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Why AI will be the Catalyst for a new era of productivity growth

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Image by Lin Tong from Pixabay

The dawn of the artificial intelligence (AI) era is often compared to transformative technological advancements such as the steam engine, electricity, and the personal computer. These innovations reshaped industries and daily life, and AI is poised to make an equally revolutionary impact, particularly on global productivity. While the effects of AI are still unfolding, experts believe that its ability to significantly boost productivity could happen in record time—just seven years, compared to decades for earlier technological revolutions.

This optimism comes at a critical juncture in the global economy. Post-pandemic, many countries are grappling with stagnating growth, rising inflation, and mounting debt, alongside the fundamental issue of declining productivity. In fact, several international agencies have noted that the productivity decline following the global economic downturn is unprecedented in recent history. Yet, AI is emerging as a way of hope, offering the potential not only to reverse this trend but to propel productivity to unprecedented heights.

The Economic Impact of AI: A Long-Awaited Leap

The global economy has struggled with low productivity growth for over a decade. For example, U.S. labour productivity growth averaged just 1.68% from 1998 to 2007, a period during which significant technological innovations like the internet and personal computers began to take root. But since 2010, productivity growth has fallen further, dipping to 0.38% between 2010 and 2019.

Some forecasts suggest that generative AI alone could add between $2.6 trillion and $4.4 trillion to the global economy

In this environment, AI is seen as the key to unlocking a new wave of economic efficiency. According to recent reports from the International Monetary Fund (IMF), AI technologies are expected to drive a substantial increase in global productivity. Some forecasts suggest that generative AI alone could add between $2.6 trillion and $4.4 trillion to the global economy.

To understand the potential of AI in the context of productivity growth, it’s useful to compare it to previous technological breakthroughs. The steam engine, for example, took about 60 years to fully transform productivity in manufacturing. Personal computers accelerated productivity growth over 15 years. By contrast, AI is expected to have a profound impact on productivity within just seven years.

Generative AI and Its Promising Future

Generative AI is a form of artificial intelligence that creates new content—whether it’s text, images, or even software code—based on patterns learned from large datasets. The speed with which generative AI is advancing is extraordinary. ChatGPT, released in November 2022, was quickly followed by a more advanced version, GPT-4, and other breakthroughs have appeared throughout 2023. This technology is expanding rapidly, with the capability to process tens of thousands of words in a minute, creating a powerful tool for automating complex tasks.

The applications of generative AI are vast and varied. In the business world, AI systems are already transforming industries like customer operations, marketing, software engineering, and research and development. The banking sector, for example, is projected to see an annual revenue increase of $200 billion to $340 billion through the adoption of AI. The retail and consumer goods sectors could see similar gains, potentially adding up to $600 billion annually.

AI’s potential to automate routine tasks could also free up significant amounts of time for human workers. Studies indicate that generative AI could automate between 60% and 70% of the tasks currently performed by employees, dramatically increasing efficiency. For knowledge-based workers, particularly in high-wage and high-skill sectors, AI is poised to amplify productivity by reducing time spent on routine tasks, such as data analysis, customer service, and administrative work.

Transforming Labour Markets: A Double-Edged Sword

However, the rapid rise of AI is not without its challenges, particularly when it comes to labor markets. Many fear that the widespread adoption of AI could lead to massive job displacement, especially in developed countries where white-collar jobs are more susceptible to automation. According to the IMF, while 30% of U.S. jobs may be at risk of automation by AI, only 13% of jobs in India are likely to be affected, reflecting the differing technological capabilities and labor market structures across the globe.

At the same time, AI’s integration into the economy is expected to create new job opportunities, especially in fields that require advanced technical skills, such as AI development, data science, and cybersecurity. This pattern mirrors historical trends: when previous technological revolutions disrupted the labor market, they also created entirely new industries and job categories. A recent study by MIT found that 60% of the jobs in America today did not exist in 1940, highlighting the constant evolution of the labor market in response to technological innovation.

AI’s Role in Healthcare: Beyond Productivity

AI’s potential extends far beyond traditional sectors like manufacturing or finance. The healthcare industry stands to benefit greatly from AI’s ability to analyze vast amounts of medical data quickly and accurately. For example, AI systems can assist doctors by analyzing scan reports, identifying patterns, and recommending treatment protocols. AI can also reduce the burden of administrative tasks, such as summarizing doctors’ notes and processing insurance claims, thereby improving productivity in healthcare settings while also reducing costs.

