Artificial Intelligence (AI) is often discussed as something that could replicate human intelligence and replace human work. AI of course has major disruptive implications for jobs. But there is another way of thinking about it: one in which AI provides “machine usefulness” for human workers, augmenting but not usurping jobs while helping to create productivity gains and spread prosperity.
Source: Bloomberg
Capital Economics analysed how different countries might benefit from AI, and concluded as follows:
- The US leads in benefiting from AI, followed by Singapore, the UK, South Korea, Canada, and Hong Kong.
- China lags due to regulatory restrictions on AI and a focus on domestic market protection.
- Japan and the Eurozone face challenges in adopting and diffusing AI technology.
- Emerging economies may experience slower AI diffusion, affecting productivity and services outsourcing.
- Developed economies may gain more from AI, potentially widening the income gap with emerging economies.
Different countries will respond to the challenges and opportunities of AI in different ways, driven by culture, regulation, technology, adaptability, history, etc. The US is an economy where employers can fire large numbers of people with relatively few consequences, upending the lives of their employees so they can shift quickly to a new paradigm. At the other extreme, it’s difficult to imagine China’s Communist leadership, with its emphasis on social stability, allowing the kinds of rapid change that may be looming thanks to AI. That will help to insulate many workers. But if some experts are correct, speculating that AI will “double everyone’s productivity,” it will also mean China doesn’t obtain the same advantages that AI will surely bring.
While there is a lot of hype about AI, it’s already having a real impact on the US economy. Jens Nordvig, the founder and CEO of analytics company Exante Data, estimates that AI investments will contribute in the region of 0.5% to gross domestic product growth this year. Nordvig says: “There is a big debate about whether the current trend in semiconductor stocks is a bubble like with the dot-com period of the late 1990s…But the AI spending is very real, and growing faster than key types of tech spending in 2000-2001.”
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