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Modeling the impact of AI on the world economy

Artificial Intelligence can contribute tremendously to global economy activity. A study by Mckinsey Global Institute has shown that AI has a potential to deliver additional economic activity of around $13 trillion by 2030, or about 16% higher cumulative GDP compared with today, which is 1.2% additional GDP growth per year.

To show the impact of AI on the world economy Mckinsey has done a simulation that examined seven possible channels of impact specifically the impact of AI adoption, product factors direct impact on company productivity, and the externalities linked to the adoption of AI related to the broad economic environment and the transition to AI. . The categories of AI highlighted in the simulation are computer vison, natural language, virtual assistants, robotic process automation, and advanced machine learning.  Mckinsey simulation consists of three main steps, first, building on an understanding of the behavior of companies and the dynamics of various sectors to develop a bottom-up view of how to adopt and absorb AI technologies; Second, considering the likely disruptions that countries, companies, and workers are likely to experience as they transition to Artificial Intelligence; and third, examining the dynamics of AI for a wide range of countries by clustering them into groups with similar characteristics in order to have a global view.

Although AI can deliver a boost to economic activity, the benefits are likely to be uneven. In fact, AI could affect countries by widening the gaps between them and reinforcing the current digital divide. According to Mckinsey Leading AI countries could capture an additional 20 to 25 percent in the net economic benefits, compared with today, while developing countries might capture only about 5 to 15%.

 

Reference: https://www.mckinsey.com/featured-insights/artificial-intelligence/notes-from-the-ai-frontier-modeling-the-impact-of-ai-on-the-world-economy

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