AI Will Transform the Global Economy, Says the IMF
The ever-expanding capabilities of artificial intelligence demand our attention. The International Monetary Fund (IMF) advises that we need to contemplate how to make the most of AI’s potential while managing the risks it brings to production processes and society as a whole.
The IMF research forecasts that, in the upcoming years, about half of the global workforce will confront the realities of AI's widespread implementation. The implications of this shift are not immediately apparent. As per WEF Executive Chairman Klaus Schwab's declaration of the fourth industrial revolution, this era could accelerate scientific and technological progress and enhance worker incomes, while also widening the gap of inequality across various social groups and pushing many professional roles out of the labor market.
AI will affect almost 40 percent of jobs around the world, replacing some and complementing others,says Kristalina Georgieva, Managing Director of the International Monetary Fund.
Historically, automation, robotics, and control systems have targeted routine production tasks, often limited to simple mechanical functions. However, the scenario is changing. As per Ms. Georgieva, the 40% impact rate increases to 60% among highly skilled professionals in developed countries. The IMF has found that just half of these workers might benefit from AI integration through enhanced productivity. Consequently, the other half faces the risk of salary cuts or even unemployment.
AI is being integrated into businesses around the world at remarkable speed, underscoring the need for policymakers to act,notes Kristalina Georgieva.
In contrast, in developing countries, the influence of AI on professionals is just 26%. This lower impact is due to the lack of substantial infrastructure for AI implementation and a smaller number of individuals prepared to interact with it. Therefore, the threat of income decline or significant labor market reshaping is greatly reduced. However, the downside is that by sidestepping the drawbacks of AI integration, these countries are unable to harness its advantages, inevitably leading to a decrease in their global market competitiveness.
Kristalina Georgieva highlights the emerging social inequality issues associated with AI deployment in both developed and developing nations. The inequality will manifest in various ways, and she points out the "pain points" identified by researchers. Society will be split between those whose incomes disproportionately rise due to AI and those who lose their jobs because of it. Less experienced or skilled individuals might rapidly improve their productivity, overshadowing those who have spent years developing their skills. Younger employees, more adaptable to incorporating AI in their work, will likely experience quicker professional advancement compared to their older or middle-aged counterparts.
In most scenarios, AI will likely worsen overall inequality, a troubling trend that policymakers must proactively address to prevent the technology from further stoking social tensions,states Kristalina Georgieva.
She recommends a special focus on workers in the most vulnerable positions in the emerging AI landscape. These individuals should receive adequate social security and protection, along with opportunities for professional retraining.
To assist further, the IMF has developed the AI Preparedness Index for countries, assessing 125 nations on digital infrastructure, human capital, labor market, innovation readiness, regulatory frameworks, etc. The results, unsurprisingly, indicate that wealthier countries with advanced economies are better equipped for AI adoption than their lower-income counterparts. The IMF experts have identified Singapore, the USA, and Denmark as countries adept at integrating AI. Those lagging are advised to invest in infrastructure, such as cloud storage and gadgets, and to boost AI competencies among their workforce.
The AI era is upon us, and it is still within our power to ensure it brings prosperity for all,Kristalina Georgieva concludes.
