Generative AI unlocking a US$4trillion opportunity – Part II
The future of Generative AI should be one of inclusive growth, where all nations have the opportunity to thrive in the new digital economy
Generative AI can substantially increase labour productivity across the economy, but that will require investments to support workers as they shift work activities or change jobs. Generative AI could enable labour productivity growth of 0.1 to 0.6 percent annually through 2040, depending on the rate of technology adoption and redeployment of worker time into other activities. Combining generative AI with all other technologies, work automation could add 0.2 to 3.3 percentage points annually to productivity growth.
Image source: McKinsey
However, workers will need support in learning new skills, and some will change occupations. If worker transitions and other risks can be managed, generative AI could contribute substantively to economic growth and support a more sustainable, inclusive world.
The era of generative AI is just beginning. Excitement over this technology is palpable, and early pilots are compelling. But a full realisation of the technology’s benefits will take time, and leaders in business and society still have considerable challenges to address. These include managing the risks inherent in generative AI, determining what new skills and capabilities the workforce will need, and rethinking core business processes such as retraining and developing new skills.
Generative AI is a game-changer in the world of technology and business. It has the potential to revolutionise industries, enhance productivity, and contribute significantly to economic growth. However, it also presents new challenges that need to be addressed, including workforce transformation and the need for new skills. As we stand on the brink of this new frontier, it is crucial for businesses and society to understand and harness the power of generative AI while managing its risks effectively.
Increasing economic inequality
Developed economies, with their advanced infrastructure and access to resources, are poised to reap the benefits of this technology. They have the means to invest in the necessary infrastructure, the skilled workforce to implement and manage these systems, and the capital to support workers as they transition into new roles or tasks. This positions them to harness the productivity gains offered by Generative AI, potentially adding 0.1 to 0.6 percent to their annual labour productivity growth through 2040.
On the other hand, emerging economies face a different reality. While they too stand to benefit from the advancements in AI, their ability to do so is hindered by several factors. Limited infrastructure, lack of access to skilled labour, and insufficient capital to support worker transitions pose significant challenges. These economies risk falling further behind as they struggle to keep up with the rapid pace of technological advancement.
The potential for Generative AI to widen the economic gap between developed and emerging economies is a pressing issue. As we move forward, it is crucial to ensure that the benefits of this technology are accessible to all. This will require concerted efforts from governments, businesses, and international organisations to invest in infrastructure, education, and training in these emerging economies.
One way that generative AI could exacerbate inequality is by leading to job displacement. As generative AI systems become more sophisticated, they will be able to automate more and more tasks that are currently performed by humans. This could lead to widespread unemployment, particularly among low-skilled workers.
Another way that generative AI could exacerbate inequality is by concentrating wealth in the hands of a few. The companies that develop and own generative AI systems are likely to be the ones that benefit the most from this technology. This could lead to a widening gap between the rich and the poor.
Finally, generative AI could exacerbate inequality by reinforcing existing biases. As these systems are trained on large datasets of human-generated data, they are likely to reflect the biases that are already present in society. This could lead to generative AI systems being used to perpetuate discrimination and exclusion.
There are a number of steps that can be taken to mitigate the risks of generative AI exacerbating economic inequality. These include:
- Investing in education and training to help workers who are displaced by generative AI find new jobs.
- Ensuring that the benefits of generative AI are shared more widely, rather than being concentrated in the hands of a few.
- Developing generative AI systems that are less biased and more inclusive.
By taking these steps, we can help to ensure that generative AI technology is used to benefit all of society, not just the wealthy few.
In addition to the risks mentioned above, there are a number of other ways that generative AI could exacerbate economic inequality. For example, generative AI could be used to create fake news and propaganda that could be used to manipulate public opinion and sow discord. This could lead to social unrest and political instability, which could further exacerbate inequality.
It is important to be aware of the potential risks of generative AI and to take steps to mitigate them. By doing so, we can help to ensure that this technology is used for good, not for harm.
The potential of Generative AI is immense. But as we navigate this new frontier, we must strive to ensure that its benefits are equitably distributed, lest we risk exacerbating existing economic disparities. The future of Generative AI should be one of inclusive growth, where all nations have the opportunity to thrive in the new digital economy.
An opportunity for India
India ranks fifth in countries with the most AI investment, with total investments in AI start-ups standing at $3.24 billion. The country is also the second-largest producer of engineering graduates, which could potentially provide a strong talent pool for future AI development. This is an opportunity for a major economy like India to pitch itself into the race. Nevertheless, there is a lot of catch up that needs to be done.
As we stand on the brink of a new era in technology, the potential of Generative AI is becoming increasingly evident. From automating tasks to revolutionising industries, this technology promises to add trillions of dollars to the global economy. However, as we embrace this new frontier, we must also consider its potential implications on the global economic landscape, particularly the widening gap between developed and emerging economies.
Generative AI, with its ability to automate tasks and augment human capabilities, is set to transform the world of work. Industries such as banking, high tech, and life sciences are predicted to see the most significant impact, with potential value additions equivalent to hundreds of billions of dollars annually. However, this transformation is not evenly distributed.
[To be concluded]
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