IntroductionDependence on fossil fuel rents can impede economic performance by hindering diversification, diminishing innovation incentives, and entrenching rent-seeking distortions. Conversely, artificial intelligence (AI) possesses the potential to alleviate some of these constraints through enhanced productivity and improved production coordination.MethodsThis study employs an unbalanced panel dataset encompassing 72 countries from 2000 to 2022. We utilize fixed-effects, feasible generalized least squares (FGLS), and system generalized method of moments (GMM) models to investigate whether AI mitigates the adverse effects of fossil fuel rents on economic performance.ResultsOur findings reveal a negative association between fossil fuel rents and economic performance, alongside a positive association between AI and economic performance. Crucially, the interaction term between fossil fuel rents and AI is positive, indicating that AI ameliorates the detrimental impacts linked to fossil fuel dependence. This moderating effect is particularly salient in non-OECD economies, middle-income countries, and nations characterized by intermediate institutional quality. Further periodic analysis and rolling-window estimates demonstrate that this moderating effect predominantly manifests in later years. Robustness checks confirm the primary findings across alternative dependent variables, various measures of fossil fuel dependence, and additional control variables. However, the observed effect diminishes when AI is replaced with a broader information and communication technology (ICT) indicator.DiscussionThese findings suggest that AI offers the most substantial benefits in contexts where resource dependence obstructs diversification, productivity enhancement, and structural development, contingent upon the existence of requisite conditions for technological adoption. Therefore, while AI does not eliminate the inherent constraints associated with fossil fuel dependence, the evidence indicates its capacity to mitigate their impact when effectively implemented.