscription required) accessible at:
https://ieeexplore.ieee.org/abstract/document/9162084 (arguing AI applications to the
Internet of Things (IoT) requires cloud hardware and connectivity but must evolve to
replace traditional cloud storage with “edge cloud” technologies that better enable
performance).

5
enabling intervention-both supportive (Critical Infrastructures) and limiting
(AI regulation).14
The basic structure of AI data management activities reveals several

pinch points where AI Critical Infrastructures can enhance, modify or
restrict AI operations. By virtue of intervention at these pinch points, AI
Critical Infrastructures can be interposed to foster innovation and operations
or can remove impediments by appeasing potential constraints erected by
market failures or by political pressures for government regulation.15
Regulatory approaches can be preventive by deterring particular AI
activities or curative, providing remediation for undeterred wrongs. AI
enhancements and constraints are doomed to failure without a clear
technical understanding of AI management practices.16
There are at least five necessary elements, steps or processes

contained in a generalized AI architecture: (1) events occur or conditions
exist enabling creation of potentially useful data, (2) data is rightfully
captured and logged as initial storage, (3) the data is aggregated, (4)
analysis is derived from algorithm design and deployment, (5) there is
decision-making based on AI insights.
Data Formation
In the data creation stage, an AI system, or its commercial data
suppliers, engage in observation of some activity or phenomena. Much data
used in contemporary AI systems has been low hanging fruit, it already
exists and can be easily captured, purchased or bartered.17 To go beyond the
obvious, future AI entrepreneurs must first recognize that some phenomena
or activity is or could occur and that it could become potential data. Then, a
14
While it may seem counter-intuitive that regulating AI might constitute a Critical
Infrastructure, nevertheless, regulation often becomes an acceptable compromise in some
industries such as when regulation is an exaction the regulated industry needs to tolerate in
order to achieve market access through regulatory enablement. For example, broadcast and
telecommunications firms, perhaps begrudgingly, accept restrictive licensing in exchange
for access to the wireless spectrum. See e.g., Harvey J. Levin, THE INVISIBLE RESOURCE:
USE AND REGULATION OF THE RADIO SPECTRUM (Routledge, 2013). Under this interpretation
of telecommunication licensing, the airwaves are a form of commons that cannot be
adequately or optimally managed by unregulated competition.
15
See id.
16
See generally, Bagby, John W., ECOMMERCE LAW: ISSUES FOR BUSINESS , Ch.13 Privacy,
at 570-573 (West 2003) (modeling distribution chain custody and data management
sequence of personally identifiable information).
17
See e.g., Patrick Laube, The Low Hanging Fruit is Gone: Achievements and Challenges
of Computational Movement Analysis, 7 SIGSPATIAL 3-10 (2015).

6
design must be employed using a traditional or an innovative data format.
When recurring data is discovered, effective and accurate sensors must be
deployed and connected to feed AI innovation. Finally, data created by new
sources may confront opposing political pressures bent on limiting any new
systems that would create previously hidden data.18
Rightful Data Capture

After data is created, it can be observed, sensed and captured. Rights
must often be acquired to capture and use such data. Of course, data is too
often wrongfully acquired and this may taint the use of these data in AI.19
Both individual subjects and data aggregators may need to authorize uses of
almost any data feed. Apart from authorized governmental investigations,
data gathering and capture in the private sector implicates contracting as the
preferred method to acquire data rights.20 Networked communications
enable observation and capture of considerable data feeds occurring as the
information first arises and then flows through telecommunications
connections, wire lines, over the airwaves, within public and private
networks or at particular websites. Data capture involves the interception,
decoding and storage of data during its creation, entry, discovery, detection
or transmission.
Interception devices may be installed almost any/everywhere en

route. Commerce has traditionally involved very considerable direct
observation and capture of data to record transactions. Throughout the
supply chain of goods and services, vendors, third party service providers
and delivery services report consumer purchases, loan payments, payment
defaults, and careful or risky acts (driving behaviors); these and other
matters are routinely gathered for underwriting. Employers record and
analyze employee activities. CATV video capture is becoming ubiquitous.
18
M. Lynne Markus & Heikki Topi, Big Data, Big Decisions for Science, Society, and
Business. NAT.SCI.FOUND. (2015) accessible at:
http://www.marktplatzcloud.ch/fileadmin/Dateien/PDF/Themenkategorien/bigdata/BigData
_Big_Decisions.pdf
19
See e.g., Peter Grabosky, Russell G. Smith & Gillian Dempsey, ELECTRONIC THEFT:
UNLAWFUL ACQUISITION IN CYBERSPACE, (Cambridge Univ.Press, 2001) and Sybil Sharpe,
NATIONAL SECURITY, PERSONAL PRIVACY AND THE LAW: SURVEYING ELECTRONIC
SURVEILLANCE AND DATA ACQUISITION , (Routledge, 2019) (arguing for balancing societal
needs with individual privacy rights in outlawing surveillance and disclosure).
20
Some major contracting methods include: (1) end user license agreements (EULAs), (2)
wholesale access grants to existing data feeds from government or private sources (e.g.,
financial transactions, camera arrays, archival data), and (3) licensing of proprietary
databases.

7
Online, social media and personal device click-streams are recorded,
personally identifiable information (PII) queries are logged, cookie data is
made available to affiliates and data files are queried. In the future,
additional data streams will likely develop.
Such data are collected and should be coded in standardized format

or otherwise reconfigured in some readily cognizable format,21 then these
data are archived into data storage. There are natural limits to the assertion
of data ownership exclusivity by individual subjects or by data
aggregators.22 In many nations, individuals and businesses have the right to
capture data publicly observed.23 Indeed, there is an inherent right to learn
from our direct and sensory experiences. AI data capture will share this
right to observe, record and remember these data. In the U.S., the right to
learn is directly inferred from First Amendment speech and association.24
Data Aggregation
Step three in contemporary AI deployment is data aggregation. This
involves organization and threshold analysis of captured data to enable
analysis through pragmatic initial “triage,” then deeper evaluation. It
requires systematic handling, at one time known as data warehousing.25
Initial, impromptu analysis in real time is often conducted to facilitate its
later and deeper analysis, the latter is known as data mining.26 Data
aggregators manage databases by combining partial bits of data from single
21
While beyond the scope of this discussion, the standardization and conversion to
standardized format, the interoperability problem, presents a major challenge in big data
acquisition because of the errors introduced when used as feedstock to AI, see e.g., Moritz
Lehne, Julian Sass, Andrea Essenwanger, Josef Schepers & Sylvia Thun, Why Digital
Medicine Depends on Interoperability, 2 NPJ Dig.Med. 1-5 (2019) accessible at:
https://www.nature.com/articles/s41746-019-0158-1 (arguing interoperability depends on
collaboration among healthcare professionals, researchers, IT experts, data engineers and
public policy influencers).
22
Bagby, John W. Outlook: Who Owns the Data? RESEARCH PENN STATE (January 2003)
accessible at: https://news.psu.edu/story/140724/2003/01/01/research/who-owns-data
23
Despite this right to learn, some nations impose privacy-rights driven limitations on
archiving, passing data onward and some uses of that data or the knowledge developed
therefrom.
24
U.S.CONST. amend I accessible at:
https://constitution.congress.gov/constitution/amendment-1/
25
At one time, aggregation was termed data warehousing, see e.g., Barbara H. Wixom &
Hugh J. Watson, An Empirical Investigation of the Factors Affecting Data Warehousing
Success 25 MIS QUART. 17-41 (2001): accessible at: https://www.jstor.org/stable/3250957
26
Data mining involves initial sense-making of structures in warehoused data using pattern
analysis, statistical analysis, correlations, trends and anomolies, see generally, H. Michael
Chung & Paul Gray, Data Mining,16 J.MGT.INFO.SYS . 11-16 (1999).

