The Rise of Artificial Intelligence in the Global Economy

The rise of artificial intelligence (AI) has already begun to influence labor markets around the world, and its impact is set to continue evolving in a variety of ways. The advent of artificial intelligence has opened up an era of transformation for labor markets worldwide. As AI technologies continue to advance at an unprecedented scale, their impact on the world of labor is indisputable. AI has the potential to re-shape our approach to employment, skills development and economic growth. Against this backdrop, it's essential to study not only how AI is influencing labor markets, but also focus on how governments are beginning to feel the rise of AI in their own economies, forcing them to develop policies to ensure that AI is used for the benefit of individuals, rather than harming the global economy, potentially impacting trade, nation-state relations and society.

Over the last decades, the rise of emerging markets has led to various companies outsourcing their manufacturing activities in countries where the cost of labor is relatively cheaper. While doing so benefited companies who enjoyed cheaper labor costs, it presented a threat to domestic companies as jobs once performed by domestic workers were outsourced abroad, leading to a rise in unemployment, especially in the manufacturing sector. This tendency to outsource manufacturing and low-skilled activities abroad was a first important shift in the labor market of many countries, creating new opportunities in emerging economies. Now, a new threat has arisen in the labor market, not only in the United States, but throughout the world, which could further impact the global economic landscape. Indeed, the technological advances and the rise of artificial intelligence more particularly are increasingly being integrated into professional workflows and business applications. This integration could further impact the stability of the labor market worldwide, causing a shift in productivity and efficiency due to a potential disruption of labor markets. 

The Brookings Institution, a prominent research organization, is delving into the future impact of advanced AI tools on worker productivity and labor demand. It's crucial to distinguish between earlier AI technologies and the emerging generative AI tools. Historically, AI and automation have mainly affected jobs with routine tasks, jobs that tend to be low-skilled such as manufacturing occupations whose tasks could be replicated more efficiently and at a lower-cost by machine automation. However, generative AI tools are poised to influence a broader range of professions involving non-routine tasks. In today’s world, the heavy focus on innovation and technological advances – mainly from emerging markets who attempt to increase their role in an increasingly competitive landscape –have led to the development of technologies in various sectors of the economy, such as banking, teaching, or biotechnology. This shift marks a significant change in the labor market dynamics, as it encompasses roles previously thought to be safe from automation. This growth in the influence of AI in non-routine tasks highlights the need for proactive and policy-driven adaptation to ensure the successful and sustainable integration of AI tools. Brookings Institution research provides valuable insights for navigating this changing technological landscape.

The rise of the automation of routine tasks, which has been an increasing threat for the workforce, as individuals have witnessed the growing role of AI and robotic process automation, with many seeing their jobs disappear to this new advanced technology. Automation and AI represent transformative forces reshaping the business landscape, promising not only increased efficiency but also substantial contributions to economic growth through heightened  productivity. However, they also pose a threat to individuals who work in manufacturing or service jobs. As these technologies further grow and develop, they are able to perform tasks that even humans cannot yet accomplish. This trend, if it continues, could lead to a decline in demand for manual labor in certain segments of the economy. Society will have to cope with major workforce transitions and upheavals. Workers in different sectors of the economy will have to acquire new skills and adapt to the increasingly powerful machines to maintain their important position in the labor market and compete against technologies that appear to get better and smarter everyday. In some cases, the rise of AI and automation may lead workers to rethink their career path and pursue a path that aligns with the new reality of the labor market, one in which technology is deeply integrated. Although the rise of these technologies have benefits in terms of added efficiency and productivity, it will require workers, and businesses to reinvent their way of working to mitigate job loss and displacement. It is important that we highlight the importance of working with technology, and not against it, especially when countries develop different technologies and competition rises. Threats become more evident with rising competition and geo-political tensions.

