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Week 7 Assignment – Essay First Draft

The Impact of Artificial Intelligence on Economy, Innovation and Society

Harjot Kaur – 2423474

ENG103: Academic Writing

Instructor: Amanpreet Kaur

The Impact of Artificial Intelligence on Economy, Innovation and Society

Computers and Technologies are getting smarter and more advanced with each passing

day and it’s all thanks to the exponential growth of Artificial Intelligence (AI) we have seen in

the past couple years. To put it simply, Artificial Intelligence is the equivalent of giving

computers and technologies the ability to analyze and interpret data and numbers like humans.

It’s like giving brains to a machine. The use of AI is transforming various aspects of the world in

several aspects such as micro and macroeconomic variables, sociological fields and innovation,

A study done by International Data Corporation, 2018 showed that the extraordinary evolution of

AI is fueled by a massive investment of almost $36 billion in 2018. In this essay I will be

conducting an exploratory analysis about the impacts of Artificial intelligence on the world

economy, technological innovation and its societal impacts by examining its advantages,

potential risks and challenges.

A recent study done by Mckinsey and Company (2018), Artificial Intelligence is expected

to contribute $13 trillion to the global economy in various sectors by 2030. It is a fact that AI has

become a crucial developmental factor when it comes to growing economy in large scale. For

instance, AI-driven automation and machinery has significantly boosted the output of production

in large-scale businesses and helped reduced labor and overhead costs. Cockburn et al. (2018)

suggests that AI is shifting towards using large data and algorithms to find relevant statistics for

innovation instead of relying on labor-intensive applications of AI. Furthermore, it is projected

that the use of AI-focused technologies will boost the productivity in the economy by 1.4%

yearly over the next decade (World Economic Forum, 2023). In the Canadian economy,

entrepreneurs and small business owners are actively making using of AI to help run their

business more efficiently and make it cost-effective.

For example, A report by GoDaddy (2018) showed that roughly 60% of small-business

owners have made use of AI in their business operations which led to an increase of 40% in

revenue. Another popular use of AI in retail operations is its ability to learn and adapt to

customer’s shopping behaviour in order to recommend them with things they need and ensure

the required products and services are in stock at all times. This approach resulted in a boost to

sales, revenue generation and overall customer satisfaction (Walmart, 2021).

Next, I will be talking about its impact on innovation and the societal impacts of AI. The

data and algorithms AI can analyze, and process is something large sector businesses use to

upscale their business operations and make their day-to-day operations smoother and more

efficient. However, some experts argue that making use of AI in innovation especially at its early

stages can hinder growth as it lacks creative intuition and instead motivates a “disruptive”

growth. Research done by World Economic Forum (2023) suggests that AI relies on data that are

already available and is unable to generate original ideas which can lead to disruptive innovation.

The technology we have right now prioritizes efficiency over originality making the use of AI in

innovation and technologies debatable in some grounds. Additionally, a study by the Brookings

Institution (2022) states that the limits of the current AI technologies is its inability to develop

groundbreaking innovation which can limit or slow down long-term growth.

One of the major concerns of AI on social grounds, is its ability to displace jobs. AI-

driven automation can result in loss of low-skilled or resistive routine jobs such as in

manufacturing industries. In the next few years, it is expected that about 90,000 jobs could be

displaced by 2028 due to the exponential growth of AI (Frenette and Frank, 2020). The jobs that

are projected to be displaced are particularly in the manufacturing industry that are repetitive and

tedious. The use of AI in social hierarchy and the economic gab is also something that cannot be
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ignored. The wealthier individuals and corporations can easily misuse the applications of AI and

potentially widen the economic gap between the rich and the poor. This can be a result of the

inaccessibility of AI technologies to the less well-off people of the society. Furthermore, there

are several other concerns relating to privacy and transparency when it comes to consumer’s data

and purchasing behaviour. This especially raises ethical concerns in the society. In addition to

that, these concerns can raise debates about introducing regulatory and safety concerns about the

use of AI in developmental purposes.

In conclusion, this essay attempts to analyze and briefly discuss the rapid development of

Artificial Intelligence (AI) and its impacts on the global economy, innovation and the society.

The idea that AI contributes to a growth in economic sector is supported by a study done by

McKinsey and Company (2018) that showed how its application in machine learning and

automation helped massively boost productivity and enhance efficiency. In Canadian market,

large scale businesses such as Walmart and other food corporations have integrated the use of

Artificial Intelligence in learning consumer behaviour and making sales and service more

accessible and convenient. The World Economic Forum (2023) and Brookings Institute (2022)

both support the idea that the use of AI in its current state can potentially hinder long term or

groundbreaking innovation and productivity growth. Another major downside of the exponential

growth of AI is definitely the displacement of low-skilled to mid-skilled jobs especially in the

production and manufacturing industries. In addition to that, experts have also raised concerns

about privacy, transparency and regulation of AI technologies in order to protect the data of

consumers and businesses.

Based on my research findings, I can suggest some key points in order to mitigate the

challenges of AI and its societal impacts. First and foremost, corporations and policymakers
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should aim to regulate the use of AI and set boundaries on how the data of consumers is used in

operations. Secondly, large-scale businesses should focus on retraining and reskilling their

employees in order to adapt to the emerging technologies and utilize them in a way their jobs are

safe, and the businesses can run smoothly simultaneously. There can definitely be a future where

AI and human labor can co-exist harmoniously as long as the workforce in the economy remain

adaptable and resilient to the technological and environmental changes.

References:

Brookings Institution. (2022). The limits of AI technologies. Brookings.

Cockburn, I. M., Henderson, R., & Stern, S. (2018). The impact of artificial intelligence

on innovation. National Bureau of Economic Research.

Frenette, M., & Frank, K. (2020). Automation and job transformation in Canada: Who's

at risk? Statistics Canada.

GoDaddy. (2018). AI and small business: How artificial intelligence is changing the

game. GoDaddy.

Hunt, T. (2023). Here’s why AI may be extremely dangerous—whether it’s conscious or

not. Scientific American.

International Data Corporation. (2018). Worldwide spending on artificial intelligence

systems will grow to nearly $79.2 billion in 2022. IDC.

McKinsey & Company. (2018). Notes from the AI frontier: Modeling the impact of AI on

the world economy. McKinsey Global Institute.

Walmart. (2021). AI in retail: How Walmart is driving sales and customer satisfaction.

Walmart Corporate.

World Economic Forum. (2023). The impact of AI on the global economy. WEF.

Word count: 1056