Strategic Fragmentation and Its Consequences: Capital Flows and Innovation Capacity in the Baltic Sea Region’s AI Transition

Purpose: The Baltic Sea Region (BSR) possesses the critical innovation assets-capital, industrial base, and digital talent-required for global Artificial Intelligence (AI) leadership.However, this potential remains unrealized.The purpose of this paper is to diagnose this "Superpower Paradox" by identifying the systemic barriers to regional integration.It argues that the primary obstacle is not a lack of strategy, but a "Battle of the Blueprints"-a conflict between competing, non-interoperable national models for AI development that fragment the ecosystem.Design/Methodology/Approach: This study employs a multi-phase, mixed-methods desk research design to triangulate data sources.Phase 1 consists of a Systematic Literature Review (SLR) examining the theoretical underpinnings of Transnational Innovation Systems (T-RIS) and institutional lag.Phase 2 involves a Comparative Document Analysis (CDA) of over 20 official national AI strategies, legal acts, and policy programmes (2018-2025) from nine BSR countries (Denmark, Estonia, Finland, Germany, Latvia, Lithuania, Norway, Poland, Sweden).Phase 3 validates these findings through a qualitative expert elicitation (N=49) involving highlevel policymakers and industry leaders from the region. Findings: The research reveals five distinct, divergent national AI blueprints: 1) Germany's "Standardization & Sovereignty" model; 2) Poland's "Security & Scale" model; 3) Denmark's "Commercialization & Branding" model; 4) Sweden/Finland's "Consensus & Human-Centricity" model; and 5) the Baltic States' "Regulatory Agility & GovTech" model. The