Nobel Prize-winning economist says AI unlikely to restore high productivity growth
AI is unlikely to restore high productivity growth in Western countries, Nobel Prize winner in economics Christopher Pissarides said in an interview with Bloomberg.
Pissarides warned that it is unlikely AI will restore the high productivity growth previously seen in Western countries. Despite the optimism of government officials and technology leaders, he suggested that the era of rapid economic expansion may well be over for good.
The economist, who focuses on the impact of automation on employment, noted that a significant share of the workforce – possibly as much as 40% in the United Kingdom and the US – is not affected by AI.
He cited sectors such as hospitality and healthcare as areas where the technology will deliver little to no productivity gains. Consequently, he expressed scepticism about the bold claims made by prominent industry figures, such as Sam Altman of OpenAI and Jensen Huang of Nvidia, regarding the transformative power of the technology.
Although he acknowledges that some benefits may emerge, Pissarides considers it unrealistic to expect a revival comparable to the computer revolution of the late 20th century.
During a presentation at the Royal Economic Society, he argued that for the optimistic forecasts to come true, sectors that are highly susceptible to AI, such as the financial industry, would have to achieve extraordinary leaps in efficiency. He concluded that the global economy will likely have to resign itself to a future of slower growth.
That perspective stands in contrast to the views of some policymakers. For instance, Andrew Bailey, governor of the Bank of England, maintains that AI could potentially reinvigorate economic growth, although he admits it will take some time before the tangible effects of the technology are visible in the official figures.
Such hopes for a revival are particularly strong in Europe and the US, where stagnating real wages and sluggish growth have created a challenging political and economic climate.
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