How Generative AI Plays a Vital Role in Global Economic Growth

According to Goldman Sachs Research, breakthroughs in generative artificial intelligence have the potential to cause dramatic changes in the global economy. As breakthroughs in natural language processing make their way into enterprises and society, they have the potential to boost global GDP by 7% (or over $7 trillion) and productivity growth by 1.5 percentage points during 10 years. Despite significant uncertainty around the potential for generative AI, its ability to generate content that is indistinguishable from the human-created output and to break down communication barriers between humans and machines reflects a major advancement with potentially large macroeconomic effects,” Goldman Sachs economists Joseph Briggs and Devesh Kodnani write in a report.

The Generative AI Role- The Impact on Economic Growth & Productivity

According to Goldman Sachs Research, generative artificial intelligence (AI) has the potential to produce considerable economic growth and productivity benefits. According to the investment bank’s analysis, breakthroughs in natural language processing, along with the rising availability of massive datasets, are enabling generative AI to alter a variety of industries, including healthcare, banking, and retail. According to the paper, the adoption of generative AI might result in a 7% rise in global GDP or about $7 trillion in economic value. Furthermore, it has the potential to enhance productivity growth by 1.5 percentage points over 10 years, providing a major boost to the global economy.

According to Goldman Sachs Research, generative artificial intelligence (AI) has the potential to significantly boost economic development and productivity. According to the investment bank’s research, advances in natural language processing, along with the increasing availability of large datasets, are allowing generative AI to transform industries such as healthcare, finance, and retail.

According to the report, implementing generative AI might result in a 7% increase in global GDP, or around $7 trillion in economic value. Furthermore, it has the potential to raise productivity growth by 1.5 percentage points over 10 years, giving the world economy a significant boost.

Innovation Creates New Jobs, Which Account For The Majority Of Job Growth!

In the team’s analysis, Kash Rangan, senior U.S. software analyst at Goldman Sachs Research, says, “Generative AI can streamline business workflows, automate routine tasks, and give rise to a new generation of business applications.” Among other things, the technology is making inroads in commercial applications, enhancing the day-to-day productivity of knowledge workers, assisting scientists in developing pharmaceuticals faster, and expediting the production of software code.

Simultaneously, improvements in artificial intelligence are projected to have far-reaching repercussions for the global corporate software, healthcare, and financial services industries, according to a separate Goldman Sachs Research paper. With well-known IT behemoths set to release their own generative AI tools, the business software sector looks to be on the verge of the next wave of innovation after the creation of the internet, mobile, and cloud computing, which altered how we operate as a society.

Software companies are already adding new generative AI technologies to their product ranges. Software-as-a-service companies, for example, are leveraging it to increase client retention and expansion while upselling and cross-selling products. They see many possibilities for such firms to benefit from generative AI growth:

1. By releasing new goods and applications.
2. By charging a premium for AI-integrated solutions.
3. By gradually increasing pricing when current products are augmented with AI-enabled capabilities and demonstrate their worth to customers.

Increased Economic Growth with the Use of Generative AI

GS Research estimates the overall addressable market for generative AI software to be $150 billion, compared to the global software industry $685 billion.  The team anticipates that when more generative AI tools are created and incorporated into existing software packages and technological platforms, businesses throughout the economy will profit from increased office efficiency and sales efforts to build design and manufacturing parts, improve patient diagnosis in healthcare settings, and detect cyber fraud. While much remains unclear about how generative AI will impact the global economy and society, and while the consequences will take time to manifest, there are obvious indications that they might be substantial.

• Following widespread industry adoption, generative AI may boost yearly US labor productivity growth by slightly under 112 percentage points over 10 years.

• Over a 10-year timeframe, generative AI might enhance yearly global GDP by 7%, amounting to a nearly $7 trillion rise in annual global GDP.

• We discover that around two-thirds of existing employment is vulnerable to AI automation, and that generative AI might replace up to one-fourth of present work.
• If AI investment grows at the same rate that software investment did in the 1990s, it might reach 1% of the US GDP by 2030. (However, in 2021, US and global private investment in AI will equal $53 billion and $94 billion, respectively, representing a fivefold increase in real terms over the previous five years.)