For What AI Could Do to Democracies, Look to the Petrostates

The rise of artificial intelligence (AI) holds the promise of increased wealth and productivity, but its impact on democratic institutions may mirror the political economy of petrostate nations such as Qatar, Saudi Arabia, and Russia. These countries, heavily reliant on hydrocarbon revenues, often feature concentrated economic power, high youth unemployment, limited investment in public goods like education and health, and governance by unaccountable elites. If AI-generated wealth is similarly concentrated among a few dominant firms, it could lead to comparable political and social outcomes, challenging democratic accountability and broad-based prosperity. Despite apparent differences—AI being a cutting-edge, general-purpose technology and oil a long-established industrial input—both sectors share characteristics that shape their economic and political influence. Both require substantial upfront investment and research and development, resulting in market dominance by a small number of large firms capable of capturing significant economic rents. The increasing substitution of labor by AI and robotics across many industries may reduce workers’ economic leverage, further concentrating wealth and power in the hands of a few. This dynamic risks creating an economy heavily dependent on a narrow, high-rent sector, weakening the incentives for democratic governance and accountability. Historically, states reliant on resource rents have exhibited weaker democratic pressures, which has often translated into limited social investment and persistent inequality. The fiscal theory of the state suggests that democratic institutions emerged partly in response to the need for broad tax bases to support complex societies and militarized labor forces. A concentrated AI economy could undermine this foundation by reducing the tax base’s diversity and diminishing labor’s bargaining power, thereby threatening the development or maintenance of democratic norms. As AI continues to transform economies worldwide, the distribution of its benefits will be crucial in determining whether it fosters inclusive growth and democratic resilience or entrenches oligopolistic control and political stagnation. Policymakers and societies face urgent choices about regulation, taxation, and public investment to ensure AI’s gains support equitable prosperity and democratic governance rather than replicating the challenges seen in petrostate models.