EU-funded investment in artificial intelligence and regional specialization

The paper assesses the geographical distribution at NUTS2-level of European Union-funded investments related to artificial intelligence (AI) during the programming period 2014-2020. It also examines the relationship between this specialization pattern and regional characteristics using a spatial autoregressive model. The results show that in the period 2014-2020, around EUR 8 billion of EU funds were targeted for AI investments in the European regions. More developed regions have a higher specialization in AI EU-funded investments. This specialization also generates spillover effects that enhance similar specialization patterns in neighboring regions. AI-related investments are more concentrated in regions with a higher concentration of ICT activities and that are more innovative, highlighting the importance of agglomeration effects. Regions that have selected AI as an innovation priority for their Smart Specialization Strategies are also more likely to have a higher funding specialization in AI.