Generative AI's Potential: McKinsey Report Projects $4.4 Trillion Annual Boost to Global Economy
McKinsey's report encompassed 850 occupations, 2,100 work activities, and 47 countries, representing over 80% of the global workforce.
15 June 2023
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Jayashri Ghorpade
With the current enthusiasm surrounding generative AI, it appears that the leadership of almost every major company is eagerly embracing this technology and swiftly announcing or adopting new AI tools. However, the question remains: what implications will these actions have on the economy?
McKinsey and Company, a global consulting leader, has recently released a report titled "The economic potential of generative AI" in an attempt to quantify the trend.
Approximately half of McKinsey's workforce already utilizes GenAI. Though it is challenging to provide definitive conclusions, the report sheds light on the potential impact of generative AI.
The report, based on the analysis of 850 occupations and 2,100 detailed work activities across 47 countries, conducted by McKinsey's analysts, reveals that GenAI has the potential to contribute "between $2.6 trillion and $4.4 trillion annually" to the global economy. This economic impact is comparable to adding an entire new country, with the size and productivity of the United Kingdom (which had a GDP of $3.1 trillion in 2021), to the Earth. It is worth noting that the study covers countries representing over 80% of the global workforce.
The economic impact of the AI field is projected to be between $2.6 trillion and $4.4 trillion, which represents a significant increase compared to McKinsey's previous estimates in 2017. This upward revision of 15 to 40% is attributed to the rapid adoption and potential applications of GenAI tools by both large and small enterprises.
Additionally, McKinsey's research indicates that current generative AI and other technologies have the potential to automate work activities that currently occupy 60 to 70% of employees' time.
However, it is important to note that this does not necessarily imply an inevitable and massive job loss. Alex Sukharevsky, senior partner and global leader of QuantumBlack, McKinsey's in-house AI division and co-author of the report, disagrees with such a notion.
According to Sukharevsky, as quoted in VentureBeat, the potential impact of utilizing advanced technology is the ability to significantly expedite job performance while increasing precision compared to current methods.
He further explained that this advancement could contribute an annual increase of "0.2 to 3.3 percentage points" to global productivity growth, translating to a substantial boost to the entire global economy.
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Nevertheless, the report acknowledges the need for support in assisting workers with acquiring new skills and transitioning to different occupations. If managed effectively, generative AI has the potential to make a substantial contribution to economic growth and promote a more sustainable and inclusive world.
Furthermore, the accessibility of Generative AI has led to McKinsey revising its previous estimates on workplace automation. The updated estimate suggests that around "half of today's work activities" could be automated between 2030 and 2060, with a midpoint estimate in 2045, which is approximately a decade earlier than their previous projections.
McKinsey, while acknowledging the widespread public interest and fascination with generative AI, asserts that other AI applications and technologies will also play a significant role in reshaping the global economy. According to Sukharevsky, the term "GenAI" is sometimes used interchangeably with AI and robotics, but precision is crucial in understanding the distinction. This is because generative AI, along with the large language models (LLM) that drive its adoption, is particularly well-suited for specific white-collar roles and tasks within the realm of knowledge work. On the other hand, general AI, robotics, and automation technologies find greater utility in physical tasks encompassing domains such as manufacturing, construction, engineering, transportation, mining, and search and rescue.
McKinsey perceives GenAI as a catalyst for technology, driving industries closer to their automation journeys while also unlocking the creative potential of employees. Sukharevsky, expressing his belief in entering an era of creativity and creators, emphasizes the significance of this shift. When asked about the specific AI tools used, Sukharevsky prefers not to provide specific details, as he regularly experiments with new tools on a daily basis. However, he confirms that although AI was utilized to analyze and gather data for the report, the entire 2023 McKinsey report on the economic impact of AI was authored by human writers.
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