Is the Global Economy Prepared for Artificial Intelligence?
Recent discussions among political and business leaders have centered around the potential impact of Artificial Intelligence (AI) on economies and businesses. As AI becomes more prevalent, economists at the International Monetary Fund (IMF) have conducted research to analyze its effect on the future of work.
The IMF’s report reveals that approximately 40 percent of global employment is exposed to AI, indicating that nearly 40 percent of jobs worldwide are under pressure. When broken down by economic classification, advanced economies face a 60 percent exposure, while emerging economies and low-income economies have exposure rates of 40 percent and 26 percent, respectively.
Despite concerns about AI’s negative impact on unemployment, economies are actively encouraging the use of AI to enhance productivity and fuel economic growth. Developed countries, in particular, seek new avenues of growth as their productivity rates stagnate. Many believe that AI could serve as the next engine of growth. According to the IMF research, while advanced economies may face more adverse effects, they are also more likely to harness AI’s advantages compared to emerging economies.
In previous technological revolutions, the impact has typically been felt by low- and middle-income jobs. However, AI presents a unique challenge as it is likely to impact high-income jobs. Advanced algorithms utilized by AI systems can analyze large-scale data, process images, recognize patterns, and make quick decisions. These tasks were previously undertaken by highly-skilled individuals who were relatively immune to previous cycles of automation, but they are not safe this time around.
IMF economists have developed a framework for measuring the workforce impact of AI. They use two criteria: exposure to AI and complementarity to AI. Exposure to AI refers to the degree of overlap between AI applications and the required human abilities in each occupation, while complementarity means that AI can be used as an additional tool to augment occupations.
As economies grapple with the widespread implementation of AI, it is crucial to strike a balance between reaping its benefits and minimizing the potential negative consequences. Adapting to this transformative technology will require careful planning and preparation, ensuring that workers are equipped with the necessary skills to thrive in an AI-driven world. Additionally, policymakers must be diligent in implementing measures that protect workers and mitigate any adverse effects on employment.
The IMF report sheds light on the challenges and opportunities that come with the rise of AI. It serves as a wake-up call for economies to prioritize understanding and adjusting to the implications of AI. By embracing AI responsibly and fostering an environment conducive to its successful integration, the global economy can navigate this transformative era with resilience and innovation.
