Technology and economics often go hand in hand. The invention of the steam engine in the 1800s and early computer chips in the mid 20th Century generated copious amounts of economic growth. AI has a unique ability to improve both the capital and labour levers in the economy. According to a study done by Accenture, AI will double economic growth by 2035.
AI aims to create intelligent behaviour in computers. Using cognitive mapping these machines or computers can respond in the same way humans do. The only difference is they have a vast network of complex data at their disposal. Advanced as the human brain is, we still cannot achieve this.
AI has the power to augment complex physical tasks requiring both adaptability and agility. Thanks to cognitive mapping, AI can do both effectively- acting as a super fast, super smart human-being. This can augment the production process on a large scale, allowing for greater production and less cost.
How Does AI Influence the Economy?
AI is unique as it has the potential to influence both capital and labour. Capital measures the value of human-made goods and the means of production. Labour represents work carried out and the skills dedicated to the work. Economic growth occurs when capital or labour increases, or when they’re used more efficiently.
AI creates intelligent machines that are able to increase capital efficiency by reducing factory downtime and increasing production. As a result, capital grows.
AI computers are also able to execute risky or monotonous tasks that will take hours for a human to do, allowing for more original thought and innovation.
Data collection and integration, for example, can take humans days to achieve. The AI technology processes large amounts of data in a number of seconds, allowing human skills to intervene and do the work that really matters – analysis. Fields like actuarial science are getting reinvented by AI. It becomes a faster, smoother process allowing for more opportunities for growth in this field and many others.
In the legal environment, AI technology can filter through documentation that will usually take hours of manpower to complete. AI does this in a number of seconds, therefore cutting down on lawyers’ hours and giving them extra room to analyse the information it spits out.
AI has begun to extend to the public space, allowing for an innovative solution to relieve pressure on depleting human resources. Japan is using robots as carers to solve their care worker shortfall of 370,000 caregivers.
“We believe that machine learning…will help people to get into business opportunities, parse out the activities that they don’t want to do, and focus more on their passions,” said Accenture’s CTO and leader of the company’s Technology Innovation & Ecosystem group, Paul Daugherty.
This focus on innovation will only advance the progress of new technology. Soon, AI innovation will be propelled at a rate where it can diffuse through each country’s economy.
Doherty believs there are limitless ways AI can be used to increase, improve and mobilise the workforce.
“Look at a platform like Google Translate. It’s an amazing platform because you can leverage and integrate refugees coming to countries to learn about the language…they get integrated faster, they get a job faster – nobody thought about that, but people are using it this way…I think we’re going to see many examples of this.”
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What Will Happen to our Jobs?
Technology often allows for movement away from manual or routine tasks. There is an inevitable fear of unemployment that goes along with this, especially when it comes to unskilled labour. Although unemployment does negatively impact economic growth, AI is not out to replace humans, rather it is out to advance our capabilities.
For example, a large manufacturer equips workers with headsets capable of laser-guided precision. These helmets employed machine learning to learn best practices for the job and improve over time. The employees still had work, and their productivity and quality of work improved monumentally. Better and greater amounts of products equals more sales which equals a greater flow of money in the economy. According to Accenture, AI can lead to a 40% productivity improvement.
Which Countries Will Grow and Who Will Fail?
Accenture recently conducted a study, combined with expertise from economists and AI researchers, about the longer-term economic impact of artificial intelligence around the world. Geography does indeed have an impact. It all depends on the size of your consumer population. China and the United States have a huge consumer population, therefore, a new business model will be easily absorbed. In other words, greater production will sell more.
Annual growth rates in 2035 of gross value added. Source: Accenture and Frontier Economics
The Downside?
Despite the benefits of AI, technological advancement has its own risks. Tesla and SpaceX CEO Elon Musk has repeatedly warned against AI, going so far as to declare that competition for the technology will be the “most likely cause of World War III.” Earlier this year, Musk said humans must somehow merge with machines or risk becoming irrelevant in the age of AI. The billionaire is working on a company called Neuralink to do just that.
So Now What?
Economic growth can only take place where it is absorbed. In order to drive adoption of these technologies, innovation needs to become our primary concern.
Daugherty believes change is inevitable but it does have a process:
“There’s a phrase we use that I think speaks well on how to approach AI, which is think big (which is the imagination), start small and find something you can apply it to on a comparative scale faster, and move it out through enterprise.”