Generative AI can add up to $4.4 trillion in productivity annually

09 October 2023 Consultancy.eu 4 min. read

The generative artificial intelligence (AI) industry has the potential to add between $2.6 trillion to $4.4 trillion annually in the coming years, according to a report from global consulting firm McKinsey & Company.

The projection of this massive economic contribution by the AI industry is based on two separate analyses: One that looks at the impact AI will have on work activities in over 800 occupations, and another that looks at the specific use cases in which AI can benefit organizations.

“We identified 63 generative AI use cases spanning 16 business functions that could deliver total value in the range of $2.6 trillion to $4.4 trillion in economic benefits annually when applied across industries,” the report states. For reference, the entire GDP of the UK – the second strongest economy in Europe – is $3.1 trillion.

AI's potential impact on the global economy

The report predicts that AI tools – particularly generative AI tools like ChatGPT – will automate nearly all types of work between 2030 and 2060. McKinsey had previously projected that AI would automate about half of all work between 2035 and 2075, but the recent explosion of powerful generative AI tools accelerated that prediction significantly.

“Generative AI will change the future of work – work tasks will be re-imagined and industries transformed in a matter of months rather than years. Technology allows companies and employees a new kind of agility and productivity boost, which our economy desperately needs,” said Anna Katariina Wisakanto, consultant at McKinsey’s office in Helsinki.

Using generative AI in just a few functions could drive most of the technology’s impact across potential corporate use cases

Contrary to popular thinking on AI, which may tend to see it replacing only low-level and repetitive work, the report found that AI would have a larger effect on higher-wage and highly educated knowledge workers. These types of jobs were previously thought to have the lowest potential for automation, but the report found that the higher the level of education, the greater the impact of AI technology.

“Generative AI is likely to have the biggest impact on knowledge work, particularly for activities involving decision making and collaboration, which previously had the lowest potential for automation,” according to McKinsey.

Generative AI holds the potential to transform the way organizations organize their internal company information, making it easier for employees to access archived information via ChatGPT-like query interfaces. Because of that, the report found that these emerging generative AI tools lend themselves best to industries like sales, marketing, software engineering, and customer operations.

Tools that use generative AI are able to efficiently process and scan vast volumes of corporate information. This could potentially replace time-consuming tasks for knowledge workers, offering scalable virtual expertise beyond human capabilities for certain industries.

Automation adoption by scenario for select countries

Automation is expected to catch on faster in wealthier nations due to higher wages making it more economically feasible in the short term. Lower-wage countries like China, India, and Mexico are predicted to adopt automation more slowly compared to higher-wage counterparts like the United States and Germany.

While there is much to be optimistic about, there is also reason to be cautious of the rapid adoption of AI technologies in so many industries. Amid the rapid advancement of AI technology, some experts have begun to express concern over potential risks.

Beyond the issue of job displacement, other concerns include things like detrimental algorithmic biases and security vulnerabilities related to personal data. Some countries and regions have begun to look towards regulating the industry. For example, the EU has been working on ironing out AI regulations, including the ‘AI Act’, initially introduced in 2021 by the European Commission.