8
through numerous sources. Collection and proper organization enables these
data to compose a profile or dossier about individuals, provide leads to
construct theories about natural phenomena or predict human behavior and
other occurrences.
Algorithmic Enabled Data Analysis

Machine learning implies both human modeling and computer
revision of these models derived from active feedback. Human data analysts
traditionally “drill down” into data enabling them to draw conclusions
useful for both in-house decision-making and supply to clients. Traditional
data analysis is based on theories and conjecture supplemented by
generalizations from empirical testing. AI may enable the correction of
faulty assumptions, erroneous calculations or premature generalizations
based on junk science.27 The auditability of these data processes is likely to
become a considerable issue in ethical AI as it increasingly produces
decision-making impacting human rights.
AI Enabled Decision-Making
The AI supply chain generally suggests there will be production of
results in the form of advisories to human decision-makers. Alternatively,
AI results can enable automated systems that make deterministic,
mechanical (smart) contracts.28 Early AI efforts seemingly were based
largely on intellectual curiosity. However, as AI is maturing, AI will be
expected to produce useful knowledge. Ostensibly, successful AI results in
data with value realized as knowledge when either utilized in-house or as a
deliverable product as advisories to third party clients. Data thus collected
and information thereby produced can be for direct use by the aggregator’s
data manager or for secondary use when sold or licensed to clients, such as
when “shared” with “partner” firms or when bartered in exchange for other
information.
27
Lubars, Brian & Chenhao Tan, Ask Not What AI Can Do, But What AI Should Do:
Towards a Framework of Task Delegability, ARXIV:1902.03245 (2019) accessibile at:
https://arxiv.org/pdf/1902.03245 but see, Howard, Philip N., Trusted Innovation–Junk
Science, Fake News, and Public Understanding of Artificial Intelligence and Climate
Change, (arguing junk science besmirches AI) accessible at: https://blogs.oii.ox.ac.uk/wp-
content/uploads/sites/89/2015/01/Trusted-Innovation-Project-Executive-Summary.pdf.
28
Of course, some AI enabled systems are also expected to refuse to make contracts such
as the denial of underwriting loans or insurance coverage based on AI decision-making,
see e.g., Aaron Klein, Credit Denial in the Age of AI, BROOKINGS RPT. (April 11, 2019)
accessible at: https://www.brookings.edu/research/credit-denial-in-the-age-of-ai/

9
AI Foundations: the 6 Critical Infrastructures

In the 50 years that AI has developed from its beginnings as a
hypothetical dream to its apparent, current transition into an emergent
technology, a consensus is solidifying that there are six durable, essential AI
nurturing foundations. These are identified here as essential AI Critical
Infrastructures. Without them, AI develops much more slowly and provides
less effective utility than when AI is supplied by an abundance of these
factors and inputs. Unfortunately, the term “infrastructure” has become
muddled,29 a hotly debated political issue.30 Given this politicization, herein
we focus instead on the economic inputs and conditions needed to foster
AI;31 making “Critical Infrastructure” a more precisely defined term in
emerging U.S. public policy discourse.32 “Criticality” inherently requires
comprehensive ranking when supported by solid evidence. This is a forward
look, predicting which critical infrastructures will have the most significant
positive impact. Critical assets would clearly rank high in such ordering.
Critical Infrastructure has expanded from public-sector owned physical
assets with long service life,33 to include government’s proprietary
29
Noah Smith, Defining ‘Infrastructure’ Is a Nonsense Argument, BLOOMBERG NEWS
(Apr.9, 2021) accessible at: https://www.bloomberg.com/opinion/articles/2021-04-09/the-
meaning-of-infrastructure-is-a-pointless-debate (arguing the debate over what constitutes
infrastructure distracts from the overriding question over what economic foundations
should be encouraged, instigated and/or financed by government).
30
There is an ongoing political debate over casting infrastructure as a narrow vision vs.
adoption of a much broader vision of conditions and inputs necessary for broad economic
growth and competitiveness. Compare, Philip Bump, Why The Debate Over What Counts
As ‘Infrastructure’ Probably Suits The Biden Team Just Fine, WASH.POST (April 8, 2021)
accessible at: https://www.washingtonpost.com/politics/2021/04/08/why-debate-over-
what-counts-infrastructure-probably-suits-biden-team-just-fine/ (arguing invoking
infrastructure as a political ploy strokes fickle voters away from their traditional ideological
home) with Moira Donegan, How Domestic Labor Became Infrastructure, ATLANTIC
(Apr.14, 2021) accessible at: https://www.theatlantic.com/ideas/archive/2021/04/why-
care-work-infrastructure/618588/ (arguing for expansion in “infrastructure to achieve
public investment in workforce and intellectual human capital).
31
Of course, national defense applications of AI are varied and potentially powerful,
particularly in generating scenarios, providing early warning and extending insightful game
theoretic strategies. See generally, Kelley M. Sayler, Artificial Intelligence and National
Security, Cong.Res.Serv. No. R45178 (Nov.10, 2020) accessible at:
https://fas.org/sgp/crs/natsec/R45178.pdf
32
See generally, Bagby, John W., Evolving Institutional Structure and Public Policy
Environment of Critical Infrastructures, SPEAKER’S JOURNAL ON PENNSYLVANIA
POLICY, Building For the Future – Strengthening Pennsylvania’s Critical Infrastructures,
Vol. 9, pp.187-204 at 188 (Spring 2010).
33
Giglio, Joseph, Fragile Foundations: A Report on America’s Public Works, Final Report
to the President and Congress, National Council on Public Works Improvement. 1988.
Washington D.C. at 33 https://hdl.handle.net/2027/ien.35556021433537 Available at

10
functions,34 and ultimately to predominately private-sector assets. Indeed,
the private sector owns, controls, operates or maintains 85% of Critical
Infrastructure in the U.S.35 Ranking directs future investment priorities,
necessary because such resources are chronically constrained.
At least six foundations comprise the Critical Infrastructures for AI.

The first is more exhaustively detailed here because it directly enables all of
the other five. First, a range of supportive industrial policies are needed.
Second, an AI human workforce capable of research and development into
AI innovation must implement these industrial policies. Third, research and
development (R&D) investment in basic and applied AI research is needed
to advance AI innovation. Fourth, AI Hardware including information and
communications technologies (ICT) are needed to provide physical assets
such as sensors, computing power, communications connectivity and data
storage to facilitate access to persistently dispersed data. Fifth, AI is
increasingly data ravenous making data accessibility an essential input to
effective AI operations. Finally, AI demand by receptive users of AI, the
clients of AI service providers, is needed to monetize AI advice and provide
return on AI investment for sustainable AI progress.
Industrial Policy Favorable to AI

AI research and development (R&D) relies heavily on intentionally
favorable public policies that remove structural impediments while also
supplying needed resources that foster innovation.36 AI innovation relies on
a mix of basic and applied research, a hybrid model that is unlikely to
SSRN: https://ssrn.com/abstract=3795633
34
See generally, Bagby, John W. & Gary L. Gittings. The Elusive Discretionary Function
Exception From Government Tort Liability: The Narrowing Scope of Federal Liability, 30
AM.BUS.L.J. 223-269 (1992) (discussing how design and control over operations constitute
traditional private-sector activities but expands to include proprietary functions conducted
by government-related entities).
35
NATIONAL STRATEGY FOR HOMELAND SECURITY 2002, Office for Homeland Security (July
2002) at 33 accessible at: https://www.dhs.gov/sites/default/files/publications/nat-strat-hls-
2002.pdf but see, Bruce Schneier, Is 85% of US Critical Infrastructure in Private Hands?
SCHNEIER ON SECURITY accessible at: https://www.schneier.com/blog/archives/2021/05/is-
85-of-us-critical-infrastructure-in-private-hands.html (arguing the 85% claim of private
sector ownership of the U.S. Critical Infrastructure is poorly documented, but the
proportion nevertheless remains substantial).
36
See e.g., Laurie A. Harris, Artificial Intelligence: Background, Selected Issues, and
Policy Considerations, CONG.RES.SERV. No. R46795 (May 19, 2021) accessible at:
https://crsreports.congress.gov/product/pdf/R/R46795

11
change in the near to medium term. Basic and applied research are quite
different in objectives although they may deploy some similar methods.37
Differentiating Basic and Applied Research for AI

Basic research, by definition, is more theoretical so it produces few
immediate results capable of near-term monetization. Basic research (a/k/a
fundamental or pure research) was once the province of private-sector
financed research foundations like Bell Labs (Lucent) when the sponsoring
enterprises had more abundant cash-flows than they do today. As expensive
big science38 took hold during and following World War II, and has
flourished since the mid-20th century, the venues for basic research have
shifted to research universities and well-endowed private research
foundations.39 Today, basic research is largely a competitively financed,
externally sponsored activity at research universities, medical organizations
and research laboratories resulting from grant funding made by government
agencies, private foundations or private industry. AI innovation benefits
from AI basic research conducted world-wide at such institutions. In the
U.S., basic research is a primary component of industrial policy.40
37
See generally, Jean Brown, Difference Between Basic Research and Applied Research,
(Dec 11, 2018) accessible at: http://www.differencebetween.net/science/difference-
between-basic-research-and-applied-research See also, Corbin, Juliet and Strauss, Anselm,
BASICS OF QUALITATIVE RESEARCH (Sage, 2015); Gliner, Jeffrey , Morgan, George & Leech,
Nancy, RESEARCH METHODS IN APPLIED SETTINGS (Routledge, 2016) and Turabian, Kate, A
MANUAL FOR WRITERS OF RESEARCH PAPERS, THESES, AND DISSERTATIONS (Univ.Chic.Press,
2013).
38
Virginia Hughes, The Science of Big Science, NATI’L.GEO. Sep 4, 2013 accessible at:
https://www.nationalgeographic.com/science/article/the-science-of-big-science
39
Funding for (mostly) basic research conducted at research universities migrated from
general funding sourced largely from tuition and historically more generous state budget
allotments to externally-sourced competitive funding from outside sources (e.g.,
government agencies, private foundations, big pharmaceutical firms). This tilts basic
research into sponsored research because state-support for higher education continues to
suffer declines since the 1990s, see generally, Tandberg, David A., Politics, Interest
Groups And State Funding of Public Higher Education, 51 RES.HIGHER ED. 416-450
(2010) accessible at: https://www.academia.edu/download/30593623/RHE_2010_Final.pdf
and Issue Brief, Two Decades of Change in Federal and State Higher Education Funding,
PEW TRUST (Oct.2019) accessible at:
https://www.pewtrusts.org/-/media/assets/2019/10/fedstatefundinghigheredu_chartbook_v1
.pdf
40
See generally, INNOVATION POLICY-A GUIDE FOR DEVELOPING COUNTRIES , (World Bank,
2010) accessible at:
https://documents1.worldbank.org/curated/en/967391468336085017/pdf/548930PUB0v20I
00Box379796B00PUBLIC0.pdf

