The Artificial Intelligence (AI) is increasingly being seen as a new factor of production in recent times. What are the credentials of AI which make it suitable as a new factor of production apart from land, labour and capital? Discuss.
Artificial intelligence is seen as a transformative technology which has the potential to be a new factor of production and it has been instrumental in bringing a paradigm change in fundamental economic relationships. It basically refers to multiple technologies which get combined in many ways to undertake three capabilities of sensing (computer vision and audio processing), understanding (natural language processing and knowledge representation) and acting (machine learning and expert systems). All these are further underlined by their inherent ability to learn from experience and adapt to change over time. The primer actors which qualify it to be a new factor of production are:
- Access to computing power: There is astronomical growth seen in public cloud computing and data storage capacities.
- The tremendous growth in big data: As more devices become interconnected, global data has shown a CAGR (Compound Annual Growth Rate) of more than 50 percent.
Banking on these capacities, AI has the power to boost growth in three primary ways:
- Intelligent automation i.e. giving rise to a novel virtual workforce which can automate complex physical tasks. It is endowed with the ability to solve various problems across industries and job titles. Another notable feature is intelligent self-learning which is enabled by repeatability.
- AI can complement and synergize existing workforces and other physical capital. It doesn’t focus on replacing existing labour and capital but helps them being used more effectively. It can help improve capital efficiency.
- Lastly, it has a huge potential to spur innovations which pave way for further innovations.
This deadly combination of human intelligence syncing with machine intelligence is a critical technological breakthrough and can go a long way to change the dynamics of the economic arithmetic. This also calls for the need of relevant policies which define the knowledge and skills to be imparted to future generations.