New research studying the impact of advances in artificial intelligence (AI) on world economies identifies three possible scenarios. What’s interesting, is the difference between them.
The Economist Intelligence Unit’s research, sponsored by Google, covers five countries—the U.S., UK, Japan, South Korea and Australia—and the countries of Developing Asia as a group. The resulting report, “Risk and Rewards: Scenarios around the economic impact of machine learning,” explains that the first scenario assumes a higher degree of complementary skills between humans and AI than that of the baseline because governments will invest more in upskilling than current trends suggest, so the scenario models greater human productivity through upskilling. In this scenario, every analyzed country and group received benefits, but some more so than others.
The second scenario assumes investment in access to open source data, tax credits to spur private sector adoption of machine learning, and advances in computing efficiency drive hardware costs down. This scenario yields the most encouraging results for economic growth. Each of the five countries, as well as Developing Asia as a group, experience higher levels of growth relative to the group’s baseline forecast, but all of the countries covered see GDP rise by at least one percent above the baseline between now and 2030.
The final scenario, and the only negative one, assumes a lack of any upskilling or data sharing, and results in AI taking the jobs of humans. The modeled losses in this scenario are considerable: Both Britain and Australia’s economies actually shrink in U.S. dollar terms—with the UK’s economy becoming $420 billion smaller and Australia’s losing $50 billion. The U.S. and Asian economies continued to grow but significantly below expectations, the report explains.
Based on the research, the report’s authors note that the near-term effect of AI would be “neither utopian nor dystopian,” and that managing expectations will be critical. They also caution that a lack of communication between developers, businesses and governments could worsen the consequences.
“There are many understanding gaps when it comes to AI, but one of the most important to bridge is that between developers and businesses and government institutions. The former are often only dimly aware of what the latter two really need, and the latter, in turn, are often only dimly aware of the potential solutions the former could provide,” the authors write. “A more robust and frequent exchange of information, capabilities and needs would help to remedy this [situation].”
The authors add that educating the public and increasing investments in research and development will be vital to alleviate any economic damage. Furthermore, they explain, there is a pressing need for increased investments in skills and training.
“That there is going to be churn in labor markets as a result of AI is widely accepted. Vocational education, now lacking in most countries, will need to become more prevalent,” the report continues. “The growing focus on STEM education is important, as well, but the expected rise in demand for ‘soft skills’ such as team building, cooperation and critical thinking means that liberal arts should not be neglected. The right mix of these three, and others, will require constant monitoring and close cooperation between industry, educators and policymakers.”
What are your thoughts on the possible economic impact of AI? What challenges do you think need to be addressed so the use of AI can compliment human skills to improve productivity?