Unleashing the power of AI-driven GPT by taming the Productivity Paradox
With tech companies being in a constant race to adopt the latest and most relevant Artificial Intelligence (AI) tools and hoping to capitalise on its anticipated massive productivity gains, 2023 has been a turning point for the world of AI.
Companies have been hoping to unleash the power of AI and maximise the gains from this new-found General-Purpose Technology (GPT).
A study has forecasted that AI adoption and integration could give a 14% boost to global GDP by 2030, an equivalent of USD 15.7 trillion. With AI projected to be a game-changer worldwide, it is expected to increase India’s yearly growth rate by 1.3% by 2035, resulting in an additional USD 957 billion being added to the Indian economy, equivalent to 15% of the current Gross Value Added (GVA). AI-driven investments in India have been growing at a compound annual growth rate (CAGR) of 30.8%.
PwC in its report titled “India Workforce Hopes and Fears 2023”, states that 51% of Indian survey respondents believed that AI would increase their productivity at work. The report also importantly states that approx.
15% of Indian respondents were more confident than their global counterparts that their employer would equip them with the necessary tools and the opportunity to build the required skill sets. Thus, it becomes all the more necessary for us to pause and deliberate on the key issues that could address the uncertainty and ambiguity that the implementation of any new technology brings alongwith it.
Renowned economists, Brynjolfsson & Mcafee, (2017) have proclaimed that AI is a GPT of the current era and is poised to disrupt the world. To be classified as a GPT, the technology must be widespread, demonstrate continuous improvement, and stimulate numerous complementary innovations. Due to their influence on economic and social frameworks, previous GPTs such as the steam engine, electricity, information technology, etc. have led to profound societal transformation.
Pooja Misra, Professor of Economics and Area Chair, and Jaya Gupta, Associate Professor in Human Resources at the Birla Institute of Management Technology (BIMTECH), Greater Noida, explain what the productivity paradox is and how it can be tamed by the power of AI-driven GPT.
WHAT IS THE PRODUCTIVITY PARADOX?
At this juncture, it is also important that we discuss the concept of the “productivity paradox”, a concept highlighted by the Nobel laureate, Robert Solow in 1987 when he stated that “you can see the computer age everywhere but in the productivity statistics”.
The productivity paradox refers to a phenomenon wherein increased IT investments did not necessarily lead to productivity gains initially. Rather, it has been witnessed that accelerated productivity gains due to the incorporation of any new GPT have borne manifold results in the long term and not the short term.