Generative AI is now widely recognized as a general-purpose technology (GPT), similar to electricity or the personal computer

Such advancements could lead to significant improvements in healthcare delivery, making it more efficient and cost-effective. This would not only improve outcomes for patients but also contribute to economic growth by lowering healthcare costs for both consumers and governments.

The Path Forward

Generative AI is now widely recognized as a general-purpose technology (GPT), similar to electricity or the personal computer. These technologies have historically contributed to broad-based productivity growth across multiple sectors. The key to AI’s success as a GPT lies in its ability to integrate seamlessly with existing technologies and applications across various industries, driving continuous innovation and productivity gains.

The widespread adoption of AI in industries like logistics, manufacturing, education, and even creative arts has the potential to revolutionize how businesses operate and how workers contribute. As businesses continue to integrate AI into their processes, the resulting efficiencies will likely lead to increased competition, lower prices, and higher wages for workers in industries that embrace these changes.

AI’s transformative potential for global productivity cannot be overstated. Just as the steam engine and personal computers reshaped industries and economies, AI is positioned to trigger an unprecedented leap in productivity across nearly every sector. While challenges related to job displacement and economic inequality remain, the promise of a future in which AI drives substantial economic growth is undeniably exciting.

As AI continues to evolve, it is crucial for businesses, policymakers, and workers to embrace this change, adapting to new technologies and fostering an environment that allows AI to reach its full potential. The future of productivity is unfolding before us, and AI will be at the centre of this revolution.

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The Rise of U.S. Retail Giants: A Century of Political and Economic Shaping

Currently, 90% of Americans live within 10 miles of a Walmart, and five of the top 10 U.S. employers—Walmart, Amazon, Home Depot, Kroger, and Target—are retailers

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MIT political scientist Kathleen Thelen’s new book, “Attention, Shoppers!”Credits:Photo: Gretchen Ertl

The U.S. retail sector, once dominated by small, independent merchants, has transformed over the past century into a landscape controlled by retail giants. In the late 19th century, most U.S. retail was local. However, this shifted with the rise of catalog retailers like Sears and Roebuck, which saw rapid growth, followed by Montgomery Ward’s expansion. By the 1930s, chain stores began to proliferate, with the Atlantic and Pacific (A&P) supermarkets leading the pack with over 15,000 locations.

Fast-forward to today, and the dominance of retailers like Walmart, Amazon, and Target is undeniable. Currently, 90% of Americans live within 10 miles of a Walmart, and five of the top 10 U.S. employers—Walmart, Amazon, Home Depot, Kroger, and Target—are retailers. In addition, logistics giants UPS and FedEx play a crucial role in supporting the retail economy.

This prevalence of massive retail chains is largely unique to the U.S., where domestic consumption is a driving force behind economic growth. Additionally, the U.S. has five times as much retail space per capita as Japan and the U.K., and 10 times as much as Germany. Unlike in Europe, the U.S. has few regulations limiting shopping hours.

How did we arrive at this point? While major chains like Walmart and Amazon are known for their business prowess, the full story involves over a century of political and legal debates that shaped the landscape of U.S. retailing. MIT political scientist Kathleen Thelen, in her new book Attention, Shoppers! American Retail Capitalism and the Origins of the Amazon Economy, dives into the role of political and legal forces in the rise of large, low-cost retailers.

“The markets that we take as given, that we think of as the natural outcome of supply and demand, are heavily shaped by policy and by politics,” Thelen explains.

Thelen’s book offers a unique perspective, drawing comparisons with European economies and taking a historical approach to the growth of chain retailing. For instance, she highlights how alternative commercial arrangements, like cooperatives, were stifled by U.S. antitrust laws, which favored big corporations while suppressing smaller competitors. This legal framework gave a significant advantage to large retailers, including Sears, which relied on the U.S. Postal Service’s money order system to reach customers who lacked bank accounts.

Smaller retailers resisted the expansion of large chains, particularly during the Great Depression, but big retailers found ways around regulatory constraints. “Antitrust laws in the United States were very forbearing toward big multidivisional corporations and very punitive toward alternative types of arrangements like cooperatives, so big retailers got a real boost in that period,” Thelen says. Over time, antitrust law increasingly prioritized consumer prices, further benefiting low-cost retailers.

