Artificial intelligence or AI, is becoming a major economic force. It can do parts of the work that used to be done only by humans, such as writing, summarizing, coding, and analyzing data. Because of this, AI can affect almost every industry and change how firms produce goods and services.
AI is often described as a general-purpose technology, like electricity or the internet. These technologies can raise productivity a lot, but the gains usually take time. Companies need to learn how to use them well, invest in supporting systems, and reorganize how work is done. That is why we may not see instant productivity growth even if AI improves quickly. AI can look cheap because many tools are easy to access. But large-scale adoption can be expensive. Firms may need better data systems, computational power, cybersecurity, and ongoing maintenance. They also need clear rules for data use, privacy, and safety. Energy use matters too, because large AI systems can consume a lot of electricity. In labor market, AI will affect jobs by automating certain tasks. Many roles will become “hybrid”, where people work with AI in a daily basis. This can raise productivity and create new job types, but it can also cause disruption if workers cannot move quickly into new roles. Training helps, but workers also need strong support systems like clear career pathways and opportunities to gain new skills.
However, there are drawbacks. A major issue is unequal access. Big firms with money, data, and trained staff can adopt AI faster and gain more benefits. Smaller firms and poorer regions may fall behind. This can widen inequality between companies and countries unless there is investment in digital infrastructure and education. AI may also increase market concentration. The strongest systems often require large datasets and major computing resources, which can give big tech firms an advantage. Good regulation is important here. The goal is to protect consumers and support competition without slowing innovation too much.
Aghion’s work helps explain both the benefits and the limits for long-run economic growth. First, Aghion suggests that AI can act like a new wave of automation. In simple terms, it can lower the cost of doing many tasks. That can lift productivity and living standards, specifically when AI improves the efficiency of businesses and helps innovation move faster. Second, growth may still be constrained by what AI cannot automate. Even if AI makes some sectors extremely efficient, people still spend a lot on areas that are hard to automate, like parts of health care, education and many face-to-face services. Over time, those “harder to improve” sectors can become a bigger share of the economy, which can limit growth. Lastly, adoption and policy choices matter a lot. In his recent work Aghion stresses uncertainty about the size of the near-term growth boost. The impact depends on how fast firms adopt AI, whether they reorganize work, and whether the business environment supports innovation and competition. If only a small group of firms capture the benefits, growth may increase less than predicted and inequality may rise more than expected.
Overall, AI can raise productivity and support economic growth, but the results depend on how it is adopted and governed. If countries invest in skills, infrastructure, and fair rules, AI is more likely to bring broad benefits. If they do not, it may increase inequality and concentrate power.
