AI’s disruptive economic impact, an India check

Source:The Hindu

For Prelims:  Large Language Models, Generative Al, Al chatbots.

For Mains: Impact of Artificial Intelligence (AI) on the economy.

Highlights of the Article:

• AI adoption boosts productivity, customer satisfaction, and employee retention through generative AI tools that upskill employees.
• AI has the potential to significantly increase global GDP, as projected by reports from PwC and Goldman Sachs Research.
• Automation by AI, including generative AI, can negatively impact employment, wages, and the labor share, particularly for blue-collar workers and those with lower education levels.
• AI's disruption is more likely to affect middle-class, white-collar jobs compared to previous technological advancements.
• India should focus on AI education and training to seize opportunities and mitigate potential negative effects on employment, considering China's projected economic gains from AI.

Context: 

The context of the article is the impact of Artificial Intelligence (AI) on the economy, particularly focusing on the positive effects of AI adoption, the potential disruptions to employment, and the opportunities and challenges associated with AI.

UPSC EXAM NOTES EDITORIAL ANALYSIS:

1.Introduction:

The article explores the impact of Artificial Intelligence (AI) on the economy, considering the positive effects of AI adoption, potential challenges in employment, and the associated opportunities and concerns. 

2.Positive Effects of AI Adoption:

• A study involving over 5,000 customer support agents in the Philippines showed that AI tools boosted worker productivity by 14% and improved consumer satisfaction.
• Survey results among employees of LinkedIn's top 50 companies in the United States indicated that almost 70% found AI helping them be faster, smarter, and more productive.
• The anticipated gains from AI's current impact were modest, but 32% of respondents expected larger gains over the next five years.

3.Potential Economic Growth:

• PricewaterhouseCoopers (PwC) predicted a potential increase in global GDP by 14% or $15.7 trillion by 2030 due to ongoing technological advancements in AI.
• A report by Goldman Sachs Research stated that generative AI alone could raise global GDP by 7% or almost $7 trillion over a 10-year period.

4.Concerns about Job Displacement:

• Research by Daron Acemoglu of MIT and Pascual Restrepo of Boston University found that robot adoption has a negative effect on workers, reducing the labor share, employment, and wages.
• Between 50% and 70% of changes in the US wage structure over the last four decades can be attributed to relative wage declines of worker groups specialized in routine tasks experiencing rapid automation.

5.Impact on Different Job Sectors:

• Analysis by Goldman Sachs suggests that 15%-35% of work in the US economy is exposed to automation.
• Over 85% of employment growth over the last 80 years can be explained by technology-driven creation of new positions.
• Opportunities and Challenges for India:
• The PwC report suggests that China is projected to experience the greatest economic gains from AI, with a projected 26% boost to GDP by 2030.
• It is recommended that India focuses on education and training in AI to take advantage of new opportunities and mitigate potential negative effects on employment.

6.Conclusion:

The editorial demonstrates the positive impact of AI adoption on productivity and economic growth, along with concerns about job displacement and challenges in various job sectors. The data presented indicates the potential economic gains from AI and the need for education and training to adapt to its advancements. Understanding the implications of AI will help countries like India navigate the associated opportunities and challenges presented by this transformative technology.