New York City is poised to benefit from an increasingly AI-powered economy, but its position is far from guaranteed. The Bay Area remains the global leader and other cities are competing hard for New York’s number-two spot.
As AI becomes enmeshed with nearly every facet of the global economy, cities that become hubs for AI-powered innovation are poised to deliver well-paying jobs, more effective municipal services, and a better quality of life. But as the pace of technological change accelerates, New York City’s economic development playbook will have to keep up. By focusing on what AI builders need to succeed—and how their success can benefit all New Yorkers—policymakers can maximize NYC’s opportunity in an increasingly AI-powered world.
There’s no time to waste: Other cities and regions are aggressively courting AI companies and talent, while trumpeting their significantly lower housing prices, office rents, electricity costs, and taxes. Cities from Montreal to Dubai are creating AI-focused innovation districts and embracing AI solutions to civic problems. Austin is building on its strength as an AI hub by adopting AI-powered building permitting tools to speed up housing construction. And Taiwan has broken ground on a major new AI business park, which has already attracted interest from computing giants AMD and NVIDIA.
Capturing a growing share of the global AI economy could help spark thousands of new, well-paying jobs at a time when much of the city’s job growth has been in low-wage occupations and private sector employment is up just 2.5 percent since before the pandemic hit.
Our new report, Maximizing NYC’s AI Opportunity, puts forward a handful of fresh ideas to attract and retain these innovative companies; property tax abatements and help financing capital improvements just won’t cut it. To realize the full potential for job creation and societal benefit that AI can unleash, New York City leaders will need to craft a different economic development playbook than has been used in the past—one that plays to New York’s unique strengths and addresses the specific needs of AI builders.
First, the city should leverage its greatest asset: the opportunity to deploy AI solutions at massive scale in one of the world’s most complex urban environments. The city should launch three major challenge-based AI procurements in areas such as housing affordability, street safety, and social services, attracting AI innovators with the opportunity to propose innovative solutions to significant problems, rather than bid on a narrowly defined scope of work. If the AI solution is successful in a pilot phase, then the company would receive a significant prize: a scaled-up city contract.
Second, the city should dramatically expand access to public data through application programming interfaces (APIs) and real-time feeds. No tax incentive is as valuable to AI innovators as access to rich, real-world data for developing and testing solutions, but while New York has been a pioneer in open data over the past decade, it’s past time for an upgrade. A major new effort to unlock access to real-time city data would be a beacon to AI builders from across the globe, allow technologists to propose novel solutions to perennial problems, and potentially enable the city to develop a new revenue stream if that data is used to create commercially viable products and services.
Third, the city should offer subsidized computing power to AI start-ups that move to or add jobs in New York City. Demand for compute exceeds supply by a factor of ten, with many small start-ups devoting half or more of any capital raised to compute alone. By offering subsidized compute to start-ups that meet specific goals—from adding jobs to participating in paid internship and training programs—the city can attract more AI builders here and help start-ups compete with bigger players.
The race to define the AI era is on. To ensure that New Yorkers benefit, policymakers need to develop a new economic development playbook to maximize the city’s AI opportunities. Failing to seize this moment could mean losing talented workers, seeing companies move away, and watching entrepreneurs build the future elsewhere. By acting now, New Yorkers will secure a central role in shaping and benefiting from an increasingly AI-powered world.
Eli Dvorkin is editorial and policy director of the Center for an Urban Future. Winston Fisher is a partner at Fisher Brothers, CEO of AREA15, and co-chair of New York City’s Regional Economic Development Council.
