New IMF Report: AI Can Boost Growth and Deepen Inequality

Business growth concept by using AI robot

By Emil Bjerg, journalist and editor

IMF estimates that around 40 percent of jobs globally will be impacted by AI. It’s ‘crucial’ that countries develop safety nets and prepare for massive restructurings on the job market.                          

“We are on the brink of a technological revolution that could jumpstart productivity, boost global growth and raise incomes around the world. Yet it could also replace jobs and deepen inequality,” IMF writes in their recent report on AI’s expected impact on the global job market. In the report, both the potential and the challenges around AI are immense.

AI – A Different Kind of Automation

Typically, IMF writes, automation has impacted routine tasks. But AI is a different type of automation that can also affect and change high-skilled jobs. Countries recognized as ‘advanced economies’ by the IMF are likely to experience both greater risks and increased benefits from AI developments.

In their analysis, IMF distinguishes between ‘advanced economies’, ‘emerging markets’, and ‘low-income countries’.

In advanced economies, the IMF expects that about 60 percent of jobs could be impacted by AI. In emerging markets, the number is 40 percent for emerging economies and 26 percent for low-income countries.

The IMF estimates that roughly half of the jobs impacted by AI will benefit from AI integration, which can boost productivity. For the other half, AI could potentially carry out the majority of those tasks, which might result in lower wages and a loss of jobs.

Two types of inequality

While a productivity boost led by AI technologies will likely lead to economic growth in advanced economies, the technological revolution can also cause two types of inequality.

AI, IMF warns, can lead to increasing inequality between countries. Knowledge economies will likely prosper from an AI revolution, while low-income countries often “don’t have the infrastructure or skilled workforces to harness the benefits of AI.”

AI could also create inequality within countries, between people with jobs that get complemented by AI increasing in value, while people with roles that can be done mainly by AI could experience wage reductions.

The AI Preparedness Index

IMF has created an AI Preparedness Index to help countries prepare for the potent shifts ahead.

The index tracks “digital infrastructure, human-capital and labor-market policies, innovation and economic integration, and regulation and ethics” to measure countries’ AI preparedness.

Perhaps unsurprisingly, the so-called advanced economies are taking the lead, with countries like Singapore, the United States, and Denmark at the top of the table.

According to the IMF, it’s ‘crucial’ that countries create “comprehensive social safety nets” while also offering retraining for those negatively impacted by AI. According to IMF, that can make the “AI transition more inclusive, protecting livelihoods and curbing inequality.”

Automation and jobs

Over the past few years, the speedy developments in AI have given rise to new jobs, perhaps most well-known, the job of ‘prompt engineer’. As Harvard Business Review writes, automation doesn’t just necessarily reduce the number of jobs. While it removes some jobs, others are created.

With the generative and proactive nature of the AI currently being developed, however, we’re yet to fully understand the impact of the change we’re in the midst of.

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