This week, Andrew McAfee, who is researching digital technology at MIT, a report on the potential consequences of generative AI published. This research revealed interesting points that we would like to share with you as an (ai) amigo. This report is the product of McAfee's original research into AI and the economy, which worked closely with experts at Google to focus on how the recent increase in generative AI can affect productivity, labor markets, and the skills employees need to succeed in an AI-powered economy.

Step 1: What is Generative AI?

At the moment, at least 1.5 million Dutch people (sometimes) use generative AI. Generative AI is a technology that automatically creates a text, image or video based on a (human) question or assignment. We hear a lot on the news about 'ChatGPT', or OpenAI. It is clear that generative AI offers many advantages, but also poses risks, challenges and raises questions.

The reason? Generative AI is one of the rare technologies powerful enough to accelerate overall economic growth - what economists call a “general technology.” These innovations have the potential to positively transform economies and societies. Another great example of this was the Internet.

The impact of AI on our (business) life

According to one estimate, nearly 80% of jobs in the U.S. economy could perform at least 10% of their tasks twice as fast (without losing quality) with the use of generative AI. That's bizarre, because you can already see how much time & money AI could save in our daily lives. We are already seeing that this technology is already generating major productivity gains. This will only increase in the coming period and will spread as people and organizations come up with additional innovations that take advantage of the possibilities of generative AI. As a result, overall productivity will improve, leading to an acceleration of economic growth. Simple math, isn't it?

How long will it take before we notice the impact?

Previous general technologies such as the internet, the steam engine and electricity took quite a long time before they really made changes. However, researchers expect that the effects of generative AI will be felt more quickly because of its ability to spread rapidly over the Internet and its ease of use thanks to its natural language interface. Exactly how long this will take, time will tell.

What are the consequences of the rapid growth of Generative AI?

With rapid growth, generative AI will bring other changes. It will reduce demand for some skills, increase demand for others, and create demand for completely new skills. Fears of large-scale technological unemployment are probably exaggerated, according to researchers. The history of general technologies shows that the growth they bring is associated with a strong demand for labor.

However, this increased demand is often in new occupations. For example, more than 85% of the total employment growth in the United States since 1940 has come in completely new occupations. Effective retraining efforts will be crucial to help employees adapt to these changes, with generative AI itself playing a role in facilitating learning and improving the performance of entry-level workers.

In short: Previous general technologies have led to changes in the companies and countries that lead the way in various sectors. The McAfee study shows that researchers believe that generative AI will be just as powerful.

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