ChatGPT and its impacts on the global economy
It’s the tool that has revolutionized the world – but what kind of macro economic impact could it have?
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It’s the tool that has revolutionized the world – but what kind of macro economic impact could it have?
The last six months have been nothing short of extraordinary, thanks to the rise of a single generative AI tool: ChatGPT. Since it was unleashed on the world in November 2022 by OpenAI, ChatGPT has managed to change the way we work, give birth to entirely new industries (such as those of prompt engineers), and threatened to replace workers in many sectors who previously thought they were secure for life.
And that’s just the last six months. The true reach and promise of the large language model-based tool is only just being established, as we learn more about how it can be used in different areas. So what kind of impact can ChatGPT have on the global economy? And what does it mean for all of us?
OpenAI, the company behind ChatGPT, has seen the economic impact of its tool first-hand. In late April, OpenAI built up a new range of financial backers, selling $300 million of shares in its company at a valuation of nearly $29 billion. So that’s the impact on this single company alone – but what about the wider economy?
Changing the world of work
OpenAI’s tool is likely to have an economic impact in two key ways. Firstly, it’s expected to make workers and businesses operations more efficient. One study at an unnamed Fortune 500 company, led by researchers at the Massachusetts Institute of Technology and Stanford University, found that the company achieved a 14% productivity gain for teams that were allowed to use generative AI tools like ChatGPT. For less experienced staff, AI helped people work up to one-third faster than they did without tech support.
“Our overall findings demonstrate that generative AI working alongside humans can have a significant positive impact on the productivity and retention of individual workers,” the researchers wrote.
But that’s not the only impact that generative AI tools like ChatGPT can have on the economy. They also have the potential to displace jobs in huge numbers. Up to 300 million roles worldwide could be automated by AI tools, according to research by investment bank Goldman Sachs. In all, 18% of the global workforce could see their roles supplanted by AI.
So are we all out of a job?
It’s not just the wholesale replacement of our work that we need to be wary of. Goldman Sachs researchers found that around two-thirds of current jobs “are exposed to some degree of AI automation,” and up to a quarter of all work could be done by tools like ChatGPT completely.
That would be bad news for workers, but the bank has better news, too. Generative AI’s promise could raise global GDP by a staggering 7%, or $7 trillion. “Despite significant uncertainty around the potential for generative AI, its ability to generate content that is indistinguishable from human-created output and to break down communication barriers between humans and machines reflects a major advancement with potentially large macroeconomic effects,” Goldman Sachs economists Joseph Briggs and Devesh Kodnani wrote in a report.
Before we all get too worried, it’s worth bearing in mind the bigger picture. While we’re at an incredibly disruptive movement driven by the latest tech innovations, this has happened before.
One recent study by a high-ranking economist found that something like 60% of workers are currently employed in occupations that didn’t even exist in 1940. That means more than 85% of employment growth over the last 80 years is down to technology that created whole new industries, new positions and new jobs. This could well be replicated in future years as AI progresses and we get to grips with the changes brought about by ChatGPT.