12
Emerging Global AI Industrial Policies

Because basic research generally fails to produce near to medium
term financial returns, commercially-financed research primarily focuses on
applied research inspired by the promise of more immediate solutions to
particular problems. Commonly, basic research morphs into development to
improve the probability that nearer-term returns are determined through
cost-benefit analyses at for-profit commercial enterprises. Successful
applied research leads more directly to products and services with nearer-
term payoff by monetizing their expected commercial potential. The full
promise of AI requires successful basic research discoveries that expand the
scientific knowledge base. AI innovation requires development of basic
research through applied research that solves near-term problems for
specific constituencies.
AI industrial policies could mirror the interventionalist tools used in

capitalist economies.41 Alternatively, AI industrial policy could assume a
much more detailed intervention by relying on central control over the
whole (non-underground) economy, as done in many planned, command
and control economies like the USSR or China. The tools generally used in
capitalist nations include: tax policies at local, state and federal levels;42
economic stimulus through direct payments;43 trade restrictions favoring
domestic industry; parts of many regulatory programs both enhancements
and restrictions; rationing; defense industrial base supply arrangements;
41
Cimoli, Mario; Dosi, Giovanni; Stiglitz, Joseph E., eds.. INDUSTRIAL POLICY AND
DEVELOPMENT: THE POLITICAL ECONOMY OF CAPABILITIES ACCUMULATION (Oxford
Univ.Press 2009).
42
International tax compacts, sometimes in the form of international trade restrictions, may
also serve as industrial policy tools. See e.g., 130 Countries and Jurisdictions Join Bold
New Framework for International Tax Reform, Organisation for Economic Co-operation
and Development (July 1, 2021) accessible at: https://www.oecd.org/newsroom/130-
countries-and-jurisdictions-join-bold-new-framework-for-international-tax-reform.htm
43
The U.S.’s “Farm Bill,” enacted every five years, reconfirms agricultural support policies
authorizes direct payments to farmers for particular crops, such as when market prices fall
and sometimes pay farmers not to plant under the theory that over-production is
unsustainable by exhausting fertility, compare, Frandsen, Søren E., Birgitte Gersfelt &
Hans G. Jensen., The Impacts Of Redesigning European Agricultural Support in
COMPUTABLE GENERAL EQUILIBRIUM APPROACHES IN URBAN AND REGIONAL POLICY
STUDIES, pp. 231-267 (20060 with Gale, H. Frederick, Growth and Evolution in China's
Agricultural Support Policies, USDA-ERS ECONOMIC RESEARCH REPORT at 153 (2013)
accessible at: https://ageconsearch.umn.edu/record/155385/files/err153.pdf and Winters, L.
Alan, The Economic Consequences of Agricultural Support: A Survey, 9 OECD
ECON.STUD. 7-54 (1987) accessible at: https://citeseerx.ist.psu.edu/viewdoc/download?
doi=10.1.1.412.1477&rep=rep1&type=pdf

13
state/local subsidies (tax exempt bonds) funding location-based industrial
projects; industrial revenue/municipal bonds;44 higher education funding
that supports basic research; and sponsored research incentivized from
various sources.
Planned economies can use some or all of the above policies but
often have included additional tools, including inter alia, enforced
production goals for most industries, rationed luxury goods, imposition of
price controls, and a proliferation of state-controlled monopolies.
Nationalistic protective policies45 have occurred under both industrial policy
models. They generally defend domestic industries in decline; sometimes to
preserve national security strategic supply. By contrast, modern industrial
policy generally seeks to develop emergent industries with medium to long-
term growth potential, like AI.46
This analysis would support a fuller comparison of all three regions

that have instituted AI nurturing industrial policies. We argue here that the
most useful AI critical infrastructures must be derived from industrial
policy to selectively limit restrictive regulation on AI throughout the
Machine Learning supply chain while assuring all six AI Critical
Infrastructures are supplied. Most effective would be: (i) un-throttling data
access; (ii) sponsoring basic AI research; (iii) assuring AI workforce depth;
(iv) limiting litigation against AI deployments processed through private
civil, regulatory enforcement and criminal actions; (v) setting enabling
standards that balance societal pressures on AI with AI deployments;47 (vi)
assure computing power advances and cost containment; (vii) further
deploy ubiquitous connectivity; and (viii) establish and enhance intellectual
property (IP) rights and other legal mechanisms enabling creation and
exploitation of proprietary rights in data and all other machine learning
44
See generally, Mulcahy, Charles C. & Thomas P. Guszkowski, The Financing of
Corporate Expansion Through Industrial Revenue Bonds, 57 MARQ. L. REV. 201 (1973)
accessible at: https://scholarship.law.marquette.edu/mulr/vol57/iss2/1/ and
Pollock v. Farmers' Loan & Trust Company, 157 U.S. 429 (1895), affirmed on rehearing,
158 U.S. 601 (1895) accessible at: https://supreme.justia.com/cases/federal/us/158/601/
45
Johnson, Chalmers, MITI AND THE JAPANESE MIRACLE: THE GROWTH OF INDUSTRIAL
POLICY, 1925–1975 (Stanford Univ.Press. 1982).
46
Bingham, Richard D., INDUSTRIAL POLICY AMERICAN STYLE: FROM HAMILTON TO HDTV ,
(M.E. Sharpe, 1998).
47
See generally, U.S. Leadership in AI: A Plan for Federal Engagement in Developing
Technical Standards and Related Tools, National Institute of Standards and Technology,
(Aug.9, 2019) accessible at:
https://www.nist.gov/system/files/documents/2019/08/10/ai_standards_fedengagement_pla
n_9aug2019.pdf

14
supply chain elements (e.g., private property (IP) rights, validation of
contract formation and enforcement).48
Challenging Predictable Criticism of Industrial Policy

The more vocal critics of industrial policy could thwart AI
advancement in some nations.49 Industrial policy is much feared and
despised in many conservative ideological quarters.50 Such critics can be
expected to argue that industrial policy distorts natural free market forces,
causes over-production in unwanted goods and/or services, incentivizes
production in sub-optimal locales while under-producing goods/services
that market forces prefer. They will likely argue this assures frustration of
the free-market promise to supply optimal economic results.
However, almost no prominent economy has ever been devoid of

government’s interventionalist use of the tools identified above as well as
other tools that implement industrial policy strategies.51 Industrial policy
experience demonstrates that it can be imposed by any or all levels of
government: regional international (EU, NAFTA), national,
state/provincial, and municipal/county/local. The U.S. most certainly has a
plethora of industrial policies from all these levels. U.S. industrial policy is
federated and therefore necessarily appears in disaggregate form that is
inspired by dispersed and generally uncoordinated sources of authority.
All five of the other AI Critical Infrastructures are impacted by

successful industrial policy. Some are supportive of AI while others directly
48
Sui generis database property rights are examples of how IP laws might be directed at
incentivizing and monetizing aspects of the machine learning supply chain, see generally
EU Database Protection, EU Directive on the Legal Protection of Databases, Directive
96/9/EC (March 1996) accessible at: https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?
uri=CELEX:31996L0009:EN:HTML
49
Adam Thierer & Connor Haaland, The Future of Innovation: Should the U.S. Copy
China’s Industrial Policy? DISCOURSE (Mar.11, 2021) accessible at:
https://www.discoursemagazine.com/economics/2021/03/11/should-the-u-s-copy-chinas-
industrial-policy/
50
See e.g., Coase, Ronald, The Regulated Industries: Discussion, 54 AM.ECON.REV. 1,95
(1964) and McKean, Roland N., The Unseen Hand in Government, 55 AM.ECON.REV. 496-
506 (1965).
51
See e.g., Graham, Otis L., LOSING TIME: THE INDUSTRIAL POLICY DEBATE
(Harv.Univ.Press 1994).

