AI will add 1.2% to annual GDP growth over the next decade
The rise of the robots will have as large an impact on the global economy as the steam engine, according to a new study from the McKinsey Global Institute.
The study claims that artificial intelligence will add an extra $13 trillion to global economic activity by 2030, which is equivalent to 1.2% of additional GDP growth a year.
About 70% of companies will implement some form of AI by the end of the next decade, according to McKinsey. Early adapters are set to reap large financial benefits, with the chance to double their cash flow, whilst latecomers could see declines of 20%.
McKinsey also claim that technology may not have a “significant impact on employment in the long term” as AI may create employment opportunities “through the expansion of products and services” and “productivity gains” that can be reinvested into the economy.
In his IZA article about how new technology may change job design, Michael Gibbs states that “technology complements many tasks, increasing productivity, quality, and innovation,” supporting the view of McKinsey’s study.
Some experts fear that intelligent machines will displace large swaths of the workforce, catalyzing a labor market crisis. Gibbs also acknowledges this fear, saying “machines substitute for humans in many manual and routine jobs.”
According to the study, in order to “capture higher productivity growth as their GDP growth momentum slows,” developed countries will need to substitute labor with AI, particularly as wage rates are so high.
Nevertheless, the study suggests that “demand—and wages—may grow for those with digital and cognitive skills and with expertise in tasks that are hard to automate, but shrink for workers performing repetitive tasks.” With less advanced jobs making up 30% of jobs in 2030, down from 40% today.
Ultimately, Richard B. Freeman notes in his IZA article, that “policy can eliminate technology-induced joblessness,” so even with McKinsey’s findings of economic growth, government policy can secure the labor market.
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