McKinsey: Artificial Intelligence Could Add $4.4 Trillion Per Year To The Global Economy

Generative AI has excited the executives of nearly every large company these days, and they seem to be rushing to announce and adopt new AI tools. But what impact will their move have on the economy?

It’s hard to say for sure, but global consulting leader McKinsey & Company (where about half of its workforce already uses GenAI) has announced a new report, “The Economics of Generative AI. I tried to quantify the tendency by “probability”.

GenAI could add “$2.6 trillion to $4.4 trillion annually” to the global economy, according to the report, which could add up to a new country on Earth with the size and productivity of the United Kingdom (2021). GDP of 3.1 trillion dollars) is close to the same economic effect as adding the whole.

To produce this report, McKinsey analysts examined 850 occupations and 2,100 detailed work activities in 47 countries representing more than 80% of the world’s workforce.

Greater impact on accelerated timelines

The $2.6 trillion to $4.4 trillion economic impact figure represents a significant increase of 15 to 40 percent over McKinsey’s previous estimates of the AI ​​sector’s economic impact from 2017. This upward revision is due to the incredible rapid adoption and potential use cases of GenAI tools by large and small businesses.

Additionally, McKinsey found that “current generative AI and other technologies have the potential to automate work activities that currently take 60-70% of an employee’s time.”

Does this mean mass job losses are inevitable? No, according to Alex Sukharevsky, senior partner and global leader at QuantumBlack, McKinsey’s internal AI unit and co-author of the report, yes. not.

“Basically, we’re going to be able to run these jobs much faster and much more accurately than they are currently running,” Sukharevsky told VentureBeat.

This “means an annual increase in productivity growth of 0.2 to 3.3 percentage points” for the global economy as a whole, he said.

But as the report points out, “Workers will need support to learn new skills, and some will change jobs. can make a substantial contribution to economic growth and support a more sustainable and inclusive world.”

And the advent of accessible GenAI has boosted McKinsey’s previous predictions about workplace automation. “Half of today’s work activities could be automated between 2030 and he in 2060, with the midpoint being his 2045, about a decade earlier than previous projections. ”

Jobs and tasks most likely to be automated by generative AI and AI in general

Generative AI is capturing people’s attention and imagination, but McKinsey believes other AI applications and technologies will also play a big role in reshaping the global economy.

“Today, when people talk about GenAI, they sometimes think that it can be replaced with AI or robotics, but it’s important to be precise,” Skalevski said.

Generative AI and Large Language Models (LLMs), which are at the heart of the pervasiveness of this technology, can be applied to the roles and tasks of a specific kind of white-collar, so-called “knowledge worker,” as opposed to AI in general. because it is suitable for Robotics and automation technologies can help in more physical tasks such as manufacturing, construction, engineering, transportation, mining, and search and rescue.

The former already exists, disrupting the white-collar workforce, while the latter also exists, but takes longer to deploy due to the need for physical machines, especially in the future, as the impact of the long tail more likely to give. The current workforce will age in the next half century and there will not be enough young people to replace them.

“How can I make a better film? How can I write a better book? How can I make a better movie? How do you create it?” Sukharevski asked rhetorically, giving several examples of tasks that can be “augmented” by AI of all kinds.

“Many new jobs and jobs will be created,” he continued. “In the short term, we can clearly see the responsiveness of our engineers. [for LLMs]But I think in the long term, the whole industry is going to realign here. “

4 tasks that add the most value

Specifically, a McKinsey report found that four types of tasks—customer operations, marketing and sales, software engineering, and research and development—are most likely to account for 75% of GenAI’s added value.

“Examples include the ability of generative AI to support interactions with customers, generating creative content for marketing and sales, drafting computer code based on natural language prompts, and many other tasks.”

Regarding customer operations, McKinsey said, “Studies show that nearly half of customer contacts by North American banks, telecommunications and utility companies are already handled by machines, including but not limited to AI.” rice field. We estimate that generative AI could further reduce the amount of human interaction by up to 50%, depending on the existing level of automation in the enterprise. “

In terms of marketing and sales, McKinsey found that using GenAI to create more personalized and intelligent content “increased the productivity of the marketing function at a value of 5-15% of total marketing spend,” increasing the productivity of sales spend. We found that the performance could be improved by 3-5%. World wide.

In software engineering, McKinsey says the technology speeds up the process of “generating initial code drafts, fixing and refactoring code, analyzing root causes, and generating new system designs,” resulting in increased productivity in software spending. We expect 20-45% improvement.

In terms of research and development, McKinsey believes generative AI “helps product designers reduce costs by selecting and using materials more efficiently.” It can also optimize manufacturing designs, potentially leading to lower logistics and production costs. “

AI as a “technology catalyst” for economic growth

Overall, McKinsey sees GenAI as a “technology catalyst” that will not only move the industry further toward automation, but also unlock the creative potential of its employees.

“If anything, I believe we are entering an age of creativity, an age of creators,” Skalevski said.

Asked specifically what kinds of AI tools he uses, Skalevski declined to comment specifically, saying he likes testing new tools almost every day.

He acknowledged that while some of the report’s data was analyzed and obtained by AI, the entire 2023 McKinsey report on the economic impact of AI was written by human authors.