Cool, your country fell way behind every other developed nation in this and you've missed out on a huge industry. In the end, your citizens will still use the products, they'll just probably end up having to pay more for the same functionality.
Given how fast compute needs replacing, it's not much of a fall behind.
Citizens will indeed use them anyway, but there's already free models that are OK and which only need 8x current normal device RAM. Bubble bursts tomorrow? Currently-SOTA models on budget phones by the end of the decade.
They can’t even use the products as a result of their obsession with government regulation. For example, Apple released a universal translator, literally right out of Star Trek, but the EU won’t be getting it either.
Other countries can shoulder the cost of the hand waving grift. If it turns out they succeed, lift their models and weights. Eat some potential IP liability for not incurring economic damage ("inefficient capital allocation") chasing magic. Be first, be smarter, or cheat ("you can just do things"). DeepSeek showed a bit of this (model training efficiency), as Apple does slow walking their gen AI. Why incur material economic risk to be first? There will be no moat.
https://hbr.org/2001/10/first-mover-disadvantage