Artificial intelligence, institutional innovation and economic growth: A conceptual framework

Abstract

This study develops a theoretical and conceptual framework to explain how artificial intelligence (AI) contributes to economic growth through institutional innovation channels. Integrating Schumpeterian growth theory with institutional economics, AI is conceptualized not merely as a productivity-enhancing input but as a general-purpose technology that reduces information asymmetries, lowers transaction costs, and improves governance quality. The paper proposes that AI adoption stimulates institutional innovation, which in turn increases total factor productivity and supports sustainable growth. A stylized-facts analysis based on OECD and World Bank indicators shows that economies with higher digital capacity, R&D intensity, and stronger institutions exhibit superior productivity and growth performance. The findings suggest that the growth effects of AI are conditional on institutional quality and organizational adaptability. The study contributes to the literature by linking technology, institutions, and growth within a unified framework and provides policy implications for digital transformation and long-term development strategies.