The Logic of Strategic Assets: From Oil to Artificial Intelligence

TL;DR

This paper clarifies the concept of strategic assets by developing a theory based on rivalrous externalities, applying it to historical and current cases like oil and AI to improve policy debates.

Contribution

It introduces a new theoretical framework based on externalities to analyze strategic assets, addressing analytical confusion in policy and academic discussions.

Findings

Identifies three types of rivalrous externalities: cumulative, infrastructure, and dependency.

Applies the theory to historical cases like the Avon 2 engine and US-Japan tech rivalry.

Analyzes contemporary AI debates using the proposed externality-based framework.

Abstract

What resources and technologies are strategic? This question is often the focus of policy and theoretical debates, where the label "strategic" designates those assets that warrant the attention of the highest levels of the state. But these conversations are plagued by analytical confusion, flawed heuristics, and the rhetorical use of "strategic" to advance particular agendas. We aim to improve these conversations through conceptual clarification, introducing a theory based on important rivalrous externalities for which socially optimal behavior will not be produced alone by markets or individual national security entities. We distill and theorize the most important three forms of these externalities, which involve cumulative-, infrastructure-, and dependency-strategic logics. We then employ these logics to clarify three important cases: the Avon 2 engine in the 1950s, the U.S.-Japan technology rivalry in the late 1980s, and contemporary conversations about artificial intelligence.