CAMBRIDGE – As global economic growth slows, many hope technological innovation is a potential solution. The International Monetary Fund’s latest World Economic Outlook, for example, highlighted the potential of artificial intelligence to boost productivity and GDP. But the report also warns that given the uncertainties surrounding the extent of AI’s impact, such forecasts should be approached with a dose of caution. While AI could usher in an era of prosperity, this outcome depends on how these emerging technologies evolve.
The current wave of techno-optimism, along with anxiety about emerging technologies’ potential implications for labor markets, can be attributed to the notion that AI is what economists call a “general-purpose technology.” Such innovations permeate the entire economy rather than being confined to a single sector.
General-purpose technologies can be divided into two broad categories: those that revolutionized energy, such as the steam engine and electricity, and those that transformed communication, like the printing press and the telephone. Although such innovations often take years, even decades, to realize their full potential, they can lead to a surge in productivity and rapid economic growth.
The world is in the midst of two technological revolutions: the transition to a net-zero economy and the rapid rise of AI and other digital technologies. Together, these revolutions are poised to reshape our economies and change how we work, the goods and services we produce and consume, and the structure and dynamics of financial markets. But the question remains: Will these sweeping changes translate into faster economic growth?
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