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The rise of AI is mirroring that of the Industrial Revolution in more ways than one

The rise of AI is mirroring that of the Industrial Revolution in more ways than one

Originally posted by Mikaela Dery @ createdigital.org.au

The maxim “the future is here, it’s just not equally distributed” could soon hold new meaning after a recent study found AI is set to significantly contribute to GDP – but only for those countries that can implement it early.

The research, conducted by the McKinsey Institute, aimed to forecast the global impact of AI. Researchers analysed current trends in AI development and deployment around the world and predicted the technology has the potential to contribute an additional $13 trillion to the global economy by 2030. This translates to a 16 per cent increase on today’s cumulative GDP, which is comparable to the economic impact of technologies that spurred on the Industrial Revolution such as the steam engine.

But like the Industrial Revolution, this economic growth could come at a cost. While some countries such as China have laid out clear policies to further incorporate AI into their workforce, countries without such a clear agenda might fall behind. 

According to the study, those that fall behind are likely to be countries that are less financially secure. Researchers voiced concerns the economic contribution of AI could, therefore, be unequally distributed and lead to greater worldwide inequality.

The ‘haves’ and ‘have-nots’

Researchers defined AI as technology belonging to one of five different categories: computer vision, natural language, virtual assistants, robotic process automation and advanced machine learning. They predicted 70 per cent of companies would use some form of AI by 2030, although less than half will have “fully absorbed” all five categories.

The rate of absorption, researchers suggested, will likely be significant. For organisations, this could mean that late adopters of AI might “lag behind in developing capabilities and attracting talent”.

Countries and companies that can establish themselves as leaders in this space could capture 20 to 25 per cent more in economic benefits compared to current levels. Emerging economies might only gain half of that, the report said.

For individuals the cost could be more acute, especially in developing countries where much of the workforce is employed in manual jobs. The report predicts job losses or wage cuts could have devastating effects, as workers in these roles have already tenuous incomes and a more limited ability to segue into higher paying jobs in the ever-expanding tech sector.

Nomura’s Chief Japan Economist Takashi Miwa agreed with the researchers’ predictions, saying at a press briefing that AI might lead to greater income inequality.

“The productivity enhancing, labour-saving technology is a challenging issue for all of the economies in the world,” he said.

The importance of leadership

This is not to say the imminent proliferation of AI is entirely negative. In fact, the report predicts that the rise of AI could be a great contributor to employment, if it is managed carefully.

“Using historical trends of new jobs created to old jobs, and adjusting for a lower labor-output ratio that considers the likely labor-saving nature of AI technologies via smart automation, new jobs driven by investment in AI could augment employment by about 5 percent by 2030,” the report stated.  

“The total productivity effect could have a positive contribution to employment of about 10 per cent.”

But such a future will require careful planning from both governments and organisations.

“Policy makers will need to show bold leadership to overcome understandable discomfort among citizens about the perceived threat to their jobs as automation takes hold,” the report stated.

“Companies will also be important actors in searching for solutions to the mammoth task of skilling and reskilling people to work with AI.”

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