The economic consequences of artificial intelligence

Article published in the Economic Review of 2023

Over the last few years, significant advances have been made in the field of artificial intelligence (AI). From voice assistants to online advertising and healthcare, the areas in which AI is used are increasing, and its impact on our daily lives is growing. The release of ChatGPT in November 2022 propelled the issue of artificial intelligence to the top of economic and political agendas.  This article focuses on the economic consequences associated with the development of AI as well as the challenges and possible risks it poses.

Due to the broad scope of its potential applications, AI is considered a general-purpose technology which has the ability to generate long-term productivity growth and improve living standards. AI can contribute to increased productivity by automating tasks, analysing big data, and freeing up time for workers to focus on more complex matters. The impact of AI on (measured) productivity growth, however, depends on factors such as implementation delays, measurement errors, complementary innovations, macroeconomic policies, and the social and economic context.

While national statistics show a slowdown in productivity growth, research suggests a link between the level of digitalisation within a firm and its productivity growth. The impact of AI on employment is still debatable, however, as one of the risks associated with AI is the replacement of certain categories of workers or skillsets. Nevertheless, studies suggest that employment levels have remained stable since the start of its adoption. While AI can outperform people in certain tasks, humans still have an advantage, notably when it comes to soft skills.

In order to deal with the challenges raised by AI, policymakers can prioritise AI research and development, invest in infrastructure and talent, and establish regulatory frameworks to promote innovation while minimising risks. They can also invest in education and training programmes to develop the skills necessary to work with AI and establish ethical and regulatory frameworks for its development and deployment.

In sum, artificial intelligence brings with it benefits, challenges and risks in equal measure. AI could well be the next big general-purpose technology, driving productivity growth across the economy, but its potential impact on the economy and jobs must be scrutinised and its development wisely regulated.