The rise of automation looks very different in developed and less developed countries where the labor market is significantly different. In the United States, automation and other forces will continue to reshape the labor market. According to a McKinsey report, the integration of generative artificial intelligence is expected to cause 30% of hours worked today to be automated by 2030. Research has also demonstrated that automation and AI will boost productivity, showing that generative AI has the potential to increase U.S. labor productivity by 0.5 to 0.9 percentage points per year through 2030 in a medium adoption scenario. It is important to remember that the United States is a developed and highly skilled country, other forces are also expected to reshape the workforce in the country, including but not limited to federal investments with recent federal legislation stimulating momentum and investment in other areas that will have an impact on employment. As the country goes through this period of technological transformation, it needs to consider not only the potential of automation to improve productivity, but also the wider implications of these changes on employment, workforce development and the overall economic landscape.

In emerging markets, often referred to as developing economies, the rise of artificial intelligence could accelerate the de-globalization process, making it easier to bring production back onshore without incurring significantly higher costs, as mentioned by Standard Chartered’s Madhur Jha and Christopher Graham in a Bloomberg article. Due to the rise of technological advances, emerging countries have been able to increase their role in the global economic landscape, adapting in an ever-changing world, even catching up to developed markets. Emerging markets can greatly benefit from AI: its applications offer new ways of bridging infrastructure gaps and solving pressing development issues in key sectors. In terms of labor market, the rise of these generative technology will potential lead to job displacement, but also will cause a shift in skills demand, because emerging markets are increasingly demanding a workforce with skills in AI, data science and other related fields; as AI becomes more widespread, there is a growing need for people who can develop, maintain and operate AI systems. Lasly, emerging markets will greatly benefit from artificial intelligence that is expected to increase productivity and efficiency, which will in turn result in the creation of new jobs in industries related to the development and maintenance of AI technology. 

However, the rise of AI technology in the global economy is not without its challenges. Leading economists, known for their expertise in this field, have issued a message of caution regarding the potential repercussions of artificial intelligence on the middle class. They fear that the integration of AI and automation into the workforce could further worsen the current decline of the middle class. This imminent threat, they argue, is anchored in a dual mechanism: firstly, the progressive undermining of traditional, stable and well-paid job opportunities that don't require advanced educational qualifications, and secondly, the rapid pace of automation, which could overtake the simultaneous creation of new roles for human workers. This confluence of factors poses a challenge to middle-class stability and prosperity, and justifies a closer look at the potential economic and societal transformations associated with AI advances. Questions have risen concerning the ethicality of these technologies in terms of privacy, prejudice and job displacement. Governments in developed and emerging markets are faced with the need to establish regulatory frameworks to address these issues. 

In response to the current challenges posed by AI and the need to mitigate the potential risks associated with these transformative technologies, the Brookings Institution highlights the need to develop sophisticated tools and strategies to manage AI's influence on the labor market. As we saw earlier, AI introduces a significant measure of uncertainty into the world of employment, particularly with regard to its implications for middle-class stability. However, it is essential to recognize that assessing the deep and multifaceted effects of AI on labor demand is a complex undertaking, characterized by nuanced intricacies that require careful consideration. Governments around the world are working hard to develop and implement policies to regulate the use of AI, with an emphasis on protecting data privacy and strengthening security measures. These regulatory efforts represent an important step towards responsibly harnessing the capabilities of AI while minimizing potential risks to individuals and society as a whole. In the ever-changing landscape of advanced technologies, it must be acknowledged that the future remains somewhat of a mystery, and that it is difficult to predict the exact impact of AI on the labor market.

However, it is essential to underline that AI, despite its remarkable capabilities, lacks certain essential human attributes. Elements such as creativity, emotional intelligence, ethical and moral reasoning, and the profound ability to understand and navigate complex social and cultural contexts remain exclusively in the human domain. While the role of AI continues to expand, and there is potential for the displacement of certain jobs, it is essential to recognize that the global labor market is a dynamic ecosystem that is constantly adapting to the changing landscape. In this landscape, those who manage to adapt, upskill and embrace the opportunities offered by AI will be the most successful. AI-driven transformation is a call to reimagine our roles, cultivate unique human qualities and harness AI as a supplementary resource in the drive for shared prosperity.

