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Abstract

Project Mentor(s): Hideki Takei, DBA

Artificial Intelligence (AI) is transforming industries and accelerating global innovation, yet its benefits remain unevenly distributed. A nation’s AI readiness—its capacity to adopt and implement AI technologies—plays a crucial role in economic growth and technological advancement. Key determinants of AI readiness include digital infrastructure, data accessibility, government policies, research and development (R&D) investment, and workforce development. This study examines the relationship between AI readiness, AI adoption, innovation, R&D investment of a nation, Digital Infrastructure Index (DII) and Human Capital Index (HCI) using a Random Forest regression model. Findings reveal a strong correlation between AI adoption and innovation (r = .80), emphasizing the need for a conducive environment to drive innovation. R&D spending also contributes to innovation (r = .65), reinforcing the notion that nations investing in research and development gain substantial benefits. Digital infrastructure emerges as the strongest predictor of AI readiness (r = .961), highlighting the critical role of government investment in fostering innovation. However, maximizing its benefits requires well-designed policies and market integration strategies. These findings highlight the critical role of strategic investments in fostering AI-driven innovation. Strengthening digital infrastructure and labor policies can enhance AI preparedness and technological competitiveness. Future research should explore optimization strategies for resource-constrained economies and the long-term impacts of AI-driven growth. Presentation recording available in the SOURCE 2025 playlist: https://www.youtube.com/@cwusource5518

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