Direction of innovation under AI

Determine whether artificial intelligence steers innovation toward radical breakthroughs or toward incremental refinements by characterizing the direction of innovation attributable to AI in research and development.

Background

The paper studies how AI affects firms’ incentives to pursue incremental versus radical recombinations within a Schumpeterian quality-ladder framework. While the model provides results on how AI productivity and task automation affect optimal recombination distance, the broader question of AI’s ultimate effect on research direction is explicitly acknowledged as unresolved.

The authors frame their contribution as addressing this question but still describe it as an open question in the broader discourse on AI’s role in shaping innovation novelty.