As Thelen argues, prioritizing price reduction often leads to lower wages for workers, with large retailers driving down wages both directly and through pressure on suppliers. “If you prioritize prices, one of the main ways to reduce prices is to reduce labor costs,” she says, noting that low-cost discounters are often low-wage employers.

In her analysis, Thelen suggests that the American retail system’s focus on low prices, low wages, and high consumer convenience has led to a “deep equilibrium,” where low-wage workers rely on these retail giants to make ends meet. Meanwhile, the speed of modern delivery systems has become a normal part of American shopping culture.

“The triumph of these types of retailers was not inevitable,” Thelen reflects. “It was a function of politics and political choice.” With ongoing debates about labor law reforms and antitrust enforcement, the current retail equilibrium may persist for the foreseeable future, unless significant changes are made to the system.

Through Attention, Shoppers!, Thelen offers readers a comprehensive look at the economic forces that have shaped the retail sector, helping explain the giant retail landscape many Americans take for granted today.

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Jio Joins Forces with SpaceX’s Starlink to Bring High-Speed Internet to India

India’s richest man Mukesh Ambani’s Jio Partners with SpaceX for a Digital Revolution

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In a groundbreaking move, Jio Platforms Limited (JPL), a subsidiary of India’s Reliance Industries Limited, has announced a strategic partnership with SpaceX to offer Starlink’s high-speed broadband internet services across India. This collaboration comes as part of Jio’s ambition to expand its broadband offerings and transform connectivity in the country, especially in rural and remote areas.

The partnership between Jio, led by India’s richest man, Mukesh Ambani, and SpaceX, led by US billionaire Elon Musk, marks a significant step in bridging the digital divide and accelerating India’s digital ecosystem. By bringing Starlink’s advanced low Earth orbit (LEO) satellite internet into its fold, Jio is positioning itself at the forefront of India’s broadband evolution, promising to provide affordable and high-speed internet to even the most remote corners of the country.

Through this agreement, Jio will integrate Starlink’s services into its vast network, offering them to both consumers and businesses across India. Customers will be able to access Starlink’s solutions through Jio’s retail outlets as well as its online platforms, ensuring a seamless and efficient experience for users nationwide.

“Ensuring that every Indian, no matter where they live, has access to affordable and high-speed broadband remains Jio’s top priority,” said Mathew Oommen, Group CEO of Reliance Jio, in a statement. “Our collaboration with SpaceX to bring Starlink to India strengthens our commitment and marks a transformative step toward seamless broadband connectivity for all. By integrating Starlink into Jio’s broadband ecosystem, we are expanding our reach and enhancing the reliability and accessibility of high-speed broadband in this AI-driven era, empowering communities and businesses across the country.”

Jio’s extensive infrastructure, paired with Starlink’s pioneering satellite technology, will address the connectivity challenges in India’s most underserved areas, ensuring the benefits of the digital age are accessible to all. The collaboration will also allow Jio to complement its existing broadband services, such as JioAirFiber and JioFiber, by providing high-speed internet in hard-to-reach locations more quickly and affordably.

Additionally, Jio and SpaceX are exploring further areas of collaboration, looking for innovative ways to strengthen India’s digital landscape. Gwynne Shotwell, President and Chief Operating Officer of SpaceX, commented, “We applaud Jio’s commitment to advancing India’s connectivity. We are looking forward to working with Jio and receiving authorization from the Government of India to provide more people, organizations, and businesses with access to Starlink’s high-speed internet services.”

In an interesting twist, Jio’s partnership with Starlink comes just one day after India’s second-largest telecom operator, Airtel, also signed a deal with Starlink. This move indicates that India’s telecom sector is witnessing a significant transformation as leading operators race to offer cutting-edge broadband services through satellite technology, further boosting the country’s digital revolution.

As part of its long-term strategy, Jio continues to innovate and diversify its offerings, positioning itself as a leader in the broadband space with cutting-edge solutions. With this collaboration, Jio not only aims to enhance the reach of its broadband services but also solidifies its role in advancing India’s goal of becoming a global leader in the digital economy.

