The Economic Potential of Generative AI
In their insightful examination of generative AI, McKinsey & Company thoroughly explore its immense economic possibilities.The key insights from the report can be summarized as follows:
$2.6+ Trillion: Generative AI, which can create novel content or simulations, could potentially add $2.6 to $4.4 trillion to the global economy each year. If included in software used for other tasks, the impact could be doubled. This would boost the total economic effect of artificial intelligence by 15-40%.
Jobs impacted: Around 75% of the economic value generated by AI would come from four main areas: customer operations, marketing and sales, software engineering, and R&D. Sixty-three use cases across 16 business functions were examined, demonstrating the technology's wide-reaching applicability.
Industries impacted: Generative AI will impact all sectors, with banking, tech, and life sciences predicted to gain the most relative to their revenues. In absolute terms, industries like retail and consumer packaged goods also stand to benefit greatly.
Wages & Education: This form of AI could revolutionize work by automating activities that currently take up 60-70% of employees' time, due to its ability to understand natural language. This impact will likely be more pronounced in occupations with higher wages and educational requirements.
Work Smarter: The potential for technical automation means that workforce transformation is likely to accelerate, with estimates suggesting that half of today's work activities could be automated by around 2045, a decade earlier than previously predicted.
Sustainable, Inclusive: Generative AI could substantially increase labor productivity, contributing to economic growth and promoting a more sustainable, inclusive world. However, this requires investments in supporting workers as they transition into new roles or tasks.
We're at the dawn of the generative AI era which holds immense potential for transforming roles, enhancing performance across various sectors, and could generate trillions of dollars in value. However, this technology also poses certain challenges, including risk management, determining future workforce skills, and rethinking business processes such as skills development and retraining. McKinsey & Company’s ongoing research aims to comprehend and gauge the influence of this transformative AI. The full report, available for download, provides detailed insights.
