The economic potential of generative AI: The next productivity frontier

Mackenzie Howe

Hatched by Mackenzie Howe

Jun 24, 2024

3 min read

0

The economic potential of generative AI: The next productivity frontier

In recent years, the development and application of generative artificial intelligence (AI) have been gaining significant attention. As businesses and industries explore the possibilities and capabilities of this technology, it becomes evident that generative AI has the potential to revolutionize productivity and contribute to substantial economic growth. According to our latest research, the economic impact of generative AI could range from $2.6 trillion to $4.4 trillion annually across various use cases.

To put this into perspective, the United Kingdom's entire GDP in 2021 was $3.1 trillion. This highlights the immense economic potential that generative AI holds. When we delve deeper into specific industries, it becomes evident that banking, high tech, and life sciences are likely to experience the most significant impact in terms of revenue generation from generative AI.

For instance, in the banking industry alone, the implementation of generative AI could add an additional value of $200 billion to $340 billion annually. This highlights the transformative power of this technology and its ability to streamline processes, improve efficiency, and enhance customer experiences. The potential impact of generative AI extends beyond the banking industry, with other sectors also poised to benefit greatly.

One of the key advantages of generative AI lies in its ability to automate work activities. Currently, work activities consume a significant portion of employees' time, accounting for 60 to 70 percent. Generative AI, along with other technologies, has the potential to automate these activities, freeing up valuable time for employees to focus on more strategic and creative tasks.

By increasing labor productivity across the board, generative AI could contribute to sustained economic growth. Our research suggests that generative AI could enable labor productivity growth ranging from 0.1 to 0.6 percent annually through 2040, depending on the rate of technology adoption and the redeployment of worker time into other activities. When combined with other technologies, the automation of work activities could add 0.5 to 3.4 percentage points annually to productivity growth.

However, it is essential to recognize that the successful integration of generative AI into the workforce will require investments to support workers as they adapt to new work activities or potentially change jobs. This transition phase is crucial in ensuring that the benefits of generative AI are harnessed effectively and inclusively.

To fully harness the potential of generative AI, businesses need to develop integrated strategies that align their technology investments with workforce development and communication practices. It is not merely about implementing the technology but also about supporting and upskilling employees to adapt to the changing landscape.

Actionable Advice:

  • 1. Invest in workforce development: Companies should prioritize investing in the development of their workforce through training programs and upskilling initiatives. This will enable employees to acquire the necessary skills to thrive in a generative AI-driven environment.
  • 2. Foster a culture of continuous learning: Encourage a culture of continuous learning and adaptability within the organization. Promote a growth mindset that encourages employees to embrace new technologies and seek out opportunities to expand their skill sets.
  • 3. Facilitate effective communication: Communication is key during periods of transformation. Ensure that there is clear and transparent communication about the adoption of generative AI, its benefits, and the support available to employees. This will help alleviate concerns and foster a sense of trust and collaboration.

In conclusion, the economic potential of generative AI is immense. With the potential to add trillions of dollars annually to the global economy, this technology has the power to revolutionize industries and drive productivity growth. However, it is crucial to invest in workforce development, foster a culture of continuous learning, and facilitate effective communication to ensure a smooth transition and maximize the benefits of generative AI. By managing worker transitions and other risks effectively, generative AI can contribute significantly to economic growth and support a more sustainable and inclusive world.

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