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From January 15 to 19, the World Economic Forum (WEF) 2024 annual meeting was held in Davos, Switzerland. As the AI wave led by ChatGPT was heating up, “AI drives economic and social development” became one of the hot topics of this year’s meeting.

The industry believes that AI’s impact on the global value chain is similar to the steam engine of the Industrial Revolution. John Nosta, founder of the well-known American innovation think tank NostaLab, said in an interview with NBD, “AI will redefine industries, employment and economic structure, just as the steam engine completely changed production and transportation. In the future, AI may promote the transformation of the nature of work, from repetitive and manual tasks to more creative and strategic roles.”

The most profound impact of generative AI may be on economic growth. Goldman Sachs Research estimates a baseline case in which the widespread adoption of AI could contribute 1.5% to annual productivity growth over a ten-year period, lifting global GDP by nearly $7 trillion. However, the IMF warned that nearly 40% of jobs across the globe could be affected by the rise of AI.

As for the related risks of this technology, Yaser S. Abu-Mostafa, Professor of Electrical Engineering and Computer Science at the California Institute of Technology, told NBD that governments had better attend to this issue before the impact causes economic pain and social problems. They need to provide resources to non-commercial AI researchers to compete with commercially motivated research. In addition, practical legislation and regulation is urgently needed to mitigate the risks of AI crimes.

AI could boost global GDP by 7% in the next 10 years

In a session on "Generative AI: The Steam Engine of the Fourth Industrial Revolution?" at the World Economic Forum (WEF) in Davos, Switzerland, on January 16, experts discussed the potential impact of generative AI on the global economy.

Yaser S. Abu-Mostafa, Professor of Electrical Engineering and Computer Science at the California Institute of Technology said that generative AI is one of the fastest-growing and most impactful innovations of the fourth industrial revolution. He compared its impact on the global value chain to that of the steam engine during the Industrial Revolution, and said that its social and economic impact could even be greater.

John Nosta, founder of the innovation think tank NostaLab in the United States, agreed with Abu-Mostafa's assessment. He told NBD that AI is set to redefine industries, employment, and economic structures much like the steam engine revolutionized production and transportation. In the future, AI will likely drive a shift in the nature of work, from repetitive and manual tasks to more creative and strategic roles, requiring a new framework for education, training, and economic policy. This transformation will not be limited to production and distribution but will extend to how we conceive of work, creativity, and societal organization.

Nosta, who has extensive experience in the medical field, used the medical industry as an example to illustrate how AI could boost human productivity. He said that the impact of AI and technology on the labor market in medicine is a multidimensional phenomenon that extends beyond mere augmentation of existing roles. It heralds a transformative shift in the very nature of various healthcare professions, fundamentally reshaping the landscape of medical work. 

As AI technology continues to develop, the medical field is likely to evolve into a "doctor + (AI), pharmacist +, nurse +, and engineer +" landscape. Nosta said "The role of the physician is evolving into a more data-informed and technologically empowered one.AI's ability to process vast amounts of medical data and uncover patterns allows physicians to manage more complex cases with greater precision. In the realm of drug manufacturing, AI empowers engineers with predictive modelling and machine learning, streamlining the drug development process.

According to Goldman Sachs, AI adoption could boost productivity growth by 1.5 percentage points per year over a 10-year period and raise global GDP by 7 percent ($7 trillion in additional output).

The next step for AI development

Bill Gates, the founder of Microsoft, believes that AI will become the strongest driving force for productivity. He said that this technology will change everyone in the next five years. He believes that AI technology should be integrated into the fields of education or healthcare.

Other tech giants' executives also shared their unique insights on the next step for AI development during the WEF meeting.

OpenAI CEO Sam Altman said that general AI (AGI) with the same or even higher level of human intelligence could be developed in the near future. However, he said that future AI development cannot be separated from breakthroughs in the field of energy, because AI consumes electricity far beyond people's expectations. He believes that the solution to this problem is to develop environmentally friendly energy, especially nuclear fusion or cheaper solar energy and energy storage.

Meta Platforms' global business group head, Menlo Santos, believes that the new AI era represents a "major moment" that the tech industry has not seen in a decade. For 2024, Santos said that the focus should be on the potential for AI to benefit human society, while also paying attention to the risks associated with AI technology.

In Intel CEO Pat Gelsinger's view, the focus in 2024 should be on improving the accuracy of results, so that executives in high-risk industries such as hospitals and manufacturing can use AI with confidence. He explained that the importance of AI accuracy is self-evident, whether it is a doctor who relies on AGI for diagnosis, a warehouse that uses AI to check assembly line faults, or autonomous driving.

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Timely government regulation needed

Despite the broad prospects for AI development and its leading role in innovation, the risk of AI is also a hot topic of discussion. One of the most common concerns is that AI will soon replace human jobs.

On January 14, the IMF released a report on AI. The IMF noted that about 60% of jobs could be impacted by AI in high-income nations, and roughly half of these may benefit from AI integration to boost productivity.

Comparatively, AI exposure was estimated to come in at 40% in emerging markets and at 26% in low-income countries, respectively.

The report states, “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,” Georgieva said."

The findings suggest that emerging markets and low-income countries face fewer disruptions from AI in the short-term. The IMF notes that many of these nations don’t have the infrastructure of skilled workers to harness the immediate benefits of AI, raising the risk that the tech could worsen inequality.

However, there are also some different voices on whether AI is about to replace human jobs. Altman said at the WEF that "It will change the world much less than we all think and it will change jobs much less than we all think". He believes that while AI has become "an incredibly productive tool," it has not replaced jobs on a large scale, as many economists feared.

In 2013, researchers at Oxford University published a startling number about the future of work: 47 percent of all United States jobs, they estimated, were “at risk” of automation “over some unspecified number of years, perhaps a decade or two.” However, in the past decade, the average unemployment rate in developed countries has fallen by about half, and the employment rate of the working-age population is at an all-time high. Japan, Singapore, and South Korea, where automation and robotics are most widely used, have the lowest unemployment rates.

Of course, the risks posed by AI are not limited to this. Yaser said, "In 2023, we also saw the rise of legal issues such as the copyright of data that was used for training these systems, and ethical and philosophical questions that are still being formulated.

Based on this, he believes that policymakers need to take action immediately. "AI will enhance human capabilities, but regulatory measures aimed at ensuring these positive outcomes should also be timely," Yaser said.

"Unemployment and social inequality could happen soon, so governments should pay attention to this risk before it causes economic and social problems. "On the constructive side, they need to provide resources to non-commercial AI researchers to compete with commercially motivated research. On the protective side, realistic and practical legislation and regulation is urgently needed to mitigate the risks of AI crimes," Yaser added.