The Political Economy and Geopolitics of AI Regulation

Regulating artificial intelligence has become a first-order strategic battleground, yet most policy debates remain trapped in technology-centric silos. This paper develops a political-economy and geopolitical lens that explains who regulates AI, how, and why.

We distinguish “supplier states” that pursue global influence through GenAI production from the majority of “adopter states” that focus on downstream use, and show how this divide, together with Big Tech’s lobbying power, fragments the rule-set and endangers market contestability.

Drawing on comparative policy evidence and corporate case material, we highlight three failure modes—regulatory drift, litigation-led rule-making, and ecosystem lock-in—and argue for a layered governance architecture that separates model-, deployment-, and system-level oversight while embedding sector-specific expertise.

The framework equips executives and policymakers to treat regulation not merely as risk mitigation but as deliberate market design, aligning AI diffusion with broader economic and geopolitical objectives.

Read the full paper here.