Artificial Intelligence Development: Boosting National GDP

Key Takeaways

According to Goldman experts, AI might contribute up to 4% of GDP in the US and 2.5% in other countries by 2025
The AI boom is expected to surpass the 2% GDP growth as witnessed due to the tech industry’s development of electricity and personal computer
AI will possibly impact the government and the public at large in the coming years, both in a positive and negative manner

03-08-2023 By: Rohit Tripathi

Boost in AI is expected to Surpass electricity and PCs

Artificial Intelligence is taking the world to the next level and with an increase in the usage of AI, an economist, Goldman Sachs has shared his analysis on the contribution of AI to the country’s GDP. According to him, spending on artificial intelligence (AI) might account for up to 4% of the GDP of the US by 2025. By that time, they forecast that investments in AI may reach $200 billion globally, with the US accounting for half of those investments. The country's gross domestic product is anticipated to increase greatly as a result of this huge investment.

According to experts at the world's largest investment firm, Goldman Sachs, artificial intelligence may someday have a greater financial influence on the American economy than electricity and personal computers.

Increase in country's GDP due to Development in AI

During previous booms in the tech industry due to the development of electricity and personal computer, the GDP grew by 2%. In contrast, according to Goldman experts, AI might contribute up to 4% of GDP in the US and 2.5% in other countries that have already started to spend extensively in the field.

According to Goldman Sachs, improvements in generative AI are largely responsible for the predicted profits. Examples of this technology include the chatbot ChatGPT from OpenAI as well as other products like the image-creation program Midourney and the text-to-speech generator from Eleven Labs.

The advantages of generative AI, however, also come at a huge price. To buy and apply new technologies and transform their processes, businesses will need to make significant investments in physical, digital, and human resources. Large-scale change calls for a significant initial investment.

The number of businesses that have integrated or discussed AI was also observed by Goldman, with 16% of Russell 3000 firms referencing AI in their earnings calls. According to the bank, given that this number has increased dramatically from less than 1% in 2016, it places America at the forefront of AI innovation.

Although the timing of the AI investment cycle is difficult to estimate, the economists stated that existing industry surveys indicate that AI will start to have its biggest influence on investments after 2025. In the ten years following its broad adoption, there is no doubt that generative AI has the potential to increase global worker productivity by more than 1% yearly.

Possible Impacts of Development in AI

Due to advancement and development in the AI sector, the GDP of a lot of countries will increase keeping the US in the first position. Therefore, it will be a win-win position for everyone as the government will be happy with the increase in GDP, many people will get jobs and consumers will be able to use AI in order to make their work easy. But, this can come as a drawback for those who are aware of AI and its implication and operations. As, no doubt, people will be able to get jobs in the AI field but it can come as a curse for those who do not have knowledge of AI. Although, some are of the opinion that AI has the power to take over various manual work, whereas, others have dissenting opinions on the same. Let’s see where AI will take the world in the next five years.

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