As emerging markets have demonstrated their resilience and adaptability as they recovered from the pandemic, it is important to note their heavy focus on the research and development of new technology, competing with developed markets to gain a competitive advantage and boost productivity. It will be interesting to see how trade organizations will be reacting to the growing impact of AI technologies on international trade, and more specifically on job displacement throughout the world. Indeed, as emerging markets are further developing, they are shifting away from low-skilled labor, giving opportunities for less developed countries such as Vietnam, to develop their manufacturing sector. As previously mentioned, governments and trade organizations will have to focus their policies and regulations on job protections, to ensure that countries do not negatively suffer from these innovative technologies, but that they are rather used as a supplementary tool for success.

No Longer Human: Addressing the use of Artificial Intelligence in IR

Artificial intelligence is a principal instrument for international relations. In areas such as cyber security, military application, and threat monitoring, artificial intelligence isn’t just something that could change the political landscape as we know it: AI will create it. The idea of a non-human entity having a specific agency could make a massive change in politics at the international level. AI has been a doctrine of apocalyptic notions that the world will end with robots. Artificial intelligence has long been a fanciful vision for the future in cinema, art, and literature. The future, however, might be nearer than we think. Already, forms of artificial intelligence affect our everyday lives, including Google translate and search, facial recognition, navigation apps, social media, banking, and even Netflix. From the moment we wake up, AI impacts and influences our lives. Our preferences are tailored to what we are likelier to buy and what we would most likely watch and go. How is this advancement in technology going to change the political and international community? It is safe to assume that artificially intelligent systems might dominate decision-making in the future and that the next cyber attack might not even be human.

In 2022, artificial intelligence will have progressed far enough to become the most revolutionary technology ever created by man. According to Google CEO Sundar Pichai, its impact on our evolution as a species will be comparable to fire and electricity. He also warned that the development of AI was still in its very early stages but that its continued growth would be extreme, stating, “I view it as the most profound technology that humanity will ever develop and work on.” The 2022 trends of AI include advanced language modeling, no-code AI platforms, computer vision technology in business, and creative AI. In global security ventures, artificial intelligence will be increasingly more significant in handling and adequately managing. However, these 2022 AI trends do not come without a cost. Cybercrime has been identified as a substantial threat to global prosperity by the World Economic Forum, which urged nations worldwide to work together to address it. This cybersecurity threat is expansive, transformative, and critical, and with the continued rise in cyberattacks, there is massive growth in the AI market. A July 2022 report by Acumen Research and Consulting says the global market was $14.9 billion in 2021 and is estimated to reach $133.8 billion by 2030. More and more money is being put into this industry, and consequently, working together as an international community is essential in preventing catastrophic damage. Specifically for international relations, AGI might be capable of executing any cognitive or operational task for which human intelligence is currently necessary. These advancements in IR will fundamentally change how the world will look in the near future. 

In a Chatham House Report titled “Artificial Intelligence and International Affairs Disruption Anticipated,” AI can be used in international politics and policymaking in three categories: Analytical roles, predictive roles, and operational roles. In the first category, Artificially intelligent systems are already found in analytical roles, combing through large datasets and deriving conclusions based on pattern recognition. This can be especially helpful when monitoring the outputs of sensors set up to confirm compliance with, for example, a nuclear, chemical, or biological arms control treaty that might be too demanding for human analysts. In predictive roles, artificially intelligent systems may offer opportunities for policymakers to understand possible future events. One such example in the arena of international affairs would be the possibility of modeling complex negotiations. AI might take on other predictive roles with a bearing on geopolitics, contributing to more accurate forecasting of elections, economic performance, and other relevant events. The last category, operational roles, is the traditional sense of robots. The day-to-day functioning of the international system would not be expected to change if truck drivers, ship crews, or pilots were replaced with automation. Still, the large-scale replacement of existing human labor in these capacities will likely cause widespread economic and political disruption in the short to long term. MIT economist Daron Acemoglu’s new research showcases this shift in labor. From 1990 to 2007, adding just one additional robot replaced about 3.3 workers nationally. With this rapid transformation in the labor force, the ethical landscape of AI is becoming more and more significant to the lives of everyone on Earth. 

