WASHINGTON — A new report from the Progressive Policy Institute (PPI) unveils an AI innovation toolbox for governors: a practical policy framework designed to help states compete for investment, jobs, and leadership in the rapidly expanding artificial intelligence economy. Authored by Dr. Michael Mandel, Vice President and Chief Economist at PPI, “An AI Innovation Toolbox for Governors” identifies five strategic levers (tax incentives, smart energy policy, university partnerships, workforce training, and AI extension programs) to help states attract AI investment, boost productivity, and create well-paying jobs.
With U.S. businesses investing over $700 billion annually in software and tech giants spending $180 billion in AI-related capital outlays in the first half of 2025 alone, the report warns that states focused solely on regulating AI risk are missing out on transformative economic growth.
“Governors once competed for auto plants. Today, they must deploy a full AI innovation toolbox to attract cutting-edge businesses and build durable growth,” said Mandel. “That means creating the right incentives, ensuring grid readiness, training workers, and helping small businesses adopt AI to remain competitive.”
The brief highlights forward-looking state initiatives in New Jersey, New York, Florida, and others as models for attracting AI-related investment and spurring innovation. It also calls for states to move quickly, citing a “window of opportunity” that may close as industry leaders finalize siting decisions for data centers and research hubs.
Key policy tools detailed in the report include:
Read and download the report here.
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Media Contact: Ian O’Keefe – iokeefe@ppionline.org
