Effects on Economy and Market

Positive Side of AI and the Economy:

Artificial Intelligence (AI) possesses the potential to either revolutionize economies or pose significant threats, depending on how it is developed, implemented, and managed. On the positive side, AI has the capacity to enhance productivity, efficiency, and innovation, thereby contributing to economic growth. Automation, driven by AI technologies, can streamline processes, reduce costs, and accelerate the pace of production. This, in turn, can lead to the creation of new industries and job opportunities, fostering economic development. 

Downside Effects on the Economy:

However, the unchecked proliferation of AI also brings about challenges that could potentially disrupt economies. One major concern is the displacement of human labor as routine tasks become automated. While this can lead to increased efficiency, it may result in job losses, particularly in industries where manual labor is prevalent. The economic divide could widen if the benefits of AI are not distributed equitably, leaving certain segments of the population unemployed or underemployed. Balancing the advantages and challenges requires proactive measures. Policymakers need to establish regulations that ensure ethical AI development and deployment, mitigating risks associated with bias, job displacement, and security breaches. Additionally, investing in education and reskilling programs can empower the workforce to adapt to the changing job landscape, fostering a more inclusive and resilient economy. 

Statistics:

AI is expected to contribute significantly to national economies. According to Bank of America, it is estimated that AI could contribute up to $15.7 trillion to the global economy by 2030. This contribution is expected to come from increased labor productivity, product enhancements, and innovations across industries.  While AI may lead to job displacement in certain sectors, it is also expected to create new job opportunities. AI and automation could create 12 million more jobs than it displaces. However, the nature of these jobs and the skills required might be different, leading to concerns about the skills gap.  This can either impact or destroy the job industry, contributing to loss jobs/ creating more that AI would not be useful in.  In Citadel's Griffin, Business Leaders Say AI to Change Economies states that the global trade within the United States, Middle east, and China, will only be increased due to the use of AI. The presidential election of 2020, Clinton and Trump broadened the institute of use of AI, but also elaborated with the risks of using it for global trade. 

Facts You May Not Have Known:

AI is being employed to address environmental challenges. For instance, AI algorithms are optimizing energy consumption in buildings, predicting and mitigating natural disasters, and facilitating more accurate climate modeling. The application of AI in environmental sustainability goes beyond economic growth and extends to global challenges.  AI can make people have the idea of it being too much for the greater good. With that being said, people might move to the countryside to get away from the effects that AI has on the economy. The increase of AI is looked at in two ways. Way one: Having knowledge that AI can replace jobs and create urgency for many released employees to find new jobs. Way two: Understanding that the use of AI is undoubtably what is happening to our future, people have to come to terms with that fact. To elaborate, having knowledge of this can be quite handy in some cases, many people have started to find other jobs. These jobs include: working under AI and helping where they can, and or, finding jobs that do not find use in AI and need the "Human Touch". 

Effects You May Not See on the Surface: 

The surface level that we see with the use of AI is easy to understand the concept and how this can evolve our economy, or destroy it. As the use of AI increases the demand for project managers increase. This falls under the category of new jobs opening up. Computer programmers are very useful with the new technology that AI needs and these programmers are very important to help spread the use of AI technology. Another effect that one may not see is the changing in consumer habits. The economic implications of these changes include shifts in purchasing patterns, altered demand for certain products or services, and new opportunities for businesses to tailor their offerings to individual preferences. 

Sources Used:

Scott, Malcolm, et al. “Citadel’s Griffin, Business Leaders Say AI to Change Economies.” Bloomberg.Com, Nov. 2023, p. N.PAG. EBSCOhost, search.ebscohost.com/login.aspx?direct=true&db=buh&AN=173536776&site=bsi-live. 

“Impact of Artificial Intelligence (AI) on the Economy & Jobs.” Bank of America, business.bofa.com/en-us/content/economic-impact-of-ai.html#:~:text=According%20to%20some%20estimates%2C%20AI,the%20global%20economy%20by%202030.&text=%E2%80%9CFunding%20for%20AI%20development%20is,as%20governments%2C%E2%80%9D%20Israel%20adds. Accessed 14 Dec. 2023.