States are using AI in various ways, even building and training the workforce to support implementation. While there are initiatives aimed at increasing state-level AI capacity, readiness varies.
The new BCG report, “Are US States Ready for the AI Economy?” examines AI in the public sector, revealing a stark divide between how leaders classify AI’s importance and how ready they are to strategically implement the technology. While previous BCG research identified the U.S. as one of the most prepared economies for AI’s impact, the latest report argues that “progress at the state level is sometimes fragmented.”
The report reveals that nearly 90 percent of the leaders surveyed see AI technology as a vital component of economic competitiveness.
However, there are barriers to adoption, both internally and externally. The No. 1 barrier, as cited by 39 percent of respondents, is the lack of a cohesive economic strategy for AI. The next greatest internal barrier mentioned was a limited AI understanding within the agencies. A lack of AI skills among workers can also pose barriers to adoption, fueled in part by a lack of alignment between education and labor, but some universities are integrating AI into their curriculum.
Outside of the government agency, public perception of AI — and more specifically, a lack of public trust — can hinder adoption.
AI task forces — groups of technology leaders or stakeholders with expertise in the area — are also gaining ground across the U.S. The report revealed that 55 percent of states have established a task force or designated an official to address the impact of AI on the economy; 36 percent have done so to address workforce impact.
Only 6 percent of respondents said that their state is advancing a coordinated plan to address AI’s economic impact; 18 percent said this is the case for its workforce impact.
The report offers a playbook focused on four areas in which public-sector stakeholders can support AI readiness and adoption. First, they can equip the workforce for AI’s advancement with education and training. Second, they can support industry adoption across sectors by supporting small- and medium-sized businesses. Third, they can create AI ecosystems by convening universities, investors and industry to share resources and knowledge. Finally, they can expand research through public-private partnerships that focus on developing AI — for social and economic impact.
“Moving from conversations to commitment requires new approaches to leadership and coordination,” the report said, underlining that public-sector officials who focus on these four areas will strengthen state economies.
The report offers specific actions that public-sector leaders can take in each of these areas. For example, for workforce development, teaching AI skills early and making training available on-demand can help. For industry adoption, state governments can demonstrate how AI delivers return on investment and fuel continuous learning across sectors. For AI ecosystems, which the report dubs “innovation clusters,” a statewide AI hub like that in New Jersey or sandbox environments can enable safe experimentation. To support research and development, governments can expand access to data and leverage the power of coalitions.
The report recommends state leaders assess their AI readiness based on the following factors, to move from task forces to action: ambition, skills, policy and regulations, investment, research and innovation, and ecosystem.
There has been debate recently about whether state or federal government, or both, should have the authority to regulate AI, and there is bipartisan agreement that both should have a role in regulation. Although varied state-level policy could create a fragmented legislative landscape, experts argue this can actually create opportunities for AI innovation.
