The Institutional Foundation of AI readiness: Analysis of developing economies

Recognizing AI's transformative potential, a nation's capacity to adopt and integrate AI technologies is fundamentally shaped by its underlying institutional and structural environment. This study investigates the impact of institutional foundations on Artificial Intelligence (AI) readiness in developing countries using Nigeria data. The study utilized Robust Least Squares (RLS) regression model to provide empirically sound estimates by mitigating the influence of heterocsedasticity often present in time series analysis. The findings reveal a significant and positive relationship between key institutional indicators and AI readiness. Specifically, the results indicate that human capital development and regulatory quality are critical determinants of a country's preparedness for the AI era. High levels of human capital encompassing skills, education, and labor market development, suggest a greater capacity to leverage, innovate, and adapt to AI systems. Similarly, superior regulatory quality, which ensures clear, predictable, and effective policy frameworks, fosters a supportive environment for AI investment, deployment, and ethical governance. The study concludes that to significantly boost Nigeria's AI readiness and harness its potential for economic growth, policymakers must prioritize strategic investments in both talent development and the strengthening of regulatory and governance frameworks because these institutional pillars are essential prerequisites for transitioning from AI awareness to successful national AI integration.