Economic Value Of Artificial Intelligence, It’s Growth and Impact

Artificial Intelligence (AI) is rapidly taking an important place in every sector of work. In 2017 AI ranked at 7 in terms of popularity and interest. Analysts predict that by 2020, AI technologies will be virtually pervasive in almost every new software product and service, it will also heavily impact businesses and there working style.

Field of business has changed dramatically every time after the entry of powerful technology. Whether we talk about the Henery Ford’s automobile revolution, the never-ending rise of computer and internet which give Jeff Bezos the power to sell anything anywhere in this world, or in the recent dates the game of electric cars that Elon Musk is playing.

Whatever changes happen in business directly show there impact on economic growth. Experts said that in future AI could potentially have a significant impact on economies and the labor market.

The economic value of artificial intelligence will surely increase, the entry of products like Voice Assistant devises or AI-powered cameras have already started showing their magic.

Artificial intelligence is the biggest commercial opportunity for companies, industries, and nations over the next few decades, according to a recent report from PwC. The use of AI will increase global GDP by up to 14% between now and 2030, the equivalent of an additional $15.7 trillion contribution to the world’s economy.

AI’s unique characteristics as a capital-labor hybrid, which confers the ability to augment human labor at scale and speed, self-learn and continuously improve over time give a big advantage to this technology.

All industries will get benefited from AI. Businesses in every industry will gain a potential change in their investment, innovation and human capital development strategies.

If we look at PwC’s predictions, AI latecomers will find themselves at a serious competitive disadvantage within the next several years.

It is expected that in upcoming years around $6.6 trillion GDP growth will come from productivity gains, such as the continued automation of routine tasks.

The demand for AI-enhanced products will increase over time which will overtake productivity gains and result in an additional $9.1 trillion of GDP growth by 2030.

The consumer demand will also get increased by the network effect. AI will gain an enormous competitive advantage through their ability to leverage this rich supply of customer data to shape product developments and business models, making it harder for slower moving competitors to catch up.

China is expected to see the greatest economic gains from AI, in number a $7 trillion or 26% boost in GDP growth China might achieve in upcoming years.

The reason behind this high growth will be China’s population and the high proportion of China’s GDP that is based on manufacturing which will significantly change by AI. Another reason that goes to China’s favor is their higher rate of AI investments compared to North America and Europe.

If we look at North America the economic gains in terms of AI are expected to rise by $3.7 trillion or 14.5% of GDP growth by 2030. North America will see the fastest growth in the near term, given its current lead in AI technologies, applications, and market readiness. But China doesn’t have to wait that long, China will catch up its growth by 2020.

It is expected that the growth of the economic value of artificial intelligence in Northern Europe will increase in a significant way, it will increase by$1.8 trillion or 9.9% of GDP, whereas in Southern Europe this technology will increase by 0.7 trillion or 11.5% of GDP.

Latin America will see $0.5 trillion or 5.4%; and the rest of the world, – Africa, Oceania, and less developed Asian markets – will see $1.2 trillion or 5.6% GDP growth.

$0.9 trillion or 10.4% AI-based growth is also expected in Asian markets. Countries like Japan, South Korea, Taiwan, Singapore, Hong Kong will heavily contribute to the growth of the Asia market.

PWC wants to find the economic value of artificial intelligence. Pwc examined the impact of AI across eight major global sectors by creating the AI Impact Index.

The Index was developed by first identifying the most compelling AI use cases in each sector, a total of almost 300 use cases. Each case then further divided into different dimensions on the bases of utility value, ability to enhance personalization, saving time for consumers, and data availability.

Time plays an important role in growth in economic value of artificial intelligence, therefore another import factor over which division is based is the adoption time, based on the percentage of use cases in each sector that can be implemented in the near term (0-3 years), mid-term (3-7 years) and long-term (7+ years).

After scoring all use cases across these dimensions, PwC calculated an overall AI impact score for each sector, with 1 being the lowest and 5 the highest. Below are the few important sectors and their behavior with AI.

Energy

In the Energy sector researcher said that the adoption time is expected as near-term i.e 39%; midterm – 44%; long-term – 17%. The score of AI impact by Pwc will be 2.2. And the biggest potential use cases in this sector will be helping to reduce bills, real-time information on energy usage and more efficient grid operation and storage.

Financial Services

In Financial Services the impact score of AI will be 3.3 by Pwc. According to the researcher, the biggest potential use cases in Financial Service will be process automation – not just back-office functions, but customer-facing operations as well and fraud detection and anti-money laundering. The adoption time of this field will near-term i.e 41%; midterm – 59%.

Healthcare

In my opinion, Healthcare will be the biggest market more AI and there are tons of possibilities and problem that AI can solve. Its impact score on this sector will be 3.7. The powerful use cases in Healthcare will be imaging diagnostics through radiology or pathology, another thing is early identification of potential pandemics and tracking the incidence of the disease to help prevent and contain its spread which ultimately means that we can save lots of life with this single technology. The Adoption time frame of Healthcare sector is near-term i.e 37%; midterm – 23%; long-term – 40%.

Automotive

How we can’t talk about Automation when we are talking about AI. I’m too waiting for that day when I can actually sit in a self-driving car. Leaving my dreams aside if we look at the impact score of AI in this sector, then it will be 3.7. It’s adoption time frame is near-term – 35% i.e midterm – 47%; long-term – 18%. The biggest potential use cases here will be autonomous fleets for ride-sharing; Semi-autonomous features such as driver assist; Engine monitoring and predictive, autonomous maintenance.

Manufacturing

After Automation, it is worth to talk about Manufacturing. It’s adoption time frame is near-term i.e 14%; midterm – 83%; long-term – 3%. The biggest potential use cases here will be enhanced monitoring and auto-correction of manufacturing processes. The impact score of AI will be 2.2.

Retail

The face of Retail will significantly change in the upcoming years. Impact score of AI in this sector will be 3.0. It’s Adoption time frame is near-term i.e 54%; midterm – 38%; long-term – 8%.

The most potential use cases in Retail will be inventory and delivery management and anticipating customer demand – for example, retailers are beginning to use deep learning to predict customers’ orders in advance.

You may be wondering right now: What does AI do that makes it so valuable?

To answer this, we have to understand what makes anything valuable. A service or a good is always valuable from the perspective of a Job to Be Done (JTBD). What AI is good at (and getting better at) is identifying a person’s unique context and subsequently deliver the best goods or service that enables a person to get their job done. Context + Resource = Value.

The economic value of artificial intelligence will break capitalism and this should be obvious to anyone. Capitalism only works where there exists a reasonable level of equality.

That’s because Capitalism requires both capital and labor. When you don’t have labor (as it is replaced by AI), then there will be nobody to consume the goods produced.

Capitalism also requires scarcity, otherwise, the price of goods goes to zero. In a world with all but the few own AI, there is an absence of buying power in the population who have no jobs.

The notion of monetary compensation will make little sense in a far future AI-driven world. However, it is unlikely in the near term that we can arrive at this new world without the pain of weaning ourselves out of the previous economy of scarcity.

There will be a period where few people will own the majority of ‘wealth’ in the world. And just as we see it today, a world where 4 billion people earn less than $2 a day, we will see even more people without means to support themselves as we make the unavoidable transition.

In your opinion what will be the economic value of artificial intelligence?

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