A recent report by the International Monetary Fund (IMF) has highlighted how Artificial Intelligence will affect the global economy, providing insights into which sectors stand to be hardest hit by the rise of AI.
According to the IMF report, AI exposure is expected to be higher in advanced economies with projections of 60%, while emerging markets are likely to face fewer disruptions from AI job takeover.
With the rise of Artificial intelligence – particularly Generative AI, which has seen the emergence of tools such as OpenAI’s ChatGPT, we have witnessed a rapid adoption and integration of AI across many industries. However, the degree to which AI tools will be used to complement or replace human jobs is still unclear. The IMF has weighed in on this debate, providing their analysis of the effects of AI on the global job market.
As part of the report, the IMF included an AI Preparedness Index, which measures digital infrastructure, human capital and labor-market policies, innovation and economic integration, and regulation and ethics, across 125 countries. The report projects that AI will affect just 26% of jobs in low-income countries, but that advanced economies were better prepared for AI adoption than low-income countries.
The US, Singapore, and Denmark were the highest-ranking countries according to the IMF’s Preparedness Index. The insights by the IMF suggest that while the US may face the greatest threat from AI, in terms of overall exposure, it could also receive more opportunities to leverage its benefits.
In October 2023, President Biden signed an executive order that requires AI developers to share safety results with the US government. The Biden administration has been vocal in their ambitions to harness the power of AI.
“As artificial intelligence expands the boundary of human possibility, and tests the bounds of human understanding, this landmark executive order is a testament to what we stand for.” President Biden told reporters at the White House. “Safety, security, trust, openness, American leadership and the undeniable rights endowed by our creator that no creation can take away.”
This mirrors the US government’s desire to augment its AI capabilities, announcing its push to hire talent with AI expertise on the federal website .
Kristalina Georgieva, the IMF managing director, noted in a blog post that accompanied the IMF report, that “roughly half the exposed jobs may benefit from AI integration, enhancing productivity,” “For the other half, AI applications may execute key tasks currently performed by humans, which could lower labour demand, leading to lower wages and reduced hiring. In the most extreme cases, some of these jobs may disappear.”
“It is crucial for countries to establish comprehensive social safety nets and offer retraining programmes for vulnerable workers[…] In doing so, we can make the AI transition more inclusive, protecting livelihoods and curbing inequality.”
Among these vulnerable workers, women and college-educated individuals stand to be more exposed to AI, according to Pew Research Centre , with 21% of US women likely to see the most exposure to AI, compared to 17% of their male counterparts.
While it is still unclear which jobs will be safe from AI, the post-pandemic economic downturn has affected many industries . With big tech corporations racing to become market leaders in AI, other non-AI-related jobs are being deprioritized by big giants such as Google and Microsoft.
AI innovation and integration are the focus of big tech companies, as they seek to become market leaders. The cryptocurrency sector has also been hit by job cuts, with the market still recovering from the market crash of 2022 and the post-FTX fallout.
As the US and other advanced economies begin to establish robust measures that will allow them to grow alongside this rapidly evolving and growing technology, other emerging and low-income economies would do well to incorporate policies and measures to promote AI within their nations, given these nations don’t have the infrastructure or skilled workforces to make use of the benefits of AI, but are projected to benefit greatly from AI integration.