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How Does Artificial Intelligence Affect the Economy?

Jeremy WynnJune 8, 2021,
How Does Artificial Intelligence Affect the Economy?

Artificial intelligence is a term that may be applied to any machine exhibiting traits associated with human minds, such as learning and problem-solving. 

Artificial Intelligence (AI) refers to the simulation of human intelligence in machines programmed to think like humans and mimic their actions, which can include anything from debriefing at an airport security checkpoint or recommending financial services based on your spending habits. The AI field has become increasingly popular due to its potential for radically changing how we interact with one another.

Artificial intelligence will significantly change the way we conduct international trade. It could lead to several changes, some good and others are still unknown. For example, AI may increase productivity growth which would, in turn, benefit economic growth and create new opportunities for trading partners across borders—especially if it were to happen globally at an increased rate as is currently lacking today.

One of the leading causes for low productivity growth is that it takes time to incorporate new technologies. In particular, complex ones with wide-reaching impacts like AI take a while to be functional in an economy because they have many different parts that need time and energy to function efficiently enough. The system needs capital investments, skilled people, etc., all taking their significant resources we don't always seem able to find so quickly these days.

Artificial intelligence will also affect the type and quality of economic growth, with international trade implications. For instance, AI is likely to accelerate the transition towards service economies and emphasize particular worker skills in production due to automation. The should lead to further expansion for services while simultaneously providing a rise in demand for skilled workers. 

While AI can boost efficiency and improve decision-making, technology also has its limits. One of those is that people will always need to consider personal factors like empathy when interacting with others. The AI revolution may be a boon for some, but it will ultimately disrupt the economy and society in ways that we can’t predict. There is potential to create super firms – hubs of wealth and knowledge – which could have detrimental effects on the broader economy. 

It might widen the gap between developed countries with skilled workers needed for jobs like coding or engineering versus developing nations where farmers are left without work when robots harvest crops from their land. Experts warn about how this trend has far-reaching consequences for all aspects of our lives - widening inequality, shrinking tax bases, causing wages to shrink as well while creating an even greater need for talented programmers who know what should happen next!

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