2 min
Could Artificial Intelligence Improve a Country's Credit Rating? New Research Says Yes
Artificial intelligence is already transforming industries, reshaping labour markets and changing how governments deliver services. Now, new research suggests AI development may also influence something far less obvious: a country's ability to secure favourable credit ratings and access lower-cost capital. A study co-authored by Lance Y. Hunter, PhD, a professor at Augusta University, and Glen Biglaiser, PhD, Regents Professor at the University of North Texas, finds a significant positive relationship between national AI development and sovereign bond ratings. Published in the International Area Studies Review, the research examines sovereign bond ratings across 101 countries between 2020 and 2023, using ratings from Moody's and Standard & Poor's alongside measures of national AI readiness. Lance Hunter, PhD, is a political science professor at Augusta University whose expertise in political behavior, elections and political communication makes him a valuable resource for journalists covering the growing influence of artificial intelligence on American politics. View his profile AI and Economic Confidence The researchers found that countries with more advanced AI capabilities generally received higher sovereign bond ratings, even after accounting for a range of economic, political and social factors. Their analysis suggests AI development may strengthen national economies by increasing productivity, improving government efficiency and supporting economic growth. These improvements can contribute to stronger public finances and greater confidence in a government's ability to repay its debts. The findings have potentially significant implications for governments seeking to attract investment, finance infrastructure and reduce borrowing costs. Government Efficiency Matters One of the study's most notable findings concerns the relationship between AI development and government effectiveness. Using statistical mediation analysis, the researchers found that government effectiveness accounted for 32.2% of the relationship between AI development and Standard & Poor's ratings and 26.1% of the relationship with Moody's ratings. The research also identified national income and gross savings as contributing factors, reinforcing the connection between technological development, economic performance and sovereign creditworthiness. The findings suggest that national AI strategies may have financial implications extending beyond innovation and industrial competitiveness. Opportunities and Risks The researchers also caution that AI's economic benefits are not guaranteed. While greater adoption can increase productivity and improve public services, poorly managed implementation could contribute to job displacement, inequality and economic instability. Their findings underscore the importance of responsible AI development, particularly policies that support workers while encouraging technological innovation. The study, Artificial Intelligence Development and Sovereign Bond Ratings, offers a new perspective on how emerging technologies may influence international finance and government borrowing. As governments worldwide increase investments in artificial intelligence, Hunter's research raises important questions about whether technological readiness could become an increasingly influential consideration in assessments of national economic strength. Lance Y. Hunter, PhD, is available to provide expert insight into the relationship between artificial intelligence, government effectiveness, sovereign debt, international political economy and the economic implications of emerging technologies. To connect with Dr. Hunter for an interview or learn more about his research, visit his profile below.





