## AI Will Transform the Global Economy. Let’s Make Sure It Benefits Humanity.

_IMF Blog, January 14, 2024_

## Source details

**Canonical URL:** [AI Will Transform the Global Economy. Let’s Make Sure It Benefits Humanity.](https://www.imf.org/en/blogs/articles/2024/01/14/ai-will-transform-the-global-economy-lets-make-sure-it-benefits-humanity)

## Other formats

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## Bibliographic details
- Authors: Kristalina Georgieva
- Published: January 14, 2024

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### Reshaping the Nature of Work
- IMF staff analysis finds "almost 40 percent of global employment is exposed to AI."
- In advanced economies:
  - "about 60 percent of jobs may be impacted by AI."
  - "Roughly half the exposed jobs may benefit from AI integration, enhancing productivity."
  - "For the other half, AI applications may execute key tasks currently performed by humans, which could lower labor demand, leading to lower wages and reduced hiring."
  - "In the most extreme cases, some of these jobs may disappear."
- In emerging markets and low-income countries:
  - "AI exposure is expected to be 40 percent and 26 percent, respectively."
  - These countries "don’t have the infrastructure or skilled workforces to harness the benefits of AI," raising the risk that "over time the technology could worsen inequality among nations."
- Distributional and demographic effects:
  - AI "could also affect income and wealth inequality within countries."
  - Potential polarization: workers who can harness AI may see "an increase in their productivity and wages—and those who cannot falling behind."
  - Research indicates "AI can help less experienced workers enhance their productivity more quickly."
  - "Younger workers may find it easier to exploit opportunities, while older workers could struggle to adapt."
- Channels exacerbating inequality:
  - If "AI significantly complements higher-income workers, it may lead to a disproportionate increase in their labor income."
  - "Gains in productivity from firms that adopt AI will likely boost capital returns, which may also favor high earners."
  - Conclusion: "In most scenarios, AI will likely worsen overall inequality."

### An Inclusive AI-Driven World
- Rapid integration of AI into businesses "underscor[es] the need for policymakers to act."
- IMF developed an "AI Preparedness Index" measuring readiness across four areas:
  - "digital infrastructure,"
  - "human-capital and labor-market policies,"
  - "innovation and economic integration," and
  - "regulation and ethics."
- Examples of index components:
  - Human-capital and labor-market policies evaluate "years of schooling and job-market mobility, as well as the proportion of the population covered by social safety nets."
  - Regulation and ethics assess "the adaptability to digital business models of a country’s legal framework and the presence of strong governance for effective enforcement."
- Using the index, IMF staff assessed "the readiness of 125 countries."
  - Findings: "wealthier economies, including advanced and some emerging market economies, tend to be better equipped for AI adoption than low-income countries, though there is considerable variation across countries."
  - "Singapore, the United States and Denmark posted the highest scores on the index, based on their strong results in all four categories tracked."

### Policy Recommendations and Priorities
- To make the AI transition inclusive and prevent social tensions:
  - "establish comprehensive social safety nets and offer retraining programs for vulnerable workers."
  - These measures aim to "protect livelihoods and curb inequality."
- Country-specific priorities based on readiness:
  - Advanced economies: "prioritize AI innovation and integration while developing robust regulatory frameworks" to "cultivate a safe and responsible AI environment" and "helping maintain public trust."
  - Emerging market and developing economies: "the priority should be laying a strong foundation through investments in digital infrastructure and a digitally competent workforce."

### Overall Assessment
- AI presents both substantial opportunities ("jumpstart productivity, boost global growth and raise incomes") and risks ("replace jobs and deepen inequality").
- The net effect is "difficult to foresee" because "AI will ripple through economies in complex ways."
- Nonetheless, policymakers can influence outcomes: "The AI era is upon us, and it is still within our power to ensure it brings prosperity for all."

*Source: AI Will Transform the Global Economy. Let’s Make Sure It Benefits Humanity., Kristalina Georgieva, January 14, 2024.*

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## References

- [benefit of humanity](https://www.imf.org/en/News/Articles/2024/03/08/sp031424-kings-college-cambridge-kristalina-georgieva)
- [a new analysis](https://www.imf.org/en/Publications/Staff-Discussion-Notes/Issues/2024/01/14/Gen-AI-Artificial-Intelligence-and-the-Future-of-Work-542379?cid=bl-com-SDNEA2024001)
- [December issue](https://www.imf.org/en/Publications/fandd/issues/2023/12/Editor-letter-the-AI-awakening)
- [https://www.imf.org/en/Publications/fandd/issues](https://www.imf.org/en/Publications/fandd/issues)

_Source: https://www.imf.org/en/blogs/articles/2024/01/14/ai-will-transform-the-global-economy-lets-make-sure-it-benefits-humanity_