The Impact of the Top 3 Strategic Imperatives on Macroeconomic Growth Opportunities of Artificial Intelligence (AI)

Disruptive Technologies

- AI is proving to be a globally disruptive technology, with multi-sector use cases and the potential to boost overall economic productivity and growth.

- Rapid digital transformation globally, especially post-pandemic, is bolstering AI-integration into the manufacturing and services sectors.

- In manufacturing, a multi-fold impact is likely, with automation and AI-centric predictive analytics boosting operations and supply chain optimization.

- Real-time data analytics and the opportunity to make targeted decisions will support varying sectors, such as banking and finance, healthcare, pharmaceuticals, and transportation and logistics.

Internal Challenges

- AI is seeing rapid evolution, and newer application uses are quickly emerging; however, enterprise-level adoption is lagging.

- Stakeholders across business verticals need to be convinced of the return on investment because initial investments in AI are massive.

- Firms will need to invest resources into AI-centric research and development (R&D) and figure out the correct use cases for their products and services.

- Continued business strategy evaluation and steady investments in internal AI capabilities will warrant careful consideration and planning.

Transformative Megatrends

- As global firms increasingly leverage AI for different functions, the type of jobs generated will transform.

- Massive job displacement is expected because routine and low-economic value-add tasks are handled by AI with minimal oversight.

- Jobs will move from low and medium skilled to highly skilled because the former tasks will be handled by AI.

- Firms and governments will need to build long-term upskilling programs to curb large labor market disruptions and ensure efficiency gains in the long run.

Macroeconomic Growth Opportunities of AI: An Overview

AI is proving to be one of the key economic disruptors in the 21st Century, with a sizable impact on efficiency, productivity, and innovation.

Private AI investments globally have risen from $5.2 billion in 2013 to $96 billion in 2023, posting a CAGR of 33.9% over a decade. Moreover, country-level policy support has seen a rapid rise, with the United States and China being the global leaders.

At the industry level, AI’s impact can be seen through the following three key lenses: productivity and efficiency, innovation and policy support, and shifting labor market dynamics. Healthcare, manufacturing, and banking and finance are some of the key industries that will benefit from increased operational efficiency and accelerated innovation because of rising AI-integration. Jobs displacement within low-skill jobs, however, will warrant continued skilling and reskilling investments to ensure long-term efficiency gains.

The base period has been altered in various places based on the nature of the indicator.

Scope

• Geographic Coverage: Global
• Study Period: 2022–2030
• Base Year: 2023*
• Forecast Period: 2024–2030
• Monetary Unit: US Dollar

Definition of AI

OECD defines AI as a machine-based system that can, for a given set of human-defined objectives, make predictions, recommendations, or decisions that influence real or virtual environments.

Key Components of AI:

• ML
• Deep learning
• Data and text mining
• Advanced analytics
• Fuzzy logic
• Case-based reasoning
• Natural language processing
• Visual analytics

Macroeconomic Growth Opportunities of AI: Drivers and Restraints

Drivers

Significant Boost to Productivity

Adoption of AI and automation boosts operational efficiency and enhances cost savings, in terms of time and labor. In the long run, AI integration will see industries shifting upwards of efficiency and productivity curves.

Access to Massive Data amid Rapid Digitalization

Rapid digitalization post pandemic and a global policy thrust for digital transformation are generating massive amounts of data, which will enable AI/machine learning (ML) algorithms to unlock values and support decision making for enterprises.

Accelerated Innovation and Rising Investments Boosting Economic Growth

AI accelerates the innovation process and is a key enabler of successful R&D outcomes, especially in the healthcare and manufacturing sectors. Along with the rising policy support from private and public entities, AI has the potential to be a key contributor in global economic growth momentum.

Restraints

Output Quality is a Function of Data Quality

Access to clean data is the key determinant of output quality because AI/ML algorithms need large, standardized, and clean data to add value at the enterprise level.

Regulatory Frameworks Remain Unclear

A well-defined scope of applications and awareness surrounding AI systems are currently lagging. Clarity around regulatory, compliance, intellectual property laws on AI and unrestricted access to AI tools are the key areas where frameworks continue to remain underdeveloped, which is a factor that will likely weigh on growth.