Countries worldwide are advancing unique approaches to sovereign Artificial Intelligence (AI), tailoring their strategies to meet national goals and address specific challenges. Major players, including the European Union (EU), China, the United States (U.S.), and the United Kingdom (U.K.), each bring distinct priorities and methods to the global AI landscape.
The European Union
The EU emphasises “trustworthy and human-centric AI” with three core pillars: excellence, trust, and coordination. Its approach aims to balance technological advancement with robust ethical frameworks while fostering collaboration within the union and globally. By focusing on developing ethical, human-centered AI solutions, the EU seeks to position itself as a leader in aligning AI innovation with societal well-being.
China
China considers AI a strategic priority, tying it to its goals of economic growth, national security, and global competitiveness. Its threefold strategy — development, application, and governance — includes significant investments in AI research, integration of AI into various industries, and centralised governance mechanisms. China’s approach is defined by its ambition to harness AI’s transformative potential to secure its position as a global AI powerhouse. With DeepSeek, a new AI model it claims was developed for a fraction of the cost of OpenAI’s ChatGPT, China is also looking to undermine the U.S. approach of investing heavily in AI, or at least make doing so a tougher sell to investors, voters, and politicians. DeepSeek’s rapid user growth and low processing demands also saw it wipe $600 billion in value from Nvidia’s market capitalisation in a single day.
The United States
The U.S. pursues AI as a driver of innovation and leadership, focusing on three pillars: investment, adoption, and regulation. By increasing funding for AI research, encouraging widespread adoption across industries, and creating a balanced regulatory framework, the U.S. aims to maintain its global leadership in AI. This approach seeks to ensure both the responsible deployment of AI and sustained technological progress. In January 2025, President Trump announced a joint venture with Softbank, Oracle, OpenAI, and others that will invest up to $500 billion in AI infrastructure by 2029.
The United Kingdom
The U.K. takes a balanced approach to AI as an opportunity and a responsibility. Guided by research, development, and deployment pillars, the U.K. prioritises investment in research excellence, nurturing AI industries, and establishing governance frameworks. This strategy ensures the ethical use of AI while enabling the U.K. to harness its benefits in various sectors.
South Korea
South Korea views AI as a critical enabler of economic and military growth. Its “AI for Everyone” plan emphasises education and public-private partnerships. Leveraging its world-leading internet speeds, South Korea fosters collaboration, such as the multi-billion-dollar partnership between Korea Telecom and Microsoft, with the aim of expanding its AI market to $46.2 billion by 2027.
The Netherlands
The Netherlands introduced a generative AI strategy in January 2024, focusing on its open language model, GPT-NL. Supported by the Ministry of Economic Affairs and Climate, this initiative emphasises investments in AI infrastructure, including supercomputers, to strengthen both national and EU-level AI capabilities. The strategy underscores the Netherlands’ commitment to AI innovation while aligning with broader European efforts.
India
India has launched an ambitious AI Computing Mission with a budget of INR 10,000 crore. This initiative includes creating a sovereign AI infrastructure powered by 10,000 GPUs, promoting AI startups, developing multimodal models, and introducing AI courses in educational institutions. India’s focus extends to key sectors such as agriculture, healthcare, and education, aiming to foster AI innovation across urban and rural areas.
Shared Goals and Global Progress
Despite differing strategies, these nations share common objectives: leveraging AI’s transformative potential for societal benefit while addressing ethical, governance, and cooperation challenges. Smaller players like Japan, Taiwan, and others are also making significant investments, contributing to a rapidly evolving global AI landscape. Each country’s approach reflects its unique priorities, but together they highlight the universal recognition of AI’s role in shaping the future.
Potential benefits of sovereign AI to society
Sovereign AI holds the potential to significantly benefit global society and the economy. One of its most profound advantages lies in addressing major global challenges, such as poverty, disease, and climate change, by providing innovative and scalable solutions. These advancements can improve the quality of life, well-being, and dignity of billions of people worldwide.
Beyond societal impact, sovereign AI can drive economic growth by enhancing efficiency, productivity, and innovation across industries. Through smarter and faster decision-making, task automation, and valuable data insights, AI enables industries to optimise processes and remain competitive in an increasingly dynamic global economy.
Another critical benefit of sovereign AI is fostering a diverse and collaborative global AI ecosystem. By encouraging inclusivity, creativity, and excellence, nations can collectively build a more vibrant and advanced technological landscape. Such collaboration enriches the global knowledge base and accelerates innovation in AI.
The effects of sovereign AI on employment are expected to be twofold. According to reports, half of the jobs affected by AI will face challenges, such as displacement or redundancy, while the other half will benefit from increased productivity. However, the overall impact on emerging and developing countries is anticipated to be less pronounced, resulting in more limited productivity gains in these regions.
A nation’s preparedness for AI plays a vital role in maximising its benefits and mitigating risks. Factors such as digital infrastructure, economic integration, innovation capacity, human capital, labour market policies, and ethical regulations are key to determining a country’s readiness to leverage AI effectively.
A recent index evaluating 30 countries highlights disparities in AI preparedness. Leading nations like Singapore, the United States, and Germany rank at the top, while middle- and low-income countries occupy lower positions. The findings underscore the need for countries to prioritise AI preparedness in their policy agendas to fully harness the technology’s transformative potential.
