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The Global Economic Impact of AI

AI has many benefits in many fields for humans to make our lives easier, increase productivity, save cost, create new jobs, better decision-making, and higher safety. According to an article published by The Social Talks on January 15, 2024, AI has been around since the 1950s and was formally defined as the ability of robots to perform specific tasks that previously only humans could do.

One of the great advantages of AI is in the healthcare industry. Assisting doctors in diagnosing patients by analyzing medical images. According to a report published by the World Health Organization (WHO), some estimates suggest that as many as 4 in 10 patients are harmed in primary and ambulatory settings while up to 80% of this harm can be avoided. AI can heighten accuracy and reduce or even eliminate human errors. According to an article published by Investopedia on December 8, 2023, global domestic product (GDP) is expected to increase by 7 percent nearly $7 trillion and boost productivity growth by 1.5 percent due to the use of AI in finance.

But there are serious threats that come from AI such as lower salaries, reduced hiring, job displacement, and deepening inequality within society and between rich and poor nations. According to an article published by IMF BLOG on January 14, 2024, AI will affect almost 40 percent of jobs around the world and 60 percent in advanced economies some will be replaced while others will be complemented. Historically, displacement due to technology or automation has often been offset by the creation of new jobs and the emergence of occupations, and AI is predicted to complement and not completely substitute the workforce.

In the past new technologies replaced routine tasks but the difference with AI impact is on highly skilled jobs. A lot of professional worker AI can do their job as well and more efficiently, so this time the impact of AI will not only be felt by the working class but by the middle class. In the last 50 years, technological advancement favoured those with advanced education such as a university degree or technical education. AI is going to have major disruptive effects some businesses will be able to adapt while others will disappear and even entire sectors may be changed. Many professional workers will still reap great benefits from AI such as data analysis and software development which will lead to higher productivity.

It will take time for AI to be incorporated into business practices to raise the productivity of the labour force but it is not known how fast that is going to happen. According to an article published by Al Jazeera on January 15, 2024, the World Economic Forum (WEF) surveyed more than 60 chief economists from the private and public sectors 94 percent of them predicted AI to boost productivity in high-income economies over the next five years, but 53 percent for low-income economies. AI has great potential to improve human lives in disparate spheres such as healthcare, education, employment, and entertainment, but if not managed carefully it could create new risks that pose big threats to humanity that will be faced in the future.


Edited by: Megha Siddapura Manjunatha

Image: CNBC

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