The future of AI is unknown and so is how different countries and societies will choose to interact and regulate AI. A new study from the McKinsey Global Institute gives a glimpse into this question by comparing the United States to Europe. The paper finds that the United States is better prepared to benefit from AI than Europe because of the ways that the U.S. has embraced innovation over-regulation.

Europe’s approach to AI is characterized by preemptive regulation and strict risk-based rulemaking. Last month, the European Union (EU) provided more details on the comprehensive AI Act that will be enacted next year. The Act will include strict penalties for noncompliance and grants legal power to the newly formed AI Office, responsible for monitoring and exacting judgments on tech companies.

Concurrently, the European Court of Auditors, a government agency that monitors revenue and expenses, released a report encouraging the EU to “pick up the pace” because “the EU has so far had little success in developing Europe’s artificial intelligence ecosystem, and has failed to accelerate AI investment on a par with global leaders.”  More succinctly, Europe cannot attract developers and entrepreneurs because of laws that make it nearly impossible for innovation to thrive.

The United States has taken a different path and has led in investing, adopting, and progressing artificial intelligence. Hubs of innovation have formed in the absence of excessive bureaucracy and helped pave the way for a more promising future. The McKinsey report notes that the dynamism of the U.S. economy has prepared the labor market to adapt to AI. When new skills and products are demanded, the free market of the United States is able to adapt to meet those demands.

Even though America has so far taken the correct path on AI leadership, there is still the possibility of backsliding into the European model. New laws and regulations are proposed almost every day that make it more difficult for the United States to maintain its AI lead. This lead isn’t just against places like Europe, but also countries like China, which is investing billions in AI.

Fostering a healthy culture around AI takes work: learning what laws already exist to address problems with AI should they occur, encouraging competition between products so that the consumer can judge what best suits their needs, and creating a landscape where smaller companies and entrepreneurs are not blocked from development by expensive compliance procedures. This approach is the best guarantee of continued leadership and dynamism.