AI’s role in securing foreign direct investments
AI has emerged as a crucial factor in attracting foreign direct investment (FDI), offering transformative potential across sectors such as infrastructure, manufacturing, healthcare, aerospace, and agro-food processing. By leveraging AI’s capabilities to enhance efficiency, productivity, and sustainability, countries can position themselves as innovation hubs, making them more attractive to investors. As the global economy evolves, nations that adopt AI effectively will gain a competitive advantage in securing FDI, fostering economic growth, and driving technological advancements.
AI-related projects have become a significant force in global FDI. Startups developing AI models have scaled rapidly, raising $25 billion in venture capital in the first half of 2023 — about 18% of global funding, according to Crunchbase. These investments often serve as a foundation for international expansion.
Since 2016, AI-related R&D projects alone have attracted 778 investments worth $26.8 billion globally, with India leading at 26.2% of this capital expenditure, followed by Canada (21.1%), Singapore (7%), the U.S. (6.8%), and Israel (5.1%). Major global corporations such as Meta, Infosys, Amazon, IBM, and Robert Bosch are prominent foreign investors in AI-related R&D, reflecting the increasing integration of AI in advanced manufacturing and other sectors.
Additionally, these projects have created approximately 160,172 high-value jobs, contributing to knowledge transfer and long-term development in host countries. This is particularly significant given the scarcity of AI talent, which remains concentrated in a few global hotspots. For instance, AI practitioners represent only 1.1% of engineers in the U.S., 1.4% in Europe, and 0.5% in China, highlighting the importance of fostering local AI ecosystems through foreign investments.
Research by Keqi Huang and Qiren Liu reveals that AI technologies, such as robot adoption, significantly influence outward foreign direct investment (OFDI) by firms in China. Using a firm-level dataset and a difference-in-differences (DID) analysis, the study found that increased robot adoption positively affects various OFDI categories, including sales, R&D, services, and consulting. However, it has no notable impact on buying OFDI.
The mechanisms driving this trend include increased output and growth in total factor productivity (TFP), which enhance firms’ capabilities to expand internationally. Firms with state-owned ownership or higher profits are more likely to engage in OFDI, particularly in wealthier OECD countries. Robustness tests using alternative methods and extended sample periods confirm the consistency of these findings.
AI is transforming financial markets by improving price discovery, deepening markets, and mitigating volatility during times of stress. However, its application also poses risks, such as contributing to market dislocations through quantitative trading and amplifying interconnectedness, liquidity challenges, and leverage risks.
Regulators, informed by lessons from the Global Financial Crisis, have implemented measures to enhance financial system resilience. As AI continues to influence financial markets, ongoing vigilance will be essential to address emerging challenges and maintain stability. In summary, AI’s ability to drive innovation, productivity, and economic expansion positions it as a powerful enabler for attracting FDI. At the same time, it requires strategic planning and robust governance to maximise its potential and mitigate risks.
Potential risks of sovereign AI to economies
Sovereign AI, while promising significant benefits, also presents notable risks that could adversely impact global society and economy. A primary concern is the potential to exacerbate inequality, polarisation, and conflict. The race for AI dominance might deepen existing divides and create new geopolitical tensions, further destabilising the global landscape.
Additionally, the integration of AI into various domains brings new vulnerabilities and uncertainties, threatening global stability, security, and order. These risks require proactive strategies to manage and mitigate the unintended consequences of rapidly advancing AI technologies.
Challenges of using AI for economic transformation in Africa
The African Center for Economic Transformation (ACET) highlights both opportunities and challenges in leveraging AI for economic transformation. While AI applications are already making strides in areas such as commerce, education, health, governance, and agriculture, there is a significant gap in policy frameworks to regulate and promote responsible AI use in Africa. Most African countries lack comprehensive strategies for innovation and digital transformation that integrate AI as a key focus.
ACET’s report emphasises the potential of AI in fiscal and monetary policymaking, noting the urgent need to build capacity, knowledge, and trust among policymakers and stakeholders. AI’s role in economic policymaking remains a frontier agenda globally, and the lack of digital leadership in African governments hampers progress in this area.
Several technical and structural barriers hinder the effective use of AI in economic policymaking. One key challenge is the usability of existing data, which is often outdated, poorly organised, and stored in inaccessible formats. Addressing these issues may require substantial institutional reform and political commitment.
Data access is another major hurdle. Government data alone may not suffice for AI-driven policymaking, necessitating collaboration with the private sector, which generates vast datasets from telephony, geolocation, wearables, financial transactions, and social media. Synthetic data also holds promise, as it reduces reliance on datasets directly linked to individuals. However, building trust between governments and the private sector and establishing legal frameworks for data sharing are essential to unlocking this potential.
To harness AI effectively, ACET recommends that African governments adopt informed policies to support AI innovation, promote responsible data practices, and foster collaboration between governments, private sectors, academia, and think tanks. Establishing a robust AI ecosystem will help African countries tackle development challenges, create successful startups, and build thriving digital economies.
A key priority is ensuring Africa’s ownership of its data. Data is a resource, and if a region chooses to outsource processing of that resource, it’s effectively outsourcing a large part of its economy. This requires legislation to regulate global technology firms and protect local data sovereignty. Policymakers must act swiftly to prepare for AI’s transformative role in fiscal and monetary policy, ensuring the continent is well-positioned to seize emerging opportunities.
By addressing these challenges and implementing the recommended strategies, Africa can leverage AI to foster economic growth, improve governance, and achieve sustainable development.