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The Impact of Artificial Intelligence on the World Economy Posted on : Nov 19 - 2018

Artificial intelligence has the potential to incrementally add 16 percent or around $13 trillion by 2030 to current global economic output-- an annual average contribution to productivity growth of about 1.2 percent between now and 2030, according to a September, 2018 report by the McKinsey Global Institute on the impact of AI on the world economy.

“If delivered, this impact would compare well with that of other general-purpose technologies through history,” notes McKinsey. “Consider, for instance, that the introduction of steam engines during the 1800s boosted labor productivity by an estimated 0.3 percent a year, the impact from robots during the 1990s around 0.4 percent, and the spread of IT during the 2000s 0.6 percent.”

The McKinsey report is based on simulation models of the impact of AI at the country, sector, company and worker levels. It looked at their adoption of five broad categories of AI technologies: computer vision; natural language; virtual assistants, robotic process automation, and advanced machine learning. Data sources included survey data from approximately 3,000 firms in 14 different sectors and economic data from a number of organizations including the United Nations, the World Bank and the World Economic Forum.

Taken together with a recent report by PwC, which found that AI technologies and applications will increase global GDP by up to 14% between now and 2030, the McKinsey report offers more evidence that AI is poised to deliver big economic opportunities for those companies and workers best positioned.

Below is a summary of the report’s key findings.

Several factors will significantly impact such AI-driven economic changes. AI could lead to a gross GDP growth of around 26 percent or $22 trillion by 2030. The major contributors to this figure are the automation of labor, which could add up to 11 percent or around $9 trillion to global GDP by 2030, and innovations in products and services, which could increase GDP by about 7 percent or around $6 trillion by 2030.

However, in addition to its economic benefits, AI will also lead to significant disruptions for workers, companies and economies. There will likely be considerable costs associated with managing labor-market transitions, especially for workers being left behind by AI technologies, which could reduce the gross impact of AI by around 10 percentage points, leading to the aforementioned net GDP increase of 16 percent or $13 trillion by 2030.

The economic impact may emerge gradually and be visible only over time. McKinsey’s models showed that AI marketplace adoption will likely follow a typical S curve pattern with a slow start in the early stages, followed by a steep acceleration as the technology matures and firms learn how to best deploy it, then tapering off in the technology’s late stages. In the case of AI, the contributions to growth are likely to be 3 to 5 times higher by 2030 and beyond than between now and 2023. View More