The world is about to enter a digital revolution which has the potential to transform any economy and revive productivity, spur global growth and boost incomes across the world, as well as replace existing jobs and exacerbate inequality. The fast pace of artificial intelligence has drawn global attention, raising concerns and important questions about its economic impact. For example, AI in finance boosting GDP shows how AI can drive growth, but overall effects on economies remain mixed.
All we can say with a reasonable degree of confidence is that we will have to work out a set of policies that would enable us to exploit the enormous potential of AI in a way that would be safe for mankind. The new analysis by the IMF technical statistics looks into how AI may potentially change the labor market. Numerous researches caution on the possibility that AI will take over tasks. However, AI is likely to augment the work done by people in most situations. The two forces are taken into consideration by the IMF analysis.
AI’s impact on labor productivity depends on its capability and adoption timeline
The results are impressive: almost 40 percent of total world jobs are being vulnerable to AI. In the past, automation and information technology have been inclined toward routine tasks, and this is among the aspects that make AI stand out as it disrupts the high skills. Thus, AI is becoming an issue of larger concern to the developed economies than the emerging and developing markets, the latter of which also have increased chances of harvesting the benefits. In developed economies, 60 percent of jobs may be influenced by AI. About 50 percent of the exposed jobs stand.
A chance to improve through the adoption of AI and this would enhance productivity. There is even a possibility that certain jobs will be lost in the most severe instances. Instead, exposure to AI in emerging markets and in low-income countries will be 40 and 26 percent, respectively. Such indications are that, within emerging and developing market economies, AI will lead to a lesser number of disruptions.
Two thirds of occupations could be partially automated by AI
The hypothetical consequences of AI would be income and wealth inequality between countries. We may see polarization in the income groups, and those who will be able to capitalize on AI will be getting a hike in their productivity levels and wages whereas others who are incapable will also be left behind. Research indicates that AI has the capacity.
To make low-experience workers become more productive at a faster rate. Young workers have better chances of taking their opportunities whilst the aged may be unable to adjust. The impact on labor income will mainly depend on how much AI will supplement the efforts of high-paid workers. Provided that it can enhance such workers dramatically, AI can cause an unreasonable rise in their revenues. In addition, the productivity gains of the firms implementing AI is also likely to increase the amount of returns to capital, which may also help well paid employees.
Innovation leads to new occupations that account for most employment growth
The two phenomena had the potential of increasing inequality. Overall, AI will contribute to increasing inequality in the majority of situations; an issue that the authorities should actively seek to curb before technology contributes to increasing social tensions any further. States should set up universal safety fall nets and provide retention schemes to vulnerable employees, which is imperative. An inclusive transition towards AI can be achieved by safeguarding the livelihoods and minimising inequality. AI is being implemented in world businesses with a mind-blowing pace.
Which is why authorities should take some measures regarding the topic. The IMF has come up with AI readiness index by which it gauges how well the countries are prepared in the following areas such as in the digital infrastructure, human capital and labor market policies, innovation and economic integration, and the regulation and ethical concerns. The results help nations develop policies that are suitable to them. E.g. the factor measuring the years of education and the mobility of labor market, and the share of the population covered by the social protection networks is part.
Conclusion
Of the component of policies on human capital and labor market. Based on the assessment with the index the IMF technical staff determined the level of readiness of 125 countries. The result shows that the overall preparation of economies to embrace AI is higher in wealthier economies, including advanced and some emerging market economies.
As well as widely varying across countries, as lower-income economies alike. The index registered the best ratings in Singapore, the United States and Denmark, attributed to the excellent scores that they scored in the four categories analysed. Based on the data that was obtained by using the AI-readiness index, developed nations need to focus on the development and incorporation of AI at the same time as they come up with effective regulatory models. Such an orientation will promote a secure and respectable AI playing field, and thus maintain the confidence of the masses.
