AI to reshape global economy and job market, IMF warns

A new report from the International Monetary Fund (IMF) says that artificial intelligence (AI) will have a profound impact on the global economy and the future of work, bringing both opportunities and challenges.

The report, titled Gen-AI, estimates that 40 per cent of jobs worldwide will be affected by AI, either by enhancing productivity or by replacing human tasks. The share could be as high as 60 per cent in advanced economies, where workers are more exposed to cognitive-intensive roles.

The IMF urges policymakers to prepare for the AI revolution by providing social protection and retraining for those who may lose out, and by fostering digital infrastructure and skills for those who may lag behind.

The report also introduces an AI Preparedness Index, which ranks 125 countries based on their readiness to adopt AI across various dimensions. Singapore, the US and Denmark top the list, while many emerging and low-income countries trail behind.

The report comes amid growing evidence of the disruptive effects of AI on some sectors and firms. Earlier this month, language-learning app Duolingo slashed 10 per cent of its contractors, while biomedical startup BenchSci laid off 17 per cent of its staff, as both companies shifted to AI-based content creation and drug discovery.

Artificial Intelligence Jobs that will Mark 2024

The AI Revolution: Opportunities and Challenges for the World

Artificial intelligence (AI) is transforming the world at an unprecedented pace. From health care to education, from finance to entertainment, AI is reshaping how we live and work. But what are the benefits and challenges of AI for the global economy and society? And how can we ensure that AI serves the common good and not just the interests of a few?

AI and the global job market

AI has the potential to boost productivity and growth in many sectors, by automating tasks, enhancing human capabilities, and creating new products and services. For example, AI can help doctors diagnose diseases, teachers personalise learning, and farmers optimise crop yields. According to the IMF, AI could create 133 million new jobs worldwide by 2025, while eliminating 75 million jobs.

However, AI also poses significant risks for workers, especially those who perform routine or low-skilled tasks that can be easily replaced by machines. AI could lower labour demand, reduce wages, and increase unemployment and inequality. The IMF estimates that AI will affect 40% of jobs around the world, with advanced economies facing greater risks than emerging and developing economies. Some jobs, such as telemarketing and data entry, could disappear entirely, while others, such as surgery and law, could benefit from AI integration.

AI and global inequality

The impact of AI on different countries and regions will depend on several factors, such as the level of development, the structure of the economy, the quality of infrastructure, and the availability of skills and education. Advanced economies, which have more resources, infrastructure, and skilled workers, are likely to harness the benefits of AI more effectively than emerging and developing economies, which may face more challenges and barriers to adopting AI. This could widen the gap between rich and poor countries, and exacerbate existing inequalities.

To measure the readiness and ability of countries to adopt AI, the World Economic Forum has developed the AI Preparedness Index, which ranks 151 countries based on four dimensions: governance, infrastructure, human capital, and innovation. The index shows that the top 10 countries are all high-income economies, while the bottom 10 are all low-income economies. The index also reveals significant regional disparities, with North America, Europe, and East Asia leading the way, while Africa, South Asia, and Latin America lagging behind.

AI and policy implications

To address the opportunities and challenges of AI, policymakers need to adopt proactive and collaborative policies that balance innovation and regulation, and that promote the ethical, fair, and safe use of AI. Some possible measures include:

Providing social safety nets and income support for workers who are displaced or affected by AI, such as unemployment benefits, universal basic income, or negative income tax.

Investing in education and training programs to help workers acquire new skills and adapt to the changing job market, such as lifelong learning, online courses, or apprenticeships.

Establishing ethical standards and principles for the development and deployment of AI, such as transparency, accountability, privacy, and human dignity, and ensuring that AI respects human rights and values.

Creating legal frameworks and mechanisms to address the liability and accountability issues arising from AI, such as who is responsible for the harms or damages caused by AI systems, and how to ensure the right to appeal or contest AI decisions.

Fostering international cooperation and dialogue on AI, such as sharing best practices, data, and resources, and harmonising rules and norms, to avoid fragmentation and conflict, and to ensure a level playing field and a common vision for AI.

Some examples of companies that have adapted to AI and used it to improve their products, services, or processes are:

Duolingo, an online language learning platform that uses AI to personalise lessons, assess learners’ progress, and provide feedback and guidance.

BenchSci, a biotechnology company that uses AI to analyse scientific literature and data, and to help researchers find and compare reagents for their experiments.

Spotify, a music streaming service that uses AI to analyse users’ preferences, behaviour, and context, and to recommend songs, playlists, and podcasts.

Conclusion

AI is a powerful and disruptive force that will have profound implications for the global economy and society. The IMF report and this blog post have highlighted some of the benefits and challenges of AI, and some of the policy actions that are needed to ensure that AI is used for good and not for evil. The future of AI is not predetermined, but depends on the choices and actions that we make today.

We need to embrace AI as an opportunity and not a threat, and to prepare for its consequences and not be caught off guard. As the IMF chief Kristalina Georgieva said, “We are on the brink of a technological revolution that could jumpstart productivity, boost global growth and raise incomes around the world. Yet it could also replace jobs and deepen inequality. We need a careful balance of policies to tap its potential.”