Artificial intelligence can double annual growth rates, shorten the time taken for growth to occur and significantly boost productivity.
It is unlike previous automation innovations, which initially delivered significant productivity gains, but tended to dwindle in effectiveness over time. AI is markedly different as it can adapt to automate complex tasks, work across multiple industries or roles, and self-learn, which enables repeatability at scale.
As a result, AI should be seen as a 'new factor of production' rather than simply a productivity enhancer, which may eventually make it even more powerful than the technological breakthroughs of the last century, such as electricity, railways and IT.
This is the contention of Mark Purdy, Managing Director and Chief Economist of Accenture Research, and Paul Daugherty, Chief Technology and Innovation Officer, who co-authored a new report, Why artificial intelligence is the future of growth, based on detailed modelling of 12 advanced economies.
How artificial intelligence plays out in our economies is not an abstract debate among economists and futurologists. It is a vital issue for technology practitioners, business leaders, politicians and the wider society.
Purdy and Daugherty highlight a theme that is familiar to anyone watching UK economic trends – the low level of productivity in the economy, and more globally, the “marked decline in the ability of increases in capital investment and in labour to propel economic progress”.
Increases in capital and labour are no longer driving the levels of economic growth the world needs but, the Accenture report contends, “AI has the potential to overcome the physical limitations of capital and labour, and open up new sources of value and growth.”
The combination of effectively unlimited computing power and the growth of big data, which has seen a 50 percent-plus compound annual growth rate since 2010, form the foundations of the AI revolution as exponential data growth feeding continual improvement in AI capabilities in a positive feedback loop.
The Accenture authors argue that AI, as a new factor of production, can drive growth in three ways:
- Introducing intelligent automation can create a new virtual workforce.
- AI can support and enhance the skills of existing workers and of deployed physical capital.
- It diffuses innovation through the economy.
These drivers can, in time, be the catalyst for broader economic transformation, as AI is used to not only do things differently but to do fundamentally different things.
Purdy and Daugherty admit that their vision of the impact of AI is far more optimistic than that of other technology leaders. Innovator and entrepreneur Elon Musk, for example, warns that AI could become humanity’s “biggest existential threat”. The Accenture authors contend that the future is not preordained, but depends on “how we manage the transition to an era of AI”. Society, they say, “must be thoroughly prepared – intellectually, technologically, politically, ethically, socially – to address the challenges that arise as artificial intelligence becomes more integrated in our lives.”
For Mark Purdy that means CIOs have “a critical role to play to help shed some light on these issues and raise awareness of the positive benefits of AI”.
Economists and academics may debate whether Purdy and Daugherty are correct in saying that AI can become a new factor of production or whether it simply amounts to a new productivity enhancer. In practical terms, however, we do know that business technology leaders who are not looking for opportunities to use AI and for ways to build their organisation’s AI capabilities and experience are turning their backs on potential opportunities to meet future demands.
As Purdy concludes, “Contrary to traditional assets that depreciate with time, AI assets gain value as time passes, given the self-learning nature of these technologies. These compounding asset appreciation effects create a big first-mover advantage, so this is an important reason for CIOs to make early investments.”