As artificial intelligence (AI) continues to grow and evolve, we're entering an era of technological revolution. This revolution could vastly improve productivity, drive global growth, and increase incomes worldwide.

But with these advancements, we also face the possibility of job losses and increased inequality. We need to approach AI with caution, crafting policies that ensure its benefits reach all of humanity. The question remains: How can we harness AI's potential for good?

The Impact on Jobs: Opportunities and Risks

In a recent study, the IMF analyzed the potential effects of AI on the global workforce. While many studies have warned that AI might replace jobs, it's important to understand that AI can also complement human work in many cases. AI has the unique ability to affect high-skill jobs, unlike previous automation technologies. So, how will AI affect us all?

The results are striking. Nearly 40% of global employment will be impacted by AI. Historically, automation has primarily affected routine tasks, but AI goes further by touching on more specialized jobs. In developed economies, about 60% of jobs could be affected by AI. Among these, half could benefit from AI integration, leading to higher productivity. On the other hand, some jobs may see reduced demand for human workers, leading to job losses and wage decreases. In the worst-case scenario, some jobs could disappear altogether.

Emerging markets and low-income countries face less disruption, with only about 40% and 26% of jobs being impacted, respectively. But these countries lack the infrastructure and skilled workforce to fully capitalize on AI's potential, which could lead to a growing gap between wealthy and poorer nations. This highlights the need for strategies to prevent AI from widening global inequalities.

The Role of Inequality in AI Integration

AI could also drive internal inequalities within nations. Workers who can utilize AI will see higher productivity and wages, while those who can't keep up may be left behind. Research shows that AI could help less experienced workers improve their productivity more quickly, but younger workers may have an advantage in adapting to these opportunities compared to older workers.

The effect on labor income largely depends on how AI complements high-income jobs. If AI plays a significant role in enhancing high-income workers' productivity, we could see a disproportionate rise in their wages. Furthermore, as companies using AI see higher productivity, they may increase returns on capital, benefiting high-income individuals even further. Both of these factors could deepen inequalities.

Creating an Inclusive AI World

With AI rapidly becoming a core element of businesses across the globe, policymakers need to act now. The IMF has developed an "AI Readiness Index" to help countries assess their preparedness across key areas such as digital infrastructure, human capital, labor market policies, innovation, and regulation. This tool is essential for nations looking to adapt to the AI era.

For instance, the human capital and labor market policies section of the index looks at factors such as education levels and job market mobility. It also examines the percentage of the population covered by social safety nets. Meanwhile, the regulatory and ethical sections assess how a country's legal framework adapts to digital business models and whether they have strong governance to ensure effective enforcement.

When the IMF applied the index to 125 countries, the results showed that wealthier economies, including some emerging markets, were better prepared to adopt AI. Countries like Singapore, the US, and Denmark scored the highest due to their strong performance in all four categories.

How Can Countries Benefit from AI?

Guided by the AI Readiness Index, developed economies should focus on promoting AI innovation and integration while also creating robust regulatory frameworks to ensure the safe and responsible use of AI. This approach will build a trustworthy AI environment that benefits everyone. For emerging markets and developing economies, the priority should be investing in digital infrastructure and creating a digitally skilled workforce to lay a solid foundation for AI adoption.

AI is already here, and we still have the ability to ensure it benefits everyone. With the right strategies, we can transform the world in an inclusive, equitable way. We must focus on policies that promote retraining and provide safety nets for those at risk of being left behind by the rise of AI.

Let's take this as a wake-up call, Lykkers: the future of AI is in our hands. How will we adapt to this rapid technological change to make sure it benefits everyone equally? It's up to us to shape the future, ensuring that AI drives prosperity for all.