- This article highlights the positives of AI adoption and its adverse economic impact as well.
About Artificial Intelligence (AI):
- It refers to the simulation of human intelligence in machines that are programmed to think like humans and mimic their actions.
- It is based on the principle that human intelligence can be defined in a way that a machine can easily mimic it and execute tasks, from the most simple to those that are even more complex.
- The goals of artificial intelligence include computer-enhanced learning, reasoning, and perception.
- AI is being used today across different industries from finance to healthcare.
Positive impacts from AI adoption
- Increase productivity: 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.
- A LinkedIn survey found that 70% of employees in top US companies perceived AI as beneficial to their productivity.
- Employee retention: It also led to better treatment of customer service agents and increased employee retention.
- Economic growth: A study by PricewaterhouseCoopers (PwC) predicted an increase in global GDP by 14% or $15.7 trillion by 2030 due to ongoing technological advancements in AI.
- Positive macroeconomic effects: Generative AI has the potential to create human-like output and ability to break down communication barriers between humans and machines could have large positive macroeconomic effects.
Negative Impact of AI adoption
- Despite its benefits, AI also poses risks, such as labor replacement.
- AI can automate repetitive tasks and with generative AI, even creative tasks can be done efficiently and fast.
- Recent research 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.
- AI may intensify competition and deepen the technological divide among firms.
- 85% of employment growth over the last 80 years is explained by the technology-driven creation of new positions hinting at the possibility of AI creating more jobs than on how much it displaces.
- It is suggested that generative AI may not replace employees, but workers using generative AI may substitute those not skilled enough.
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.