COULD AI BOOST PRODUCTIVITY? Labor productivity growth has fallen in most economies during through 2040. Some of the most populous the past two decades even as there have been large advances countries in Asia are positioned to be among the world’s largest economies by 2040, even in technology. The next wave of technological improvements, as their per capita income lag behind that of including AI could reverse this trend. advanced economies. AI might have large effects on productivity during the next Asia’s record growth during the past 40 years two decades, in line with the delayed nature of productivity has resulted in a convergence between Asian gains from electricity and information technology. The pace of standards of living and those of middle- and adoption could also affect productivity gains. According to one even high-income economies. In 2020, China study, AI could boost global GDP by 1.2 percent per year if 70 and other developing Asia countries contrib- percent of companies adopted some form of AI by 2030. uted 18 percent and 7 percent respectively to Although any gains are likely to be unequally distributed, both global GDP. If these trends continue, by 2040 between and within countries, countries that are net gainers developing countries in Asia are projected from an AI-induced productivity boost would have expanded to account for approximately 35 percent of economic opportunities that could allow them to deliver more global GDP, with India and China as the largest services, reduce national debt levels, and finance some of the contributors at 29 percent of global GDP, ac- costs of an aging population. cording to Oxford Economics. The faster economic growth in Asia could lead to some of the most populous countries being among the world’s largest economies by 2040. may distort the global competitive landscape For example, faster economic growth in In- because of the state support that they receive. dia—on track to be the most populous country As the competition for technology leadership by 2027—could propel India into the ranks of the world’s three largest economies. Similarly, intensi昀椀es, SOMNCs, including those from faster growth in Indonesia, the world’s fourth China, could increase their reliance on state most populous country, could allow it to break support to capture and lock-in 昀椀rst mover into the ranks of the top 10 economies by advantages, prompting private companies 2040. However, their standards of living or to lobby their governments to intervene on per capita GDP are likely to remain well below their behalf. those of advanced economies. CONTINUED TILT TOWARD ASIA BROADER IMPLICATIONS AND DISRUPTIONS Global economic activity has been tilting The economic environment of the future, toward Asia during the past 40 years, re- characterized by increasing national debt, a 昀氀ecting its higher rate of economic growth more complex trading environment, diver- in comparison with the rest of the world, large population, and reduction in grinding si昀椀ed global connections, and employment poverty—a trend that almost certainly will disruptions, will increase strains on govern- continue through at least 2030 and perhaps ments. Taken together, these trends are likely 52 GLOBAL TRENDS 2040 Photo / Bigstock