Macro Markets and Machines_The Economic and Market Transformation Driven by AI_GWM report - Flipbook - Page 48
Macro, Markets, and Machines
November 2025
In response to growing demands for clarity, the number of AI-related regulations have been accelerating
(Exhibit 42). The chart below shows a sharp increase in regulatory activity in the United States, underscoring how
public trust concerns are driving policy action as AI technologies become more pervasive.
Exhibit 42 – Early Days of AI Regulation
70
60
50
40
30
20
10
0
2016
2020
2024
# of AI-related regulations in the U.S.
Sources: Scotiabank Economics; Stanford HAI 2025 AI Index Report.
Trust also hinges on disciplined investment in public-good infrastructure: linked, well-governed data sets;
outcome-focused evaluation; and capacity to redesign workflows, to name a few essential assets. These are
not just technical enablers – they lower fixed costs, enable diffusion, and reinforce the credibility of AI systems
in practice.
Sustaining trust requires a pace calibrated to evidence and risk. Moving too fast can erode trust; moving too
slowly can leave needs unmet and stifle learning. Governments should start where benefit-risk ratios are high,
measure rigorously, and scale what works. Durable welfare gains will come not from one-off deployments, but
from iterative improvement.
Section 5.4: Concentration, Coordination, and Custodianship
As AI systems scale, preserving market contestability becomes a central challenge. Scale advantages in data,
models, distribution, and compute accelerate progress, but also risk entrenching incumbents and raising
switching costs. The priority is to preserve rivalry where scale is unavoidable, through open interfaces, data
portability, and credible pathways for challengers to interoperate with dominant platforms. These measures
help keep innovation at the frontier active and competitive even in markets that are not yet fully modular or
easily disaggregated.
Cross-border interoperability is essential to avoid costly fragmentation. While AI can lower frictions in trade
through translation, discovery, and compliance, divergent rules on data transfer, testing, IP, and localization are
splintering markets. The guiding principle should be risk-based interoperability that converges on assurance and
audit requirements sufficient for trust, while allowing jurisdictions to calibrate risk appetites. According to the
World Trade Organization, AI could boost global trade by nearly 40% by 2040. Realizing these gains, however,
depends on open, predictable policy frameworks and deeper cooperation to bridge digital divides – a path the
world is not currently on.
Scotia Wealth Management
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