The union of Jio’s expansive infrastructure and SpaceX’s space-based internet promises to accelerate India’s journey toward becoming a digitally connected nation, ensuring that no part of the country is left behind in the fast-evolving digital landscape.

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New Research Could Allow People to Correct Robots’ Actions in Real-Time

Through basic interactions like pointing to the object, tracing a path on a screen, or physically nudging the robot’s arm, you could guide it to complete the task more accurately.

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Graduate student Felix Yanwei Wang nudges a robotic arm that is manipulating a bowl in a toy kitchen set up in the group’s lab. Using the framework Wang and his collaborators developed, slightly nudging a robot is one way to correct its behavior. Credits:Credit: Melanie Gonick, MIT

A breakthrough framework developed by researchers from MIT and NVIDIA may soon allow people to correct a robot’s actions in real-time using simple, intuitive feedback—similar to how they would guide another person.

Imagine you’re doing the dishes and a robot grabs a soapy bowl from the sink—but its gripper misses the mark. Instead of having to retrain the robot from scratch, a new method could enable you to fix its behaviour in real time. Through basic interactions like pointing to the object, tracing a path on a screen, or physically nudging the robot’s arm, you could guide it to complete the task more accurately.

This new approach eliminates the need for users to collect data and retrain the robot’s machine-learning model, unlike other traditional methods. Instead, it allows the robot to immediately adjust its actions based on user feedback to get as close as possible to fulfilling the user’s intent.

In tests, the framework’s success rate was 21 percent higher than an alternative method that did not leverage human corrections.

“This approach is designed to let robots perform tasks effectively right out of the box,” says Felix Yanwei Wang, an MIT graduate student in electrical engineering and computer science (EECS) and the lead author of a paper on the framework. “We can’t expect laypeople to gather data and fine-tune models. If a robot doesn’t work as expected, users should have an intuitive way to fix it.”

Wang’s co-authors include Lirui Wang PhD ’24, Yilun Du PhD ’24, senior author Julie Shah, MIT professor of aeronautics and astronautics and director of the Interactive Robotics Group at CSAIL, along with Balakumar Sundaralingam, Xuning Yang, Yu-Wei Chao, Claudia Perez-D’Arpino PhD ’19, and Dieter Fox from NVIDIA. The research will be presented at the upcoming International Conference on Robots and Automation.

A New Approach to Robot Correction

Currently, many robots use generative AI models trained on vast amounts of data to perform tasks. These models can solve complex tasks but often struggle to adapt to real-world situations that differ from their training environment. For example, a robot might fail to pick up a box from a shelf if the shelf in the user’s home is arranged differently than in its training environment.

To address this, engineers often collect new data and retrain the model—a time-consuming and costly process. However, the new MIT-NVIDIA framework allows users to interact with the robot during deployment, correcting its behavior in real time without the need for retraining.

“We want users to guide the robot without causing mistakes that could misalign with their intent,” says Wang. “The goal is to provide feedback that adjusts the robot’s behavior in a way that is both valid and aligned with the user’s goals.”

The system offers three ways for users to provide feedback: they can point to the object they want the robot to interact with, trace a desired trajectory on a screen, or physically nudge the robot’s arm. Wang explains, “Physically nudging the robot is the most direct way to specify user intent without losing any of the information.”

Ensuring Valid Actions

To avoid the robot making invalid moves—like colliding with nearby objects—the researchers developed a sampling procedure. This technique ensures that the robot chooses actions that are both feasible and aligned with the user’s request.

“Rather than just imposing the user’s will, we allow the robot to take the user’s intent into account while ensuring the actions remain valid,” Wang says.

The researchers’ framework outperformed other methods during tests with a real robot arm in a toy kitchen. While the robot might not always complete tasks immediately, the system allows users to correct it on the spot, without waiting for it to finish and then provide new instructions.

The framework also has the potential to learn from user corrections. For instance, if a user nudges the robot to pick up the correct bowl, the robot could log this action and incorporate it into its future behavior, gradually improving over time.

“The key to continuous improvement is having a way for users to interact with the robot,” says Wang. “This method makes that possible.”

Looking ahead, the researchers aim to improve the speed of the sampling procedure and test the framework in new, more complex environments, paving the way for robots that are more adaptable to real-world scenarios.

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