From a policy standpoint, it is essential to know what data is used, an AI model’s guiding assumptions and the kinds of practices developers employ. The Council on Foreign Relations recently conducted a conference titled “The Future of AI, Ethics, and Defense.” Speakers discussed the intersection of technology, defense, and ethics and the geopolitical competition for the future of innovation. Speakers included former secretary of defense Ash Carter, cofounder of LinkedIn Reid Hoffman, and professor at the Institute for Human-centered artificial intelligence Fei-Fei Li.  Discussing these implications of AI, Fei-Fei Li states, “We have a society that wants to respect human rights, we want to be inclusive, we want to use AI or technology for good, we can have a culture of transparency and accountability, and we can form multi-stakeholder allegiance to both push for innovation, but also put the right guardrails. And this kind of foundation in our world is our competitive advantage.”  Showcasing the ethics that need to be addressed as artificial intelligence advances, Fei-Fei Li concludes that these technologies can benefit society instead of holding it back in the long run. The accountability and transparency related to AI are crucial for the international community to maintain an ethical environment. But what exactly are the ethical challenges of AI? 

Brian Patrick Green, director of Technology Ethics at the Markkula Center for Applied Ethics, addresses these challenges in his article titled “Artificial Intelligence and Ethics: Sixteen Challenges and Opportunities.” Fundamentally, artificial intelligence is increasing at a tremendous rate. Technical safety and if the technology works as intended are important for companies. Another challenge is bias and the malicious use of AI. For example, China's facial recognition system logs more than 6.8 million records daily. The Chinese government is accused of using facial recognition to commit atrocities against Uyghur Muslims, relying on the technology to carry out "the largest mass incarceration of a minority population in the world today." In Russia, authorities have long used biometric data for artificial intelligence-powered facial recognition to surveil and prosecute peaceful protestors and other critics. Additionally, during the Invasion of Ukraine, Russia employed “deepfakes” in propaganda warfare. Deepfakes are images or videos created using AI that can show scenes of things that never happened or even people that never existed. This technology is still increasingly advanced and could be extremely realistic in the future. Furthermore, using AI technology to create cyber weapons to control autonomous tools like drone swarms are being developed. Russian President Vladimir Putin when speaking about the international race to develop artificial intelligence noted, “whoever becomes the leader in this sphere will become the ruler of the world.” 

Anja Kaspersen and Wendell Wallach are senior fellows at Carnegie Council for Ethics in International Affairs. In November 2021, they published an article that changed the AI ethics conversation: “Why Are We Failing at the Ethics of AI?” Concerning the ethical implications of AI, the article states, “Society should be deeply concerned that nowhere near enough substantive progress is being made to develop and scale actionable legal, ethical oversight while simultaneously addressing existing inequalities.” There has been some work done to address ethical concerns, however. There are many ethical proposals, but they are not always coinciding, uniform or unanimous, even in an organization like the EU. A number of publications on AI highlight the need for policies and regulations that would diminish the risks and direct AI development and use toward public benefit. Public policy and governance can ensure that global AI development is a positive-sum game increasing benefits for all. Suggestions for the  US  leadership include calls for building strategic partnerships worldwide. Balancing competition and cooperation is indispensable, for artificial intelligence isn’t just a component of policy anymore but integral in global security. 

With artificial intelligence dominating everyone on the Earth and advancing at an alarming rate, understanding ethical implications and security risks is necessary to maintain a peaceful world that benefits citizens' lives instead of harming them. Artificial intelligence has a multitude of issues that need to be addressed by the international community, including the capability of cyberattacks, the creation of cyberweapons like drones, and propaganda warfare. With the malicious use of facial recognition and privacy crises, there is a plethora of panic and anxiety for the public. With continued technological advancement, policies must be updated and executed. U.S policymakers must balance risks, benefits, and responsibilities when continuing AI endeavors. Additionally, an enormous amount of ethical issues still need to be tackled. AI research will dominate global affairs, and it can be hard to predict outcomes with this transformation. Whatever the future holds, it is clear that artificial intelligence will be a part of it, or perhaps more accurately, directly beside humankind.