15
or indirectly would limit some aspect(s) of AI.52 The industrial policies and
AI Critical Infrastructures of the three key world regions are addressed next.
U.S. AI Industrial Policy

Before about 2016 when AI scholarship emerged in greater
abundance,53 the U.S.’s AI efforts were largely focused on national security
and defense.54 AI policy is now spreading throughout non-defense sectors of
the federal executive branch. Much is coordinated by the Presidential
Administration,55 and various regulators. However, Congress and even the
judiciary56 are also addressing AI industrial policy. AI industrial policy
52
See e.g., Darrell M. West & John R. Allen, TURNING POINT: POLICYMAKING IN THE ERA OF
ARTIFICIAL INTELLIGENCE (Brookings, 2020) (arguing sea change under way in public
policy toleration of innovation experimentation, changing technology regulation from
chronic ex post, regulation imposition lagging arguably harmful activities into an ex ante
preventative regulatory environment, particularly for AI). Regulatory lag is discussed more
fully in Bagby, John W. & Nizan Geslevich Packin, RegTech and Predictive Lawmaking:
Closing the RegLag between Prospective Regulated Activity and Regulation, 10 MICH.BUS.
& ENTREPRENEURIAL L.REV.127 (2021) accessible at:
https://doi.org/10.36639/mbelr.10.2.regtech (arguing for predictive regulation in financial
services to diminish regulatory lag).
53
See generally, Laurie A. Harris, Artificial Intelligence: Background, Selected Issues,
and Policy Considerations, CONG.RES.SERV. No. R46795 (May 19, 2021) accessible at:
https://crsreports.congress.gov/product/pdf/R/R46795 (discussing arXiv data on AI-related
publications as proxy for AI R&D) at 6-8, 22-23.
54
DARPA Announces $2 Billion Campaign to Develop Next Wave of AI Technologies,
Defense Advanced Research Projects Agency (Sept.7, 2018) accessible at:
https://www.darpa.mil/news-events/2018-09-07 (discussing briefly DARPA’s history of
funding and conducting AI research). See generally, Kelley M. Sayler, Artificial
Intelligence and National Security-Updated, CONG.RES.SERV. No.R45178 (Nov.10, 2020)
accessible at: https://fas.org/sgp/crs/natsec/R45178.pdf See also, Aimee Laurence The
Impact of Artificial Intelligence on Cyber Security, CPO MAG. (Aug. 22, 2019) accessible
at: https://www.cpomagazine.com/cyber-security/the-impact-of-artificial-intelligence-on-
cyber-security/ (arguing high costs of deploying AI as a cyber security tool pit against the
risks of hacker use of AI) and --How AI Battles Security Threats without Humans, Wired
(Oct.2019) accessible at:
https://www.wired.com/wiredinsider/2019/10/how-ai-battles-security-threats-without-
humans/ (arguing AI both enables and combats security threats and AI progress fuses
academic research with private sector investment).
55
AI industrial policy is typical of executive branch strategy-making, the Administration
often initiates and coordinates policy.
56
By design, the judiciary generally has limited ex ante influence on industrial policy. Both
judicial restraint and case or controversy likely constrain any such judicial activism.
Nevertheless, two AI deployments are noted in litigation: first, law practice decision-
making enhancements may result from AI, and, second, AI’s unintended consequences and
negative externalities are already triggering litigation to constrain some AI methodologies
and require audit trail transparency of algorithm “black box” decision-making, compare,

16
directly inspires the five other AI Critical Infrastructures. In addition, many
states are initiating AI industrial policies that mostly target governmental
functions such as smart city deployment,57 public safety and criminal
sentencing.58 Traditional state industrial policies seek to attract business
with favorable economic development environments.59 U.S. industrial
policy is a fragmented and disparate collection of strategies espoused at
nearly all levels of government. This is somewhat more consistent with
conservative political ideology that eschews central planning and control -
the dread accusation that industrial policy (should never) “pick[s] winners
and losers.”60
In 2016, President Obama’s National Science and Technology

Council (NSTC)61 set seven strategic priorities to federally fund AI research
to produce AI knowledge and technologies that would benefit society and
minimize negative impacts.62 Thereafter, two Presidential executive orders
Price II, William Nicholson and Rai, Arti Kaur, Clearing Opacity through Machine
Learning (February 12, 2020). 106 IOWA L. REV .- (Forthcoming); Duke Law School Public
Law & Legal Theory Series No. 2020-13. Available at SSRN:
https://ssrn.com/abstract=3536983 or http://dx.doi.org/10.2139/ssrn.3536983 with Blank,
Joshua D. and Osofsky, Leigh, Automated Legal Guidance (March 1, 2020). CORNELL LAW
REVIEW, Forthcoming; UNC Legal Studies Research Paper. Available at SSRN:
https://ssrn.com/abstract=3546889
57
Adie Tomer, Artificial Intelligence in America’s Digital City, BROOKINGS (July 30, 2019)
accessible at: https://www.brookings.edu/research/artificial-intelligence-in-americas-
digital-city/
58
See e.g., Bagby, John W., Book Review, 4 J. L. ECON. & POLICY 213-218 (2007)
Harcourt, Bernard E., AGAINST PREDICTION: PROFILING, POLICING, AND PUNISHING IN AN
ACTUARIAL AGE, (Univ. Chicago Press, 2006) (reviewing documentation of unfairness
inherent in big data driven AI).
59
See e.g., America’s Top States for Business 2021, CNBC (July 13, 2021) accessible at:
https://www.cnbc.com/2021/07/13/americas-top-states-for-business.html
60
See e.g., Michelle Clark Neely, The Pitfalls of Industrial Policy, ST.LOUIS FED.
(Apr.1, 1993) accessible at: https://www.stlouisfed.org/publications/regional-
economist/april-1993/the-pitfalls-of-industrial-policy?; The Global Revival of Industrial
Policy: Picking Winners, Saving Losers, ECONOMIST (Aug 5.2010) (arguing resurgence in
industrial policy is different today benefiting from experience with past failures) and
President's Emerging Economic Policy: Picking Winners and Losers, WALL ST.J. (July 20,
2018) (arguing President Trump’s industrial policies are evident in trade policy that could
harm some industries with tariffs, but might maintain U.S. technological prowess).
61
National Science and Technology Council, Networking and Information Technology
Research and Development Subcommittee, The National Artificial Intelligence Research
and Development Strategic Plan, (Oct.2016) accessible at:
https://www.nitrd.gov/pubs/national_ai_rd_strategic_plan.pdf
62
The seven strategies include: (1) make long-term investments in AI research, (2) develop
effective methods for human-AI collaboration, (3) understand and address the ethical,
legal, and societal implications of AI, (4) ensure the safety and security of AI systems, (5)

17
declare federal policies to study, fund, refine, and deploy AI in federal
government activities. In February 2019, Exec.Order No.13,85963 promoted
R&D from AI investment; expansion of availability for AI in federal data,
models, and computing resources; reducing AI barriers; enhancing AI
standards development; undertaking strategic planning for AI’s role in
national security; and promoting AI workforce development. In December
2020, Exec.Order No.13,96064 established common principles for federal
agencies’ AI design, development, acquisition, and use that encourage the
public trust. Additionally, it requires the Office of Management and Budget
(OMB) to promulgate AI implementation guidance; it requires annual,
publicly-available inventories of non-classified, non-sensitive AI uses; and
it requires the federal agency workforce to expand its AI expertise.
The watershed 2016 strategic plan and two Executive Orders have
triggered efforts at various agencies to promulgate AI industrial policy
frameworks in their strategic plans, reports, and memoranda. For example,
OMB and the National Institute of Standards and Technology (NIST) are
key to coordinating other agencies’ AI industrial policy efforts. NIST
responded to Exec.Order No.13859 as it marshaled broad public and
private-sector input to inspire deep, long-term AI standards development
“to speed the pace of reliable, robust, and trustworthy AI technology
development.”65 OMB, which also coordinates federal agencies,66 declared
develop shared public datasets and environments for AI training and testing, (6) measure
and evaluate AI technologies through standards and benchmarks, and (7) better understand
the national AI R&D workforce needs. A 2019 NSTC update added an 8th strategy to
expand public-private partnerships, see NSTC Select Committee on Artificial Intelligence,
The National Artificial Intelligence R&D Strategic Plan-2019 Update (June 2019)
accessible at: https://www.nitrd.gov/pubs/National-AI-RD-Strategy-2019.pdf.
63
Exec.Order No.13,859 Maintaining American Leadership in Artificial Intelligence,
(Feb.11, 2019) 84 FED.REG.3967, accessible at: https://www.govinfo.gov/content/pkg/FR-
2019-02-14/pdf/2019-02544.pdf
64
Exec.Order No.13,960, Promoting the Use of Trustworthy Artificial Intelligence in the
Federal Government (Dec.3, 2020) 85 FED.REG.78939, accessible at:
https://www.govinfo.gov/content/pkg/FR-2020-12-08/pdf/2020-27065.pdf
65
National Institute of Standards and Technology, U.S. Leadership in AI: A Plan for
Federal Engagement in Developing Technical Standards and Related Tools, (Aug.9, 2019)
at 3-6 accessible at:
https://www.nist.gov/system/files/documents/2019/08/10/ai_standards_fedengagement_pla
n_9aug2019.pdf
66
The President has power to require policy conformance and dismiss agency heads
without due cause and for political reasons if the agency is housed in the administration’s
Cabinet, see e.g., Regulatory Planning Process, Exec.Order No.12,498, 50 FED.REG. 1036,
3 CFR (Jan. 4, 1985) accessible at: https://www.archives.gov/federal-
register/codification/executive-order/12498.html However, the President cannot require

