Artificial Intelligence and Economic Transformation: Implications for Growth, Employment, and Policy in the Digital Age

Shaukat, Hira and Ali, Amjad and Audi, Marc (2025): Artificial Intelligence and Economic Transformation: Implications for Growth, Employment, and Policy in the Digital Age.

Abstract

The rapid advancement of Artificial Intelligence (AI) has significantly influenced various industries, labor markets, and government institutions across the globe. This study explores the multifaceted impact of AI on economic growth, employment, and workforce skills. Drawing on sectoral data and comparative literature, the paper analyzes how AI-driven technologies shape growth and labor outcomes. While technological progress creates new opportunities for individuals equipped with advanced skills, it simultaneously displaces traditional, routine-based jobs, resulting in potential unemployment for less adaptable segments of the workforce. The study emphasizes the critical role of governance in addressing the challenges posed by AI and underscores the importance of proactive policy measures to ensure inclusive growth. It further explores the potential of AI in education, particularly in developing countries, where its integration can enhance students' employability skills. However, challenges such as affordability, ethical concerns, and overdependence on technology are also highlighted. The paper advocates for increased investment in reskilling initiatives, AI literacy programs, and the development of adaptive governance structures to facilitate the equitable integration of AI technologies. Overall, the findings offer strategic guidance for policymakers to design adaptive governance structures and reskilling programs.

• Item Type: MPRA Paper
• Language: English
• Keywords: Artificial Intelligence, Economic Growth, Employment, Skills Development, Governance
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity

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