Front Matter
  • 1 https://isni.org/isni/0000000404811396, International Monetary Fund

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© 2021 International Monetary Fund

WP/21/166

IMF Working Paper

Institute for Capacity Development

Technological Progress, Artificial Intelligence, and Inclusive Growth

Prepared by Anton Korinek (University of Virginia), Martin Schindler (IMF), and Joseph E. Stiglitz (Columbia University)

Authorized for distribution by Valerie Cerra1

June 2021

IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Abstract

Advances in artificial intelligence and automation have the potential to be labor-saving and to increase inequality and poverty around the globe. They also give rise to winner-takes-all dynamics that advantage highly skilled individuals and countries that are at the forefront of technological progress. We analyze the economic forces behind these developments and delineate domestic economic policies to mitigate the adverse effects while leveraging the potential gains from technological advances. We also propose reforms to the global system of governance that make the benefits of advances in artificial intelligence more inclusive.

JEL Classification Numbers: E0, O1, O3

Keywords: Artificial Intelligence; Inclusive Growth; Economic Development

Authors’ E-Mail Addresses: anton@korinek.com, mschindler@imf.org, jes322@gsb.columbia.edu

Contents

  • Abstract

  • I. Introduction

  • II. Downside Risks of Technological Progress

    • A. Labor-Saving Technological Progress

    • B. Resource-Saving Technological Progress

    • C. Information, Digital Monopolies and Superstars

    • D. Misguided Technological Progress

    • E. Broader Harms Associated with AI

  • III. Evaluating the Uncertainties and Opportunities

    • A. Uncertainty about the Pace and Scale of Progress

    • B. The Productivity Puzzle: Are We Really in an Era of Unprecedented Innovation?

    • C. Putting AI in the Broader Context of Development

  • IV. Lessons from Past Technological Transformations

    • A. Pre-Industrial Revolution

    • B. Industrial Revolution

    • C. Manufacturing-Based Export-Led Growth

    • D. What is Different This Time

  • V. Domestic Policy Responses

    • A. Taxation, Redistribution, and Government Expenditures

    • B. Pre-Distribution

  • VI. Global Governance

    • A. A Global Tax Regime for the Digital Age

    • B. Global Competition Policy

    • C. Intellectual Property Rights

    • D. Data and Information Policy

  • VII. Conclusion

  • References

  • Figures

  • Figure 1. Productivity and Earnings Growth

  • Figure 2. Income Inequality over Time, 1960-2015

  • Figure 3. Rising Wage-Skill Premia