18
in October 2020 that AI is an industry of the future,67 and in November
2020 provided guidance to all federal agencies on the development of AI
applications, both in-house as well as by federal contractors and
academics.68 Other federal agencies directly support AI.69
Congressional AI activities are expanding, including debate,

hearings held, bills introduced and legislation passed.70 Most notable are
various AI-related defense appropriations that include the National
Artificial Intelligence Initiative Act of 2020 (AIIA),71 a component of the
National Defense Appropriations Act (NDAA). The AIIA established the
National Artificial Intelligence Initiative Office (NAIIO) as a unit of the
White House Office of Science and Technology Policy (OSTP).72
E.U.’s AI Industrial Policies

Conservative commentators denigrate European-style industrial
policy.73 The EU’s AI industrial policies are largely designed to achieve
policy conformance and must show cause to dismiss incompliant independent agency
heads, Humphrey's Executor v. U. S., 295 U.S. 602 (1935) accessible at:
https://supreme.justia.com/cases/federal/us/295/602/ see also, Bagby, John W., Regulatory
Impact Analyses: Towards a Reasonable Economic Impact from Federal Regulations, 19
NEW ENG.L.REV. 533-550 (1984).
67
Office of Management and Budget and Office of Science and Technology Policy,
Memorandum for the Heads of Executive Departments and Agencies: Fiscal Year (FY)
2022 Administration Research and Development Budget Priorities and Cross-cutting
Actions, (Aug.14, 2020) https://www.whitehouse.gov/wp-content/uploads/2020/08/M-20-
29.pdf
68
Russell Vought, Director of the Office of Management and Budget, Guidance for
Regulation of Artificial Intelligence Applications, Memorandum for the heads of executive
departments and agencies, (Nov.17, 2020), accessible at: https://www.whitehouse.gov/wp-
content/uploads/2020/11/M-21-06.pdf
69
These include, inter alia, National Science Foundation (NSF), Defense Advanced
Research Projects Agency (DARPA), Department of Energy (DoE), Veterans Affairs
(VA), National Institute for Justice (NIJ), National Oceanic and Atmospheric
Administration (NOAA), Social Security Administration, Department of Health and
Human Services (HHS), National Aeronautical and Space Administration (NASA),
General Services Administration (GSA) and the Administrative Conference of the United
States (courts).
70
See generally, Laurie A. Harris, Artificial Intelligence: Background, Selected Issues, and
Policy Considerations, CONG.RES.SERV. No. R46795 (May 19, 2021) accessible at:
https://crsreports.congress.gov/product/pdf/R/R46795 at 23-27.
71
Pub.L.No. 116-283, H.R.6216, 116th Cong. accessible at:
https://www.congress.gov/116/bills/hr6395/BILLS-116hr6395enr.pdf
72
National Artificial Intelligence Initiative Act of 2020 (Div. E, §5001) §5102 of the
NDAA.

19
uniformity among EU nations (states). The EU’s 2020 AI White Paper,74
purports to promote investment in AI leadership, but was primarily focused
on controlling AIs impact on “European values.” Such values focus largely
on privacy as a fundamental human right, quelling the EU public’s growing
fears of AI. The White Paper defines AI, calls for filling in the AI research
voids, and would solidify AI’s legal status across the EU. Indeed, downside
features of AI are seen in the EU as inevitable and difficult to address, such
as chronic opacity, complexity, unpredictability, and unresponsive
autonomous behavior.
Just over a year after the 2020 White Paper, 75 the European
Commission tabled (published as a proposal) an Artificial Intelligence Act
that would standardize an AI definition;76 establish rules for AI
development, marketing and use; and require risk-based evaluation of AI
deployments including a standardized and mandatory risk evaluation
methodology. Certain “harmful” AI practices would be restricted, such as
those involving biometric identification systems, e.g., facial recognition. As
is typical with EU Directives and legislation, jurisdictional matters are well-
detailed ex ante. Sanctions and enforcement powers are also detailed. The
focus in the EU now shifts to its member states for separate national
implementation. The new AI Act conceivably could apply as early as 2024.
Nevertheless, the EU situation remains somewhat unstable as perspectives
from the EU data protection (privacy) regulatory entities already seek
modification to further reinforce privacy protections likely to restrict AI
access to data.77
73
Adam Thierer & Connor Haaland, The Future of Innovation: Can European-Style
Industrial Policies Create Tech Supremacy?, DISCOURSE (Feb.11, 2021) (arguing well-
developed European-style industrial policy will relegate its technology development to
third place) accessible at: https://www.discoursemagazine.com/economics/2021/02/11/can-
european-style-industrial-policies-create-technological-supremacy/
74
European Commission. (February 2020). White paper on artificial intelligence: a
European approach to excellence and trust. OCLC 1141850140 accessible at:
https://www.worldcat.org/oclc/1141850140
75
See generally, Proposal for a Regulation of the European Parliament and of the Council
Laying Down Harmonised Rules on Artificial Intelligence (Artificial Intelligence Act) and
Amending Certain Union Legislative Acts, COM/2021/206 final (April 21, 2021)
accessible at: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?
uri=CELEX:52021PC0206&from=EN
76
AI defiiinition: “software that is developed with one or more of the techniques and
approaches listed in Annex I and can, for a given set of human-defined objectives, generate
outputs such as content, predictions, recommendations, or decisions influencing
environments they interact with.” Id. At Article 3(1).
77
See, EDPB-EDPS Joint Opinion (May 2021)on the proposal for a Regulation of the
European Parliament and of the Council laying down harmonised rules on artificial

20
Asian AI Industrial Policies

At this early juncture, generalizations about AI industrial policy
across all of Asia seems futile. Both China and India hold very strong
promise for adopting national policies addressing AI innovations. In
addition, there are several other Asian nations with AI potential given their
strong performances in ICT-related matters, including Indonesia, Taiwan,
Japan and Korea. Comprehensive marshalling the current or aggregate AI
industrial policies of these and other Asian nations is beyond the scope of
this work. Nevertheless, given China’s economic strength and growing
international influence, Chinese policies must be considered.
However, frustrating this effort is the fact that China’s AI policy is

far less transparent than in Western democracies.78 Most understanding is
developed by inference from secondary sources that deduce (dis)incentives
from Chinese government’s publicly-released edicts concerning its
infamous defensive and coercive policies. These include the Great (Internet)
Wall, government assured access to huge big data collection of population’s
behavior and electronic device activities, attempts to control ICT and other
technical standards,79 and national security-justification for the enforcement
crackdown on Chinese big tech’s growing power (e.g., SM, bans on
Chinese firms engagement in offshore IPOs because of foreign securities
market’s required transparency and disclosure regime).80
intelligence (Artificial Intelligence Act) accessible at:

https://edpb.europa.eu/system/files/2021-06/edpb-edps_joint_opinion_ai_regulation_en.pdf
78
Matt Ridley, Innovation is a Geographically Localized and Temporary Phenomenon,
Discourse (Feb.23, 2021) accessible at:
https://www.discoursemagazine.com/economics/2021/02/23/innovation-is-a-
geographically-localized-and-temporary-phenomenon/ (arguing China’s innovation
leadership may soon be replaced by India), see also,
Yaroslav Trofimov, In Leaving Afghanastan, U.S. Reshuffles Global Power Relations,
WALL ST.J. (Sept.1, 2021) (quoting Ma Xiaolin, researcher at Zhejiang International
Studies Univ. in Hangzhou that “America is still stronger than China in technology,
manufacturing and military power.”)
79
See e.g., Valentina Pop, Sha Hua & Daniel Michaels, From Lightbulbs to 5G, China
Battles West for Control of Vital Technology Standards, WALL ST.J. (Feb. 8, 2021)
accessible at: https://www.wsj.com/articles/from-lightbulbs-to-5g-china-battles-west-for-
control-of-vital-technology-standards-11612722698 and Arjun Kharpal, Power Is ‘Up For
Grabs’: Behind China’s Plan to Shape the Future of Next-Generation Tech, CNBC
(Apr.26 2020) (discussing China’s industrial policies announced in China Standards 2035
intended to control world ICT standards) accessible at:
https://www.cnbc.com/2020/04/27/china-standards-2035-explained.html
80
See e.g., Charlie Campbell, Here's What the Crackdown on China's Big Tech Firms Is
Really About, TIME (July 13, 2021) accessible at: https://time.com/6079877/china-ipo/

21
Impact of Industrial Policy on Five Other AI Critical

Infrastructures
National and regional industrial policy strategies are intended to
drive and often achieve action. The following five additional AI Critical
Infrastructures are mostly impelled by industrial policies and are generally
recognized as fostering AI development, deployment and the resulting
societal benefits.
AI Workforce
Humans represent a three-legged AI paradox. First, predicting
human behavior may be the most prevalent current AI objective. Second,
many AI proponents have long promised that AI would replace human
work. However, the third should be juxtaposed against this automation
threat; it is that AI has always relied heavily on human-directed ingenuity to
produce AI research, execute conforming R&D, and make AI deployment
choices in various fields of use/application domains. Of course, this is the
skills-gap problem. AI will flourish despite a shrinking supply of low-
skilled, physical labor.81 Instead, at a foundational level,82 the future AI
workforce must be well-trained in science, technology, engineering and
mathematics (STEM).83 Indeed, some AI proponents argue data scientists
effectiveness is enhanced when domain experts participation in AI projects
is limited.84 But the successful AI workforce must think differently than has
been the traditional content and methods of STEM education. Cultivating
human capital in AI requires curricula that, in addition to conventional
technical proficiencies, also focuses more on critical thinking, humanities
and social sciences. This additional content and should help avoid the
unfortunate but too widely prevalent “silo training” by equipping an AI
81
See e.g., Daron Acemoglu & Pascual Restrepo, Low-Skill and High-Skill Automation, 12
J. HUM.CAP. 204-232 (2018) but see, Nicola Croce & Moh Musa, The New Assembly
Lines: Why AI Needs Low-Skilled Workers Too, WORLD ECON, F. (Aug.12, 2019)
accessible at: https://www.weforum.org/agenda/2019/08/ai-low-skilled-workers/
82
Joe McKendrick, Beyond STEM: Why AI Demands Higher-Level Skills, FORBES (Sept.20,
2018) accessible at: https://www.forbes.com/sites/joemckendrick/2018/09/20/beyond-
stem-why-ai-demands-higher-level-skills/
83
The Future of Jobs Report-2018, Centre for the New Economy and Society, World
Economic Forum (Sept.2018) at 23 accessible at:
http://www3.weforum.org/docs/WEF_Future_of_Jobs_2018.pdf
84
See, Jesper Jeeninga, Improving Communication Between Computer Programmers and
Domain Experts: Creating A Generic Scenario Description Language to Aid the Process of
Describing Scenarios for Emergency Response Training Simulators, Master's thesis,
Univ.Twente, (2011) accessible at:
http://essay.utwente.nl/60139/1/MA_thesis_J_Jeeninga.pdf

22
workforce to achieve interdisciplinarity. 85 Furthermore, field of use experts
from the various domains in which AI would apply should all become better
exposed to AI.
It is estimated that automation-induced displacement of U.S.

workers (automation risk) by 2030 will constitute 0.5% (750,000 jobs).86
Jobs in the cognitive workforce represents a smaller subset of this total, the
remaining are physical labor workforce. U.S. AI workforce is predicted to
grow substantially.87 The largest concentration of Asian participation in the
U.S. is in the computer and mathematical workforces.88 In China, AI will
lead to automation risk on parts of the workforce, but will require increases
in AI workforce.89 The AI workforce in the EU is concentrated in the UK
(24%), Germany (14%) and France (12%),90 such that the EU will suffer a
shortage in the EU’s AI workforce.91 This suggests AI Critical
Infrastructures in China and the U.S. will allow them to dominate the EU in
AI.92 For centuries, EU nations have logged very strong performances in
85
Shirley Malcom, David A. Bray & Michael Krigsman, AI: Impact on Jobs and Training,
CXO TALK (Aug.10, 2018) accessible at: https://www.cxotalk.com/episode/ai-impact-jobs-
training
86
Mark Muro, Robert Maxim & Jacob Whiton, REPORT-AUTOMATION AND ARTIFICIAL
INTELLIGENCE: HOW MACHINES ARE AFFECTING PEOPLE AND PLACES, Brookings Inst. (Jan.24,
2019) accessible at: https://www.brookings.edu/research/automation-and-artificial-
intelligence-how-machines-affect-people-and-places/
87
Diana Gehlhaus & Ilya Rahkovsky, U.S. AI Workforce - Labor Market Dynamics, CSET
ISSUE BRIEF, Center for Security and Emerging Technology, Georgetown Univ. (April
2021) accessible at: https://cset.georgetown.edu/wp-content/uploads/CSET-U.S.-AI-
Workforce-Labor-Market-Dynamics.pdf (partitioning the U.S. AI workforce into sub-
classes, predicting considerable barriers to entry for many AI careers, and noting the AI
workforce is geographically concentrated).
88
Id. at 46, Fig.11.
89
Muyi Xiao, Human Resources Both Drive and Limit China’s Push for Automation, NEW
AMERICA (Feb. 3, 2020) accessible at: https://www.newamerica.org/cybersecurity-
initiative/digichina/blog/human-resources-both-drive-and-limit-chinas-push-for-
automation/ (arguing China’s aging population will constrict workforce requiring pressures
to enhance training of high technology talent to become the future AI Workforce).
90
Sue Duke, Understanding AI in Europe: Where the Workforce is Today, and Where it
Needs to Go, LINKEDIN (Nov 18, 2019) accessible at:
https://economicgraph.linkedin.com/blog/understanding-ai-in-europe-where-the-
workforce-is-today-and-where-it-needs-to-go (arguing AI workforce lags the U.S. and is
geographically concentrated).
91
Julia Anderson, Paco Viry & Guntram B. Wolff, Europe Has an Artificial-Intelligence
Skills Shortage, BRUEGEL BLOG (Aug. 27, 2020) accessible at:
https://www.bruegel.org/2020/08/europe-has-an-artificial-intelligence-skills-shortage/
92
See e.g., Kai-Fu Lee, AI SUPERPOWERS: CHINA, SILICON VALLEY, AND THE NEW WORLD
ORDER, (Houghton Mifflin Harcourt 2018) (arguing China dominates in several of the AI

23
technological innovation. If the EU industrial policies supporting AI
actually become effective, then some EU nations can be expected to excel
in AI.
R&D Investment in AI
AI is a complex and thorny set of challenges, perhaps even a set of
wicked problems93 that defies resolution without major investment in human
inspired and directed R&D.94 Early-on, useful AI research largely consumed
basic research investment. AI development now largely relies on iterative
research, by alternatively consuming basic and then applied research. All
R&D research requires considerable funding. Government funded,
academic, think tank and private investment in basic research, in which
success is not primarily dependant on immediate return on investment
(ROI) calculations, continues to currently consume considerable AI
attention. However, AI basic research provides medium-term to long-term
returns and must then be refined for deployment by applied research
investment in the targeted field of use, application domain.95
Accurate R&D assessments among nations is notoriously difficult to

document.96 The R&D environments in the U.S, China and the EU are
Critical Infrastructures discussed in this article: AI workforce, data availability, IP policies

that inspire aggressive technology start-up firms and strong government sponsored
industrial policies conducive to AI).
93
Camillus, John C., Strategy as a Wicked Problem, 86 HARV.BUS.REV. 98 (Reprint No.
R0805G, May 2008) accessible at:
http://www.induscommons.com/uploads/8/1/4/3/81436330/hbr_-
_strategy_as_a_wicked_problem.pdf (arguing wicked problems are difficult to solve due to
incomplete information, a plethora of participants with diverse opinions, large economic
stakes, and interrelations between wicked problems and other thorny problems) and Craig,
Robin Kundis, Resilience Theory and Wicked Problems (May 25, 2020). Vanderbilt Law
Review (2020 Forthcoming), University of Utah College of Law Research Paper No. 376,
Available at SSRN: https://ssrn.com/abstract=3610420 or
http://dx.doi.org/10.2139/ssrn.3610420
94
Laurie A. Harris, Artificial Intelligence: Background, Selected Issues, and Policy
Considerations, CONG.RES.SERV. No. R46795 (May 19, 2021) accessible at:
https://crsreports.congress.gov/product/pdf/R/R46795 at 6-10
95
See supra, text accompanying notes 38 to 40.
96
See e.g., Helene Dernis, Petros Gkotsis, Nicola Grassano, Shohei Nakazato, Mariagrazia
Squicciarini, Brigitte van Beuzekom & Antonio Vezzani, World Corporate Top R&D
investors: Shaping the Future of Technologies and of AI, JRC WORK.PAP. NO.JRC117068,
Joint Research Centre (Seville site) (2019) accessible at:
https://publications.jrc.ec.europa.eu/repository/bitstream/JRC117068/jrc117068_jrc-
oecd_report_2019-final_6sep2019_online.pdf

24
expected to directly impact AI successes.97 Differentials in R&D
investments among these three regions is predicted to directly augment or
weaken AI success.98 China appears thoroughly committed to AI
investment in R&D99 and may be exceeding U.S. investment in non-military
AI applications.100 The EU likely will continue to lag the other two
regions.101 Comparative studies of world regions fail to focus equally on the
AI Critical Infrastructures discussed in this article.102 After the AI Critical
Infrastructure of industrial policy directs R&D, any winner of the AI race
must constantly exploit the knowledge accretions to make meaningful
progress.
AI Hardware - ICT
AI runs on high performance computing hardware, collects its data
from an abundance of diverse networked sensors and then stores such data
in dispersed data aggregations.103 While this model might be revised, these
elements in the AI supply chain would require replacement by adequate or
superior substitutes. In the near to medium term, AI is unlikely to advance
without replete cloud data storage, broad data accessibility using ICT
97
Zachary Arnold, What Investment Trends Reveal About the Global AI Landscape,
BOOKINGS INST . (Sept.29, 2020) accessible at: https://www.brookings.edu/techstream/what-
investment-trends-reveal-about-the-global-ai-landscape/ (arguing more aggressive U.S.
industrial policies in R&D, immigration, antitrust, and government contracting directly
impact successful growth or stagnation for U.S.’s AI industry).
98
Jeff Loucks, Susanne Hupfer, David Jarvis & Timothy Murphy Future in the Balance?
How Countries are Pursuing an AI Advantage, DELOITTE INSIGHTS (May 1, 2019)
accessible at:, https://www2.deloitte.com/us/en/insights/focus/cognitive-technologies/ai-
investment-by-country.html
99
Ashwin Acharya & Zachary Arnold, Chinese Public AI R&D Spending: Provisional
Findings, CSET ISSUE BRIEF , Center for Security and Emerging Technology, Georgetown
Univ. (Dec.2019) accessible at: https://cset.georgetown.edu/wp-content/uploads/Chinese-
Public-AI-RD-Spending-Provisional-Findings-1.pdf
100
Karen Hao, Yes, China Is Probably Outspending the US in AI—But Not on Defense,
MIT TECH.REV. (Dec.5, 2019) accessible at:
https://www.technologyreview.com/2019/12/05/65019/china-us-ai-military-spending/
101
-- Why Europe is Lagging in the AI Race with the US and China? PLANT AUTOMATION
accessible at: https://www.plantautomation-technology.com/articles/why-europe-is-
lagging-in-the-ai-race-with-the-us-and-china
102
Corinne Cath, Sandra Wachter, Brent Mittelstadt, Mariarosaria Taddeo & Luciano
Floridi, Artificial Intelligence and the ‘Good Society’: the US, EU, and UK Approach, 24
SCI.& ENGR.ETHICS 505-528 accessible at: https://philpapers.org/archive/FLOAIA.pdf
(comparing AI studies of AI policies in the U.S. EU and the UK).
103
The National Artificial Intelligence Research and Development Strategic Plan, National
Science and Technology Council, Networking and Information Technology Research and
Development Subcommittee (Oct.2016) accessible at:
https://www.nitrd.gov/pubs/national_ai_rd_strategic_plan.pdf at 21.

25
networked telecommunications, and security-protected networked systems.
All these physical infrastructures must promise increasing speed and
efficiencies.104 Costly, ever evolving and advancing ICT hardware will
arguably contribute greatly to AI development and progress.105
AI requires increasing innovation in computation hardware and

connectivity.106 Regulatory enablement with industrial policies that enhance
connectivity are essential in all three regions compared in this article.107 The
EU Commission acknowledges the need for computing power in making AI
progress.108 In addition, standardization holds promise to enhance AI
hardware and connectivity.
Abundant Data Access

AI has a stubbornly voracious appetite for data. Big data in near all
fields of use domains are needed to initiate machine learning in each field.
Furthermore, in dynamic environments, access to continuously updated data
is needed to maintain accuracy and relevance.109 Public sentiment is
unlikely to relax human-values driven privacy protections unless AI’s
various negative externalities are constantly addressed and revised. These
include algorithmic partiality, Black Box opacity, barriers to auditability,
and pattern or practice partiality. 110 Furthermore, data accessibility could be
suppressed, manifest as the barriers to data ubiquity or constraints on the
104
See e.g., Richard Waters, Facebook Joins Amazon and Google in AI Chip Race,
FINANCIAL TIMES, (Feb.18, 2019), (subscription required) accessible at:
https://www.ft.com/content/1c2aab18-3337-11e9-bd3a-8b2a211d90d5
105
See e.g., Gordon E. Moore, Cramming More Components Onto Integrated Circuits, 38
ELECTRONICS 114-117 (1965) https://newsroom.intel.com/wp-
content/uploads/sites/11/2018/05/moores-law-electronics.pdf (declaring Moore’s Law).
106
Dave Vellante with David Floyer, A New Era of Innovation: Moore’s Law is Not Dead
and AI is Ready To Explode, SILICONANGLE (April 10, 2021) (arguing AI innovation
depends on increasing computing power) accessible at:
https://siliconangle.com/2021/04/10/new-era-innovation-moores-law-not-dead-ai-ready-
explode/
107
The Importance of Artificial Intelligence and Data for the Telecommunications Industry,
Report of the FCC’s Technological Advisory Council Working Group on Artificial
Intelligence and Computing, (Jan.14, 2021) accessible at:
https://www.fcc.gov/sites/default/files/fcc_aiwg_2020_whitepaper_final.pdf
108
Press Release, Europe Fit for the Digital Age: Commission Proposes New Rules and
Actions for Excellence and Trust in Artificial Intelligence (April 21, 2021) accessible at:
https://ec.europa.eu/commission/presscorner/detail/en/IP_21_1682
109
The National Artificial Intelligence Research and Development Strategic Plan, National
Science and Technology Council, Networking and Information Technology Research and
Development Subcommittee (Oct.2016) accessible at:
https://www.nitrd.gov/pubs/national_ai_rd_strategic_plan.pdf at 30-31.

26
proliferation of public sensor deployments. Both human and automated
smart contract transactions will require rights to access data feeds. These
could be throttled unless the negative externalities of AI are constantly
discovered, studied and then addressed to the public’s satisfaction. Indeed,
in privacy rights expansionist nations like the EU, the regulation of AI
negative externalities seems much more likely and immediate, even
draconian. Data access restrictions are less likely to constrain AI
development as to non-human natural phenomena and anonymized
aggregate data about humans in most nations.
In China, such human privacy rights may constrain private sector

firms, but are likely to arm the Chinese government with additional citizen
controls.111 Furthermore, private sector Chinese firms may be recruited to
work for the Chinese government so human rights barriers to those private
firms seems unlikely to emerge in any real way. Other authoritarian nations
like China are also unlikely to throttle data collection and aggregation
effectively for government use. Indeed, the long history of authoritarian,
centrally-controlled economies may reserve this replete and unrestricted
data availability to government operations, and thus provide only limited
data feeds to private industry.112 Therefore, to the extent that R&D by
private-sector AI operations is essential to broad AI development, then
authoritarian nations’ data accessibility restrictions may constrain their AI
development success. Controls using government contracts limiting such
data’s use, retention and analytic breadth/depth will suppress private-sector
power reserving societal control to that central government. Sadly,
authoritarian nations are not the only ones actively suppressing data access
in self-defense of their policy prerogative, even traditional democratic
nations experiment with data suppression.113
110
See e.g., Petit, Nicolas and De Cooman, Jerome, Models of Law and Regulation for AI
(October 1, 2020). Robert Schuman Centre for Advanced Studies Research Paper No.
RSCAS 2020/63, EUI Department of Law Research Paper, Available at SSRN:
https://ssrn.com/abstract=3706771 or http://dx.doi.org/10.2139/ssrn.3706771
111
Compare Jamie Horsley, China’s Orwellian Social Credit Score Isn’t Real, FOREIGN
POL’Y (2018) accessible at:
https://law.yale.edu/sites/default/files/area/center/china/document/2018-11-
16_horsley_chinas_orwellian_social_credit_system_isnt_real.pdf with John Glynn, The
New Privacy Threat from China's Social Credit Surveillance Systems, 24 SKEPTIC 38-41
(Spring 2019) accessible at: https://www.survivorshandbook.com/wp-
content/articles/china-1984.pdf
112
See e.g., Laura He, China is Cracking Down on Data Privacy. That's Terrible News for
Some of its Biggest Tech Companies, CNN BUS. (July 7, 2021) accessible at:
https://www.cnn.com/2021/07/07/tech/china-didi-data-tech-crackdown-intl-hnk/index.html

27
Data access must be abundant for AI systems to work well, initial
inferences and a constant flow of new data that enables machine learning
depends on public policies enabling data access, limited privacy restrictions
and ubiquitous sensor networks. While the U.S. leads the EU and China in
data access, restrictive EU privacy law will diminish AI progress dependant
on abundant data access but could eventually surge in China as privacy
policies enable government data access.114
Sustainable Demand-Side Receptivity

While the discussion above might suggest that AI success is mostly
a supply-side matter, this fatally ignores the demand side.115 AI delivered
benefits must eventually live up to AI’s hype by stimulating sustainable
demand.116 Simple AI deployments devoid of assessment are unlikely to
survive long or create demand that accurately communicates market
preferences without proof of AI benefits. While it is possible that AI
deployments may appear to work for short, transitory periods, when tested
for effectiveness, only the more successful AI tools will likely survive. For
example, AI that produces discriminatory outcomes that are proven using
113
Government data is often a goldmine although periodically governments should be
expected to purge information viewed as embarrassing, undermining to its current goals or
exposing particular administrations to political retribution or law enforcement scrutiny.
Pressures to eliminate large swaths of these data recur periodically, but may be cloaked as
measures to achieve government efficiency achieved by eliminating “costly” regulatory
programs. For example, The Bush Administration effort at suppressing data ostensibly
because it might inspire intensified regulatory decision-making was led by then Vice-
President Dick Cheney. Several cabinet level agencies were proposed for elimination, most
notably one proposal targeted the Department of Commerce, as a major collector, manager
and disseminator of commercial-sector performance data useful to regulatory effectiveness.
See e.g., Tara McKelvey How Bush Broke the Government, AM.PROSPECT (Dec.11, 2008)
(arguing Bush's legacy is a systematic and politically motivated weakening of several
federal agencies responsibilities for inputs/outputs data) accessible at:
https://prospect.org/features/bush-broke-government/ and Chris Chocola, Eliminate the
Commerce Department, THE HILL (June 27, 2012) https://thehill.com/blogs/congress-
blog/economy-a-budget/235183-eliminate-the-commerce-department
114
Daniel Castro & Michael McLaughlin, Who Is Winning the AI Race: China,the EU, or
the United States? — 2021 Update, CENTER FOR DATA INNOVATION (Jan.2021) accessible
at: https://www2.datainnovation.org/2021-china-eu-us-ai.pdf (comparing the US, China
and the EU as to all AI Critical Infrastructure components).
115
See e.g., Martin S. Feldstein, Supply Side Economics: Old Truths and New Claims,
(1986) accessible at: https://www.nber.org/system/files/working_papers/w1792/w1792.pdf
116
See e.g., Dora Manoj, Ashwani Kumar, Sachin Kumar Mangla, Abhay Pant &
Muhammad Mustafa Kamal, Critical Success Factors Influencing Artificial Intelligence
Adoption in Food Supply Chains, 59 INT’L.J.PROD.RES .1-20 (Aug.10, 2021) accessible at:
https://doi.org/10.1080/00207543.2021.1959665

28
audit transparency, eventually will be targeted for termination by regulation,
litigation, legislation or evaporating demand.117
Analysis/Discussion
This article reveals that the three international regions surveyed
provide quite different AI Critical Infrastructure environments. Such
differences are likely to inspire different AI innovations and ultimately
result in different levels and intensities of successful AI deployments. All
three regions - Asia, the EU and North America - are developing AI
industrial policies, but each is demonstrably different. As to relative
regional advantages, a few key observations seem immutable: (1) the U.S.
likely outspends other regions in R&D, (2) China is surpassing the other
regions in AI research citations, (3) Asia is well-known to have a
regional/cultural-specific advantage excelling in STEM education and AI
workforce readiness, (4) the EU will throttle AI deployment consistent with
continental human values as evidenced by the EU’s strong privacy and
human rights responses to perceived AI negative externalities, and (5)
cross-border mobility in research findings, the human AI workforce, cloud
storage resources and R&D capital flows could both equalize some
comparative regional AI advantages but might also exacerbate others.
On balance, China is likely to sustain advantage in human AI

workforce and controlled data accessibility. China’s centrally-controlled
authoritarian business environment continues to restrict foreign investment
important for R&D in AI. Unlike in the U.S., China’s reliance on their
business sector to drive innovation will be muted in the long term by
China’s authoritarian central economic control.
The EU’s strong omnibus privacy rights will restrict data

accessibility. EU investment in R&D funding is unlikely to keep pace with
the U.S. perhaps even with China. The U.S. will likely lead the three
regions in R&D funding. The U.S. can be expected to continue attracting
Asians to populate human AI workforce given the stark contrast between
the two region’s political and cultural environments and quality of life.118
117
See e.g., Andrew Smith, Using Artificial Intelligence and Algorithms, FTC BUS.BLOG
(April 8, 2020) accessible at: https://www.ftc.gov/news-events/blogs/business-
blog/2020/04/using-artificial-intelligence-algorithms
118
Te Ping Chen & Miriam Jordon, Why So Many Chinese Students Come to the U.S.
WALL ST.J. (May 1, 2016) but see, --, Visa Restrictions on Chinese Sudents Will
Disadvantage US, says Queens College President, THE WORLD (WGBH, July 8, 2020)
accessible at: https://www.pri.org/stories/2020-07-08/visa-restrictions-chinese-students-

29
Cloud-based data storage chronically disrespects borders making potentially
ubiquitous its world-wide accessibility. An AI standards-war is well-
underway between the U.S. and China. Historically, the U.S. has set most
standards. China actively seeks to develop, own and control key AI and ICT
standards. The EU, under the auspices of the International Standards
Organization (ISO), also competes well because the EU better manages,
cultivates the emergence and then reconciles diverse perspectives in many
standards development activities.119 Finally, the EU’s fixation on human
rights and privacy data protection would seem to assure their leadership in
transparency of public-policy robust AI systems, likely important to public
acceptance of AI. Nevertheless, the EU will lag in making large data sets
available.120
will-disadvantage-us-says-queens-college
119
See generally, Bagby, John W. and Mitra, Prasenjit and Purao, Sandeep, Standards
Development, Disruptive Innovation and the Nature of Participation: Lock-In, Lock-Out,
Holdup (August 15, 2006). TPRC 2006, Available at SSRN:
https://ssrn.com/abstract=2115235
120
The authors gratefully acknowledge comments from scholars exposed to earlier drafts,
including, Robert A. Prentice, Sharon Dunn, Rita Marie Cain-Reed and Sean Miller.

30

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The Critical Infrastructures

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Artificial Intelligence: the Critical Infrastructures

Electronic copy available at: https://ssrn.com/abstract=3924512

(i) strategic insight/vision largely expressed as regional and/or

This article builds a foundation for the comparison of AI’s potential

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How Critical Infrastructure Supports AI

However, hype over AI remains palpable, having endured over at

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Innovation Factors that AI Most Needs

Stated negatively, highly AI-restrictive cultural, legal or political

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AI Supply Chain Analysis Reveals its Needs

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The basic structure of AI data management activities reveals several

There are at least five necessary elements, steps or processes

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Rightful Data Capture

Interception devices may be installed almost any/everywhere en

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Such data are collected and should be coded in standardized format

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Algorithmic Enabled Data Analysis

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AI Foundations: the 6 Critical Infrastructures

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At least six foundations comprise the Critical Infrastructures for AI.

Industrial Policy Favorable to AI

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Differentiating Basic and Applied Research for AI

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Emerging Global AI Industrial Policies

AI industrial policies could mirror the interventionalist tools used in

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This analysis would support a fuller comparison of all three regions

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Challenging Predictable Criticism of Industrial Policy

However, almost no prominent economy has ever been devoid of

All five of the other AI Critical Infrastructures are impacted by

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U.S. AI Industrial Policy

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In 2016, President Obama’s National Science and Technology

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Congressional AI activities are expanding, including debate,

E.U.’s AI Industrial Policies

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Asian AI Industrial Policies

However, frustrating this effort is the fact that China’s AI policy is

intelligence (Artificial Intelligence Act) accessible at:

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Impact of Industrial Policy on Five Other AI Critical

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It is estimated that automation-induced displacement of U.S.

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Accurate R&D assessments among nations is notoriously difficult to

Critical Infrastructures discussed in this article: AI workforce, data availability, IP policies

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AI requires increasing innovation in computation hardware and

Abundant Data Access

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In China, such human privacy rights may constrain private sector