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    AIs disruptive economic impact an India check

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    Prabhat Karmarkar

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    AIs disruptive economic impact an India check

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    3 views6 pages

    AIs disruptive economic impact an India check

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    Prabhat Karmarkar

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    EDITORIAL ANALYSIS : AI’s disruptive economic

    impact, an India check


    insightsonindia.com/2023/07/14/editorial-analysis-ais-disruptive-economic-impact-an-india-check/

    Insights Editor July 14, 2023

    Source: The Hindu

    Prelims: Science and technology, Artificial intelligence(AI), Generative AI, Big Data,
    GANs, ChatGPT1 tool, DALL.E2 etc
    Mains GS Paper III and IV: Significance of technology for India, AI, indigenisation
    of technology and development of new technology.

    ARTICLE HIGHLIGHTS

    The rise of Large Language Models and Generative AI has sparked more interest
    in the progress of AI across the globe.

    INSIGHTS ON THE ISSUE

    Context

    Artificial intelligence(AI):

    It is a branch of computer science dealing with the simulation of intelligent behavior


    in computers.
    It describes the action of machines accomplishing tasks that have historically
    required human intelligence.
    It includes technologies like machine learning, pattern recognition, big data,
    neural networks, self algorithms etc.
    g: Facebook’s facial recognition software which identifies faces in the photos we
    post, the voice recognition software that translates commands we give to Alexa, etc
    are some of the examples of AI already around us.

    AI innovations:

    GANs (Generative Adversarial Networks)


    LLMs (Large Language Models)
    GPT (Generative Pre-trained Transformers)
    Image Generation to experiment
    Create commercial offerings like DALL-E for image generation
    ChatGPT for text generation.
    It can write blogs, computer code, and marketing copies and even generate
    results for search queries.

    Areas of use, limitations and AGI:

    1/6
    AI systems are capable of exhibiting superhuman performance on specific or
    “narrow” tasks.
    Example: In chess, Go (a game several orders harder than chess)
    In biochemistry for protein folding.
    The performance and utility of AI systems improve as the task is narrowed,
    making them valuable assistants to humans.
    Speech recognition, translation, and even identifying common objects such as
    photographs, are just a few tasks that AI systems tackle, even exceeding human
    performance in some instances.

    Limitations:

    Their performance and utility degrade on more “general” or ill-defined tasks.


    They are weak in integrating inferences across situations based on the common
    sense humans have.
    Artificial General Intelligence (AGI)
    It refers to intelligence that is not limited or narrow.
    There are no credible efforts towards building AGI yet.
    Common sense will make a human save his life in a life-threatening situation while
    a robot may remain unmoved.

    ChatGPT:

    It is a generative AI tool that uses a Large Language Model (LLM) to generate text.
    LLMs are large artificial neural networks that ingest large amounts of digital text
    to build a statistical “model”.
    Several LLMs have been built by Google, Meta, Amazon, and others.
    ChatGPT is generating flawless paragraphs that caught the world’s attention.
    Writing could now be outsourced to it.
    “sparks of AGI” in GPT-4; AGI could emerge from a bigger LLM in the near future.

    What are the concerns?

    Ethical debates on the use of generative AI that users will have a ‘productivity-
    powered’ upper hand over a non-user.
    The subjects of worker replacements and economic growth with the rise of AI
    have entered the spiral that the Internet once went through.

    Positive effects of AI adoption(research by different institutions):

    There is broad consensus on increasing productivity by adopting AI in producing


    goods and services.
    Study on“Generative AI at Work”(by MIT economists): It showed that AI tools
    boosted worker productivity by 14%.
    It improved consumer satisfaction, leading to better treatment of customer
    service agents and increased employee retention.

    2/6
    Experts suggest that generative AI may not replace employees, but employees
    using generative AI will replace those who do not upskill.
    Survey among employees of LinkedIn’s top 50 companies in the United
    States: It shows that almost 70% of them found AI helping them to be faster,
    smarter, and more productive.
    32% were of the opinion that while AI’s current impact may be modest, they
    anticipate larger gains over the next five years.
    Professor Erik Brynjolfsson(MIT): suggests that restructuring business processes
    and increased investments are essential to fully leverage AI’s productivity potential.
    Research from across the world is largely optimistic about AI’s impacts on
    growth.
    A study by PricewaterhouseCoopers (PwC): It predicted an increase in global
    GDP by 14% or $15.7(fifteen point seven) trillion by 2030 due to ongoing
    technological advancements in AI.
    Report from Goldman Sachs Research(April 2023): It said that generative AI
    alone could raise global GDP by 7% or almost $7 trillion over a 10-year period.
    It highlights generative AI’s potential to create human-like output.
    Its ability to break down communication barriers between humans and
    machines could have large positive macroeconomic effects.
    The Forum for Kent A. Clark Center for Global Markets: It surveyed and
    published the views of U.S. and European economic experts on the impact of AI on
    the per capita income of the U.S. and western Europe.
    44% of the U.S. experts agreed to an expected substantial increase,
    whereas 46% said the effects were uncertain.
    34% of European experts expected a substantial increase in GDP per capita,
    while 42% were uncertain about the effects of AI.
    Only 2% of experts believed that AI would not significantly impact per capita
    GDP;
    Ban on generative AI chatbots:
    62% of the European experts agreed that a ban could hinder
    innovation, 14% were uncertain, and only 2% disagreed.

    Negative impacts of AI technologies(Research and analysis):

    Labour replacement that AI technologies bring to the table.


    AI can automate repetitive tasks and with generative AI, even creative
    tasks can be done efficiently and fast.
    A research paper titled “Robots and Jobs(Evidence from US Labor Markets”
    MIT and Boston University): It found that robot adoption has a negative effect on
    workers.
    On average it reduces the labour share, employment and wages.
    It primarily affect blue-collar workers and individuals with lower levels of
    education.

    3/6
    In “Tasks, Automation, and the Rise in U.S. Wage Inequality”: Between 50%
    and 70% of changes in the U.S. wage structure over the last four decades can be
    attributed to relative wage declines of worker groups specialized in routine tasks in
    industries experiencing rapid automation.
    Acemoglu argues that automation reduces labour share and wages, especially
    when productivity gains from automation are small.
    His other studies highlight distributional concerns over automation.
    Causing inequality among workers and possible serious negative impacts
    on social welfare.
    A European Parliamentary Research Service report: It cites McKinsey Global
    Institute’s research that suggests that AI may intensify competition and deepen
    the technological divide among firms.
    The Guardian: It puts forward the idea that AI could be highly disruptive as it is
    more likely to displace middle-class, white-collared jobs
    Earlier technological advancements displaced people from lower-paid farm
    jobs to higher-paid factory floor jobs.
    Analysis by Goldman Sachs has suggested that 15%-35% of work in the U.S.
    economy is exposed to automation.
    It puts out numbers to show how this may not adversely affect the labour
    market.

    Opportunities for India

    Increased efficiency by the adoption of AI in call centers and software industries


    does not bode well for millions of Indians who work in the field.
    Regulation on the use of AI is not a bright solution as this would just drive
    investments and new opportunities away.
    The PwC report suggests that the greatest economic gains from AI will come from
    China, with a projected 26% boost to GDP by 2030.
    It would be prudent for India to focus more on education and training in AI
    It could be easier now with online education having larger acceptance after
    the COVID-19 pandemic
    India can take advantage of the demographic dividend and new opportunities
    that emanate from AI.

    Ethical Issues with AI:

    4/6
    Way Forward

    India, being the most populous country, should be on the lookout as any net
    negative effect on employment can adversely impact the economy.
    AI has seeped into every aspect of the global economy, and its effect on
    productivity and growth is being seen in an optimistic way.
    Governments would have to step up their cyber regulations with respect to the
    new challenges posed by AI and may also need tax capital, as suggested by many
    experts, to balance the returns from capital and labour to reduce the displacement
    and distributional effects.
    Ever-growing advancements in AI are now a reality and equipping ourselves with
    the latest tools will help us forge ahead along with everyone else.

    QUESTION FOR PRACTICE

    5/6
    What are the different elements of cyber security ? Keeping in view the challenges
    in cyber security, examine the extent to which India has successfully developed a
    comprehensive National Cyber Security Strategy.(UPSC 2022) (200 WORDS, 10
    MARKS)

    6/6

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