156th edition of the Economic Kaleidoscope

by | May 28, 2024 | Actualités, Economie

In this edition, we portray how Artificial Intelligence AI is currently doing wonders in small Caribbean Island called Anguilla. The article entitles An AI-Powered Boost to Anguilla’s Revenues is a very interesting analysis of the positive impact of AI.

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An AI-Powered Boost to Anguilla’s Revenues

By Flavien Moreau **

A Caribbean Island is receiving a fiscal boost from internet domain registrations and offers lessons for others.

AI technologies like ChatGPT hold great promise to spur productivity growth and innovation globally. They have also generated an unusual boom in Anguilla, a British overseas territory and member of the Eastern Caribbean Currency Union, whose .ai country-code internet domain has become a favorite among technology companies across the world. Since the launch of ChatGPT in November 2022, registrations of .ai domain names have skyrocketed—surging from 144,000 registrations in 2022 to 354,000 in 2023.

In 2023 alone, this surge in .ai domain registrations generated EC$87 million in revenue (approximately US$32 million)—just over 20 percent of the government’s total revenue for the year. This marks a dramatic increase from previous years, when revenue from .ai domain registrations hovered around 5 percent. Looking ahead, the government expects revenue from .ai domain registrations to stabilize at around 15 percent of total government revenue, as the initial rush of registrations gradually slows.

Given that Anguilla is heavily dependent on tourism, with tourism activities accounting for 37 percent of GDP, the .ai domain registration boom is also playing an important role in diversifying the economy, thus making it more resilient to external shocks.

Anguilla’s story is not unique among Small Island Developing States, as others like Tuvalu (.tv) have benefited from favorable country code top-level domains assigned in the 1990s by the International Telecommunication Union. Although capitalizing on this “virtual endowment” has presented challenges for others, Anguilla has been successful with its pricing model, charging US$140 for a two-year domain registration. This model not only encourages new registrations but also guarantees a steady stream of income from renewals, given that about 90 percent of domains are renewed after two years. Expired .ai domains have proven to be highly valuable too; for example, the domain “litigate.ai” was auctioned for US$13,000 in 2023.

In response to this financial windfall, Anguilla’s authorities have committed to a prudent fiscal strategy, paying down debt and prioritizing capital expenditure. The injection of funds from .ai domain registrations can benefit key infrastructure projects such as the development of the airport. The government also plans to invest these revenues in long-term, sustainable projects in areas like renewable energy. As with many Caribbean neighbors, the Blue Economy—including sustainable fishery and biodiversity preservation—remains the government’s medium-term focus.

** Flavien Moreau is an economist in the IMF’s Western Hemisphere department.


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