The State of AI Competition in Advanced Economies

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October 06, 2025

### The State of AI Competition in Advanced Economies

Alex Haag

Global competition in artificial intelligence (AI) has intensified in recent years. Some assessments emphasize US exceptionalism, while others argue that China is eroding US dominance. By contrast, the progress of other advanced foreign economies (AFEs) receives far less attention. Existing cross-country comparisons rely largely on composite indices that, while useful as benchmarks, are subject to weighting and aggregation biases that may obscure important dimensions of AI capacity. A clearer understanding of cross-country AI capabilities can help better contextualize global AI competition.

This note brings together international comparisons on key metrics to assess countries' relative preparedness and performance in AI. The analysis shows that the United States retains important advantages in infrastructure (with the exception of electricity-related infrastructure), compute capacity, and investment conditions. AFEs face greater challenges in scaling compute resources and attracting investment. China has achieved rapid gains in research output and adoption, though its position in enabling infrastructure is less clear. [1](https://www.federalreserve.gov/econres/notes/feds-notes/the-state-of-ai-competition-in-advanced-economies-20251006.html#fn1 "footnote 1") Taken together, these comparisons suggest a global landscape in which, despite incre

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