September 20232023AIFocus

FOCUS on the Rise of AI: Global Economics

Anna Thibodeau
International News Editor

The closest thing the global economy has ever faced to the eruption of generative artificial intelligence (AI) currently being experienced across the world was the creation of the internet and its subsequent boom in the mid-1990s, according to The New York Times. This time, however, experts foresee generative AI to have both a larger and quicker effect on global GDP. This is creating an increasing number of fears and questions on how AI will affect the future.

The New York Times reports that the McKinsey Global Institute released a report in June claiming that generative AI is set to add $4.4 trillion to the global economy annually. Reuters reports that this addition could be as much as $14 trillion to $22 trillion annually. The McKinsey report also predicts a productivity boost that could save 60 to 70 percent of workers’ time through automation, says The New York Times.

Some fear AI will replace workers, while others see it as an opportunity to augment productivity. Brookings explains that this swing will depend on whether industries move towards AI that complements or substitutes labor. AI that substitutes labor has the possibility of displacing jobs, while AI that complements labor makes human intervention indispensable to the success of the AI. One study that analyzed call centers that augmented their calls with AI saw up to a 30 percent increase in productivity and found that customer sentiment was higher as well. 

AI also presents potential opportunities and barriers in developing countries. AI could be used to offer better or more readily available medical diagnostics in areas with low access to sufficient medical care, reports Foreign Affairs. AI advances could also fill a need for therapy in areas with high rates of mental illness and limited access to therapy, help people find and fill out all the necessary permits to start a business more quickly, tutor students in areas or countries with limited opportunities or weak education systems, or even identify the poorest households in a given area to help decide how to distribute aid in a crisis. However, while all of these innovations could be life changing for people in developing countries, Foreign Affairs also mentions that much of the developing world still does not have access to basic technologies such as wide use of smartphones and broad band internet, which are necessary in order to implement AI. 

The World Economic Forum reports that AI preparedness needs to be a top priority in these developing countries. Without immediate public-private cooperation, these countries risk facing an even larger technological divide, job market disruption, and a decrease in public trust leading to further political instability. However, policymakers in these economies seem to only have vague ideas on how to approach AI legislation and weak understandings of the power of this technology.

It is clear that the goals of AI usage in Western countries are already different than what they would be in developing countries. The New York Times adds that some companies have started using generative AI to keep medical records and summarize patient visits. The medical field does not have room for error though and does not plan to adopt a wide usage of AI in its current form, as it is susceptible to mistakes and falsifying information. In developing countries, however, Foreign Affairs reports that less than half of all clinical cases are currently handled correctly. This suggests that while an imperfect AI would be a risk in the medical field in the Western world, it may be an improvement to the medical world in some developing countries.

The New York Times also reports, however, that widespread use of AI in any country is likely still years away; McKinsey predicts mainstream adoption to take eight to 27 years. Companies such as JP Morgan are in the experimental phase with AI and are not yet ready to use it in their everyday business practices with real clients. The main goal of most businesses right now is using generative AI to save time and streamline work inside their companies.

The long-term effects of generative AI on the global economy are generally still a mystery. Brookings reports that AI technologies could eventually affect as much as 80 percent of the U.S. work force in some form and will need less oversight as it continuously and rapidly gets more accurate. The development of generative AI also marks the first time that automation has threatened a change in creative and unstructured cognitive jobs. What is known, however, is that AI will undoubtedly change the workforce and economy. The question that remains is how that change will affect human jobs.

Image courtesy of Pexels

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