Impact of Artificial Intelligence on Global Economy

How artificial intelligence has affected the economy globally ?

Artificial intelligence or machine intelligence is embraced by more individuals, businesses, and government. Most countries have just begun to think seriously about their own AI future in which technological, economical, and military supremacy becomes the domain of those few countries with the deepest pockets. The best AI-oriented expertise and magnitude of state resources can be directed towards achieving AI supremacy.

BY George

5th Sep 2020

How artificial intelligence has affected the economy globally? - Verzeo

The implications of having a handful of countries controlling cutting edge in AI future are profound. These technologically driven countries can become the de-facto guardians of the AI Supremacy which could wage a dangerous war throughout the world.

In an economic model that was earlier dominated by a single economic pole is being replaced by multipolarity. Companies are bringing in new technologies and data highways are becoming new shipping routes. Storage is gradually becoming from shipping containers and warehouses to Cloud storage.

Decentralisation and digitization are replacing conventional means of communication and transaction. New economic flows, driven by the exponential progress and are already creating massive disruptions in economies all over the world. Online platforms are becoming more important than ever before.

The biggest currency repository in the world is driven by cryptocurrency and has no physical lockers or safe. All are driven by software that is based on knowledge and processes captured by automation. The chain is a familiar feature of the current globalization that gives way to blend digital technology with low-cost and greater integration across products and services on a global platform.

The greatest challenge we face is the transition from the current economic model driven by conventional means of manufacturing and fossil fuels to modern technological technologies which are the realm of science fiction. Components like labour automation have influenced AI efficiency development. The worldwide connectedness has helped developing countries to contribute to AI development.

However, the impact of AI won’t be linear and the development will accelerate pace over time. Since the 1950’s scientific minds have puzzled over “thinking” and “intelligence”. The machines and the algorithms in the AI are used to interpret data and answer questions.

The impact of AI’s economic growth comes through macroeconomic effects, for example, when AI increases productivity growth, the increase in productivity growth increases economic growth as well. It also increases opportunities for international trade

AI helps businesses to handle complex production units by providing a centralized management system, a business can use AI to manage their warehouses more efficiently and predict customer’s demand, improving the accuracy of its quick turn around and delivery systems.

AI automation via digital platforms provides a convenient way for companies to expand worldwide. In the U.S, almost 95% of small businesses are active on eBay, which uses AI to export their products. In comparison, only less than 5% go for offline business do not use AI export.

Artificial intelligence provides accurate information and translation services that improve dialogues and decrease miscommunications and make cooperation between businesses much more streamlined and efficient. AI translations in business have been shown a positive effect on trade revenues which is an effect that’s equivalent to decreasing the distance between countries by over 35%.

AI system can also respond to the supply chain in real-time. They are used to detect patterns and trends and they can predict where and when demand increases which automatically increases the production to respond. AI has proven invaluable to figure out how to supply the optimal number of products to a new market. Automation can help streamline recruiting and training.

According to the wall street journal, AI could lead to gross GDP growth of around 26 per cent or $22 trillion by 2030. The major contributors to this figure are the automation labour that adds 11% or around $9 trillion to global GDP by 2030, and innovation in services and products could also increase GDP by 7% by 2030.

The best-positioned countries that are responsible for the vast majority of AI-based activities and the U.S and China, but developing economies, which have relatively underdeveloped foundations in investment capacity, digital infrastructure are falling further behind in the market. Countries like Sweden and Singapore are well-positioned to capture the benefits of AI. Economies like with moderate foundations are still wondering whether to increase their economy using the help of AI.

One of the reasons for low productivity relevant to AI is to understand that it takes time for an economy to incorporate and make effective use of new technologies, particularly the complex ones. This includes time to build a large enough capital stock to have an aggregated effect and for the complimentary investments needed for AI. The development and means of AI build on other technologies as well. The key ones include cloud computing, big data analytics, and IoT. these digital technologies also rely on cross border data transfers. This means that the data localization that restricts global data flows will hit AI directly, by undercutting the building blocks on which AI is built.

Artificial intelligence has impacted the global economy on a large scale, with companies requiring digital skills as job profiles.AI could augment the employment level to 5% by 2030. The total productivity level could help the economies grow globally.

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