AI’s disruptive economic impact, an India check

Source: The post is based on the article “AI’s disruptive economic impact, an India check” published in “The Hindu” on 11th July 2023.

Syllabus: GS 3 – science and technology (awareness in the fields of computer)

News:

How has Artificial Intelligence (AI) influenced daily life and business operations?

AI has emerged as an indispensable tool in our daily lives and businesses, contributing to authoring poems, devising pickup lines, and solving complex problems. Large language models and generative AI have spurred global interest in AI advancement. The application of AI extends across various fields, with an increased adoption of AI systems such as ChatGPT.

Are there positive impacts from AI adoption?

Several studies indicate a positive correlation between AI adoption and increased productivity.

A study by MIT demonstrated how AI tools enhanced worker productivity by 14% and improved consumer satisfaction. It is suggested that AI may not replace employees, but workers using AI may substitute those not skilled enough.

A LinkedIn survey found that 70% of employees in top US companies perceived AI as beneficial to their productivity. Further investments and business restructuring are required to fully utilize AI’s potential.

How will AI impact economic growth?

A study by PricewaterhouseCoopers predicts a global GDP increase of 14% or $15.7 trillion by 2030 due to AI advancements.

The Kent A. Clark Center for Global Markets survey showed 44% of US experts and 34% of European experts expect a substantial increase in GDP per capita due to AI.

However, some experts like Professor Nicholas Bloom suggest that AI might not significantly impact per capita GDP.

Could AI Negatively Impact Employment?

Despite its benefits, AI also poses risks, such as labour replacement. Research by Daron Acemoglu and Pascual Restrepo indicates that robot adoption negatively affects employment and wages, particularly for blue-collar workers and those with lower education levels. Automation is associated with wage inequality, particularly in industries undergoing rapid automation.

What are the Prospects for India in the AI era?

India, given its vast population, needs to consider the possible negative impact of AI on employment.

Regulation of AI could deter investments and opportunities, but India can potentially leverage its demographic dividend by focusing on AI education and training, especially as online education gains traction after the COVID-19 pandemic.

What is the Overall Impact of AI?

While the impact of AI on productivity and economic growth is largely positive, its effect on the labour market and societal implications can be challenging.

Many experts agree that AI may bring about significant societal challenges in the labour market, politics, data privacy, crime, and warfare.

There is a need for robust cyber regulations and potentially tax capital to balance the returns from capital and labor and mitigate the displacement effects. Adapting to the ever-evolving AI advancements is crucial to progress.