The development of technology and implementation of artificial intelligence (AI) models are no longer optional for emerging economies, but fundamental elements of the new development model, as they need to avoid the middle-income trap, First Deputy Governor of the National Bank of Romania (BNR) v argued.
"We can speak of the transition of the current economy towards a new type of economy which we can define as the binary economy. In fact, such an economy is one in which an increasing share of value no longer comes from the physical materials or labour used to make a product, but mainly from the information, algorithms, intellectual property and technology embedded in it. Emerging economies need to avoid the middle-income trap, which is precisely why, in order to advance in the international hierarchy, the development of technology and implementation of AI models are no longer optional, but fundamental elements of the new development model," Leonardo Badea says in the article "Economic Growth in the Age of Artificial Intelligence.", agerpres reports.
In his view, competitive advantages based on low labour costs or access to natural resources are fragile.
He points out that advanced economies are seeking to occupy segments of global value chains where margins are high.
According to him, the development of artificial intelligence can amplify the mechanisms that support long-term productivity.
"From this perspective, technology, organisation, skills, the quality of institutions and innovation enable an economy to get more from the same resources, while the development of AI can amplify these mechanisms and, implicitly, long-term productivity growth," the BNR representative explained.
In this context, investment in research, innovation and education plays an essential role in supporting economic growth.
The BNR First Deputy Governor points out that, beyond the pace of economic growth, its ability to generate prosperity in the future must also be analysed.
"It is important to have economic growth, but a new question arises: is this economic growth based on a set of conditions that will lead to its multiplication and the regeneration of future growth capacity? Thus, growth is called generative when the process through which it produces prosperity has a multiplier effect on the ability to produce prosperity in the future as well," Badea said.
Regarding the effects of AI on the labour market, Badea points out that the economic literature indicates different outcomes, depending on the scale and speed of automation.
"Automation can, at the same time, have significant effects on the labour market. Acemoglu and Restrepo (2019) show that the replacement by capital of tasks previously performed by labour generates a displacement effect, with a negative effect on demand for labour and on the share of labour income in value added. In the opposite direction is the reinstatement effect, associated with the emergence of new tasks in which labour continues to hold a comparative advantage. The final effect of technological progress on labour therefore depends on the relative importance of the two mechanisms," he mentioned.
In his view, artificial intelligence and robotics mark the beginning of a new stage of development.
"We are at the beginning of a new journey. After the agricultural revolution, the industrial revolution and the digital revolution, we are entering the age of artificial intelligence and robotics. The new frontier is no longer merely geographical or spatial. It is the frontier of intelligence, information and knowledge in a digitalised economy, which will develop at a different pace from what we have been accustomed to," Leonardo Badea concluded.
Comentează