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Luukas Ilves

Unlocking AI’s potential: A blueprint for governance and prosperity

We are living in a transformative era – an era where artificial intelligence is no longer a buzzword but a revolutionary force redefining governance, economies and societies. Much like the internet and PC revolution of the 1990s, AI promises another seismic shift in how we live and work. To ignore this shift, or worse, to mishandle it, is to risk irrelevance. For governments striving to leap forward in digital transformation and provide tangible economic and societal benefits through services and policy, AI is not a future prospect. It is here now, demanding action, strategy and leadership. 

Decision-makers worldwide grapple with AI’s opportunities and challenges, but a clear truth emerges – the public sector cannot afford to lag behind. And no, this is not about experimenting for the sake of playing around with the latest generative large language models (LLMs). It is about transforming governance to meet the expectations of 21st-century citizens. Conflict zones, notably the one in Ukraine, show that urgency can supercharge AI development. However, other governance challenges, from healthcare to the environment, should also spur us on. 

How can governments position themselves to fully leverage AI’s potential for public good? At stake is what we might call a “holy trifecta” of good government – driving societal progress, economic growth and resilience in the face of uncertainty. Yet the challenge lies in the fact that we do not fully know which AI use cases will unlock the greatest value. 

Learning from the frontrunners 

Applying AI in government is a practical reality rather than a theoretical exercise. Critically, the countries that already excel at digital transformationEstonia, Singapore and othersare also among those moving fastest in AI adoption. 

Estonia’s digital-first approach has long been a benchmark for streamlined public services, anchored by robust data governance, automation and digital identity systems. Now, AI is enhancing those systems, offering citizens faster, more personalised and transparent services. Estonia has more than 140 use cases of AI in government, most of which contribute to day-to-day functions. 

Singapore is pioneering AI applications in urban governance. From predictive traffic management to advanced healthcare analytics, they help define what it means to be a smart nation. Decades of digital literacy, iterative policymaking and a strong culture of technical excellence have helped them quickly pivot into AI. 

Ukraine, while not yet embedding AI in all public services, has shown how AI can be leveraged for military, cyber defence and crisis management amid an existential threatfurther underscoring that a solid digital foundation translates into agility and adaptability. 

What unites these success stories is the use of technology – but also a culture of user- centredness, a willingness to iterate and experiment, deeply interlinked data infrastructure (and high adoption of digital identity) and a high degree of existing automation.  

In Africa, some nations are also showing leapfrogging potential by adopting AI without being constrained by older legacy systemsan opportunity to innovate at remarkable speed. As generative AI is still in its early stages, no country’s lead is insurmountable. Nations that have previously lagged in digital government can seize this moment to catch up and even surpass others. 

From code generation to smart compliance 

Beyond mere experimentation, governments can leverage existing enterprise AI tools for immediate, concrete applications. Individuals and small teams already use AI for coding assistance, data analysis and automated content generation, democratising skills that were once highly specialised. For larger organisations, AI agents are already beginning to streamline procurement and hiring in the private sector.  

Because generative AI can deal with unstructured data more effectively than earlier methods, it can help bridge existing gaps in digital transformation. Lack of structured data or advanced coding expertise is less daunting when AI can quickly parse unstructured information, generate code, and reveal data-driven insights. 

Confronting AI’s complex challenges 

Despite its promises, AI does not come without pitfalls. Among the challenges governments face are ethical concerns, operational hurdles and societal scepticism. Of course, these are not trivial issues. But they can be solved with the right approach. 

Operational challenges must take centre stage. Simply building high-value applications is difficult, and many governments operate with legacy systems that are simply not equipped for the demands of AI tools’ scalability and interoperability. The solution lies in establishing a strong, secure, interoperable and future-ready digital foundation. Without this, AI risks becoming an overhyped liability rather than a transformative asset. 

Ethical questions also loom large. We have seen how biased or poorly thought-through algorithmic deployments can worsen systemic inequalities. Consider the cautionary tale of the UK organ donor algorithm, which went awry due to simplistic system design and the lack of feedback loops to react to errors and damage.  

Finally, public opposition is a real risk. Even in Estonia, where there is broad support for AI to make public sector applications more efficient and convenient, surveys show that a majority of respondents are hesitant to take humans out of the loop from decision-making processes. 

To overcome these challenges, governments should leverage the superpower of transparency. Open access to data, algorithms, software, use cases and outcomes of algorithmic decision-making invites better oversight and broader public contributions.  

Governments should also bear in mind the cost of not having AI. In many cases, even imperfect AI systems can outperform human decision-making in terms of consistency, predictability and fairness. AI-powered government services – with their clear data trails and accountability – can promote greater transparency (because “you can’t bribe a computer”). Furthermore, as AI models grow increasingly complex, “AI to monitor AI” is becoming an essential strategy to ensure ethical and effective use. 

Picture 2030: AI’s role in the economy and society 

What will AI-driven governance look like by 2030?  

Economically, AI has the potential to reduce costs, streamline services and enable brand-new lines of innovation. Socially, it can improve inclusivity and responsiveness in areas such as education, healthcare and benefits delivery. Yet uncertainties remain. We might see bottlenecks in computer or data quality, and we must be prepared for Gen AI’s flaws to persist. 

The real risk is standing still. Countries unwilling to adapt, experiment and engage with AI could find themselves falling behind, both economically and in terms of public service quality. Likewise, governments who act too quickly without checks and balances risk amplifying biases or failing public trust. 

Leading with purpose in the AI era 

Fully harnessing AI’s benefits may require redesigning many of our institutions, regulations and processes. If we want AI to optimise for equity, cost-efficiency or any other social good, we must first decide what that means in practice. After all, algorithms have no inherent value systemno moral compassuntil we embed one. Doing so means asking fundamental questions. What outcomes do we want to achieve in our public services? Which trade-offs are acceptable, and which are not? 

Far from a trivial exercise, this process demands a rigorous look at our collective goals and the metrics we use to measure success. When AI is equipped with the right parametersclear objectives, robust data and ethical constraintsit can often devise novel and more efficient pathways toward achieving those goals than humans alone might have imagined. But until we define those aims, AI can’t align with them. 

By clarifying our values, specifying desired outcomes, and enforcing transparency and accountability, we allow AI to do what it does best: explore uncharted solutions and create genuine public value. This is the true potential of AI in governmentif we choose to lead with purpose.