The impact of Artificial Intelligence (AI) across Scotland’s industrial and commercial activities could boost Scotland’s annual Gross Domestic Product (GDP) by up to £16,700 million by 2030, or 8.4%, according to new research by PwC.
That’s the equivalent of an annual £3,000 per person, with the improvements coming from gains in productivity, new business investment and product improvement.
PwC’s research estimates overall GDP could be 10.3% higher in 2030 as a result of AI making it the biggest commercial opportunity in today’s fast-changing economy.
AI refers to computer systems that can sense their environment, think, learn and then act. This ability to respond to the environment sets it apart from the automation of routine tasks. Machine learning algorithms and chatbots are examples of AI already used by businesses. In its assessment of the economic potential of AI, PwC looked at four different elements:
Automated intelligence: Automation of manual, routine tasks
Assisted intelligence: Helping to perform tasks faster and better
Augmented intelligence: Helping people to make better decisions
Autonomous intelligence: Automating decision-making processes without human
The total impact on GDP reflects trade patterns. Scotland has stronger trade links with Europe and the rest of the world, equating to high gains that could flow from the introduction of AI.
Jonathan Gillham, economist at PwC, said:
“Much of the focus on AI to date has been on the impact that increased automation will have on jobs. While we expect the nature of employment will change and some jobs will be susceptible to automation, our research shows that the huge boost to GDP that AI-driven products and services will go a significant way to rebalance the impact.
“AI will make everyday products better, more personalised and cheaper, fuelling increased demand. Automating the more mundane and repetitive aspects of people’s jobs will also increase the UK’s productivity, boost wages and give people more free time.”
The research shows that the majority of economic gains to 2030 will come from increasing consumer demand, and this will drive a greater choice of products, increased personalisation of those products and make them more affordable. Overall, the biggest sectors will be retail, financial services, and healthcare as AI increases productivity, product value and consumption.
PwC’s research predicts that the benefits from labour productivity growth will be felt first, with the increased consumption-led benefits from AI-enhanced products coming through later as more of them come onto the market. As this happens, competition within the AI goods market will increase dramatically, leading to future increases in the value of goods to consumers and therefore the amount people spend on them.
Kenneth Gibson added:
“AI has the potential to transform the productivity and GDP of our economy. In order to realise the potential gains from AI we need to ensure that such systems are adopted in a responsible way and that every part of society can reap the benefits.
“No sector or business is immune from the impact of AI. That’s why it’s so important for Scotland to place itself at the forefront of the AI revolution and create the right environment for existing and new businesses to innovate and make the most of the product, productivity and wage benefits that this technology can bring.
“Of course, AI opportunities need to be underpinned by both more robust governance and new operating models to realise its full potential. PwC’s Responsible AI report warns that effective controls need to be built into the design and implementation phase to ensure AI’s positive potential is secured and address stakeholder concerns about it operating beyond the boundaries of reasonable control. We have all seen enough sci-fi movies to have a fear of machines ‘taking over’ and people need reassurances that it cannot happen.
“The big question is how to secure the right talent, technology and access to data to make the most of this opportunity. To meet this challenge we need to be even more innovative in the way we develop technology skills in Scotland the UK. We need to grow our technology industry at a much earlier stage and to make sure we have the right skills to prosper in the future.”