Study claims AI will spur growth on par with the steam engine

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A study predicts AI will spur growth similar to groundbreaking technologies such as the steam engine, for at least the next decade.

The simulation run by the McKinsey Global Institute shows artificial intelligence has the possibility to add 1.2 percent to annual gross domestic product growth until at least 2030.

For perspective, that represents $13 trillion of additional global economic activity. Such growth is equivalent to other landmark developments such as that of the steam engine.

AI is among the most sought-after technologies globally. Much like 5G, countries are vying to become leaders in the space.

Russian President Vladimir Putin recently said:

“Artificial intelligence is the future, not only for Russia, but for all humankind. It comes with colossal opportunities, but also threats that are difficult to predict.

Whoever becomes the leader in this sphere will become the ruler of the world.”

China and the US, the world’s largest economies, are the other major players in the AI race who aim to fully utilise the rapidly advancing technology in order to retain their lead.

Beijing has already set out its five-year plan which includes AI. The nation aims to be a leader by 2030.

Compared to the global average, China’s labour productivity is low and the economy is becoming reliant on consumption. Without AI, it’s likely the country will struggle to achieve its target growth rate.

Despite the economic benefits. there continues to be a concern about AI increasing wealth inequality.

“The productivity-enhancing, labour-saving technology is a challenging issue for all of the economies in the world,” Takashi Miwa, chief Japan economist at Nomura, said at a press briefing on Tuesday.

Like many experts, Miwa believes AI poses a threat to low-skilled jobs.

There will also be a severe disparity between countries. According to the McKinsey analysis, developed countries – likely to emerge as AI leaders – are set to benefit economically 20 to 25 percent more than current levels.

Emerging markets could only gain half of that, according to the report.

Are you surprised by the prediction? Let us know in the comments.

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