By: Jeremy Montoya
One of the hottest topics in the world of technology is the topic of Artificial Intelligence (AI). What is AI? Simply put, it is a technology that “leverages computers and machines to mimic the problem-solving and decision-making capabilities of the human mind.” The development and advancements of AI over the last few years have led world leaders and global economists to consider the impact that it may have on society. In the wake of this economic potential’s growing use by corporations, nations, and individuals alike, one question that must be considered is whether this powerful technology has the potential to increase an ever-growing divide between prosperity in developed countries versus that in underdeveloped countries.
From the outset, there is a theoretical inquiry into the world of economics that looms over the question of how technological developments and processes that increase efficiency can impact the job market as a whole. The theoretical question is one that economist Henry Hazlitt described as “The Curse of Machinery.” The theory that has been understood for decades now is that when there are advancements in the world of technology that increase productivity, then such advancements must naturally displace some individuals from the employment that was previously needed to ensure the same level of production. Henry Hazlitt argues that this theory has been repeatedly disproven, and he opines that such technological developments simply push the displaced employee into a new area of specialty or a new marketplace that has been created out of the technological advancement. One of the observations Hazlitt points out is that people will say things like “today[’s] conditions are fundamentally different” and that technological advancements will do more harm than good on the job market. However, he argues that there is empirical evidence showing that with every advancement in technology, prices of goods sold go down, and quality of life goes up as a whole. Therefore, following Hazlitt’s argument to its logical conclusion, one may reach the supposition that the technological advancements in AI are no different than technological developments in the past and that society will be better off because of them.
However, is the development of AI truly the same as other technological developments in the past? Consider this question: has there ever been any technological development with the sophistication of AI? A Technology with the ability to “mimic the problem-solving and decision-making capabilities of the human mind.” A technology that at its core carries with it the possibility of displacing millions of workers with a more accurate level of precision and efficiency than any skilled employee could ever hope to attain, not just in one area of the market but in all areas. It is AI’s element of uniqueness that has led MIT computer science graduate Robbie Allen to claim that “AI [will be] the most impactful technology in our lifetime.”
With the undeniable impact of AI and the ever-growing societal permeation of this technology, it has become critical for world leaders to consider the effects that the development of AI will have on countries that are leaders in technology versus countries that depend on manual labor to sustain their economies. If world leaders are not willing to act quickly and effectively, many developing nations may see more than half of the jobs in their economies wiped out and will be left behind.
AI’s Impact: Advanced Economies versus Developing Nations
Research shows that the United States, along with the UK and Singapore, are some of the leading countries in their readiness for the impact of AI. The U.S. government has made it a central focus to maintain and expand its “edge” in the development of AI. Secretary of State Antony Blinken stated, “We want America to maintain our scientific and technological edge because it’s critical to us thriving in the 21st century economy.” This hyper-focus on AI has led other economists to believe that the U.S. economy could see a growth of more than 2x its current annual GDP. Some scholars have stated that the impact of AI in developed nations will allow for these countries to “capture an additional 20 to 25 percent in net economic benefits.” Not only will developed nations benefit from new advances in production due to AI but in the United States, the impact of AI can also be seen through the returns it has generated in the stock market. Reuters reported that “[a]bout 25% to 50%” of the gains on the S&P 500 this year (2023) were due to the excitement generated around AI. The U.S. government has ensured that there are guidelines set in place to prepare for the transition to AI by having over 47 AI initiatives that are focused on “workforce training, promot[ing] safety guidance for automated transportation technologies, and more.” Many scholars are projecting that AI could be the solution to a decline in the active workforce in developed countries due to aging populations. In a report generated by Goldman Sachs, they observed that “jobs displaced by automation have historically been offset by the creation of new jobs, and the emergence of new occupations following technological innovations accounts for the vast majority of long-run employment growth.” Thus, the argument maintained is that even while some jobs will undoubtedly be replaced by technologies such as AI, the market will adapt by opening up new opportunities created by the advancements in technology. The issue with that argument is that such a rapid transition might only be able to be achieved by countries that already have the educational resources and infrastructure in place to facilitate the training necessary to fill positions in newly developed markets.
In developed countries like the United States, the dawn of AI is a long-awaited and welcomed source of growth and economic development that promises to reduce unwanted repetitive tasks while enhancing quality of life and economic benefits. However, can the same benefits be expected to take place in underdeveloped nations that do not have the infrastructure to prepare for AI’s impact and who do not have the capability to shift their population skills towards whatever new industries might develop due to AI?
One of the greatest fears from the perspective of a developing nation is that the introduction of AI into the marketplace will only serve to widen the economic gap that they already face when attempting to compete in the global market. Researchers Joyjit Chatterjee and Nina Dethlefs point out that in underdeveloped nations, the focus tends to be on “education, sanitation, healthcare and feeding the population,” which are oftentimes more urgent needs within these nations. This leaves no room for these countries to invest in the newest technological advancements of AI and will, therefore, undoubtedly leave these countries at a massive disadvantage when their capabilities to contribute to the global economy fall drastically due to their inability to develop their workforce to keep up with new demands in the market. Researchers believe that “the developing world, such as sub-Saharan Africa, the Caribbean, and Latin America, as well as some central and south Asian countries,” will be the nations that will suffer the most from the rapid developments in AI. One of the greatest challenges that developing nations will face is the inability to retain any of their highest-skilled workers because these individuals will naturally be more drawn to providing their skills and services to companies that are located in developed nations that can offer them a higher standard of living and a better quality of life. These issues will require solutions from a global perspective and from national leaders to ensure that economic disparities are not worsened over the next decade.
Current Steps Being Taken and Options for Further Action by World Leaders
Currently “some 60 countries have AI policies… include[ing] developing AI ethical principles, investing in AI R&D, preparing the workforce for opportunities as well as disruptions from AI, and assessing the need for AI regulation and standards.” World leaders have begun to converge around the idea that there should be a standard of ethical guidelines for the introduction of AI into society which include: “accountability and/or privacy and/or fairness…transparency and openness, safety, and AI that is sustainable and for the common good.” The United States has emerged as a leader in their approach to using AI in a strategic way to encourage development for both them and their allies in a way that promotes democracy and equity.
However, the greatest challenge that global leaders will face is how to equitably apportion the profits that will undoubtedly be generated through the development of AI to economically impoverished nations that do not have the resources to pour into the research and development necessary to remain competitive in the AI arena. One solution is to create a general fund in which developed nations apportion a percentage of their AI profits in order to invest this money into nations with fewer resources. Pooling resources from multiple economies to assist in the growth of less developed nations could have a positive impact not only on those nations’ ability to compete on a global scale but also on leveraging the tools of AI to better serve their own populations’ needs. However, the issue of AI’s global effect remains complex, and while leaders offer potential solutions for its global impact, each country will need to perform an introspective analysis of what policies and laws they will adopt to ensure sustainability and protection for their nation in the expanding world of technology.