Cultivating Intelligence at Scale: Building Adaptive National Capability in the Inference Economy

Frontier AI is rapidly emerging as globally accessible cognitive infrastructure, transforming machine intelligence from a scarce strategic resource into a widely available productive input. This transition fundamentally changes the basis of international competition. As access to intelligence converges, competitive advantage increasingly depends on the institutional, organizational, and societal capabilities required to translate globally accessible intelligence into sustained developmental outcomes, marking the emergence of the Inference Economy—an economic order in which value creation depends less on producing intelligence than on organizing and translating its effective use within national economies. To operationalize this transition, the paper introduces Adaptive National Capability (ANC)—the cumulative national stock of institutional, organizational, and societal translation capability that emerges as a country’s institutions, organizations, and citizens repeatedly and effectively translate globally accessible intelligence into sustained developmental outcomes—and develops a diagnostic framework for evaluating its evolution and comparative strength across nations. The Inference Economy is conceptualized both as an operational system, in which AI-mediated reasoning is embedded in organizational and institutional workflows, and as a broader economic order emerging from the cumulative diffusion of these practices. The paper identifies the translation layer as the principal bottleneck of the Inference Economy and formalizes this proposition as the Translation Primacy Hypothesis: “Among countries with comparable access to globally accessible intelligence, differences in developmental performance are explained primarily by variation in ANC.” The framework further incorporates the Human Capital Dependency Gradient to distinguish capabilities that remain strategically dependent on sustained domestic human capital from those increasingly provisioned through global cognitive infrastructure. By integrating general-purpose technology theory, institutional economics, sociotechnical infrastructure studies, AI governance, and the absorptive-capacity and dynamic-capabilities traditions, the paper identifies institutional translation capability as the missing mechanism linking universal AI access to national development. The paper concludes that AI inaugurates Globalization 2.0—a cognition-driven phase of globalization in which nations increasingly depend on shared inference infrastructure and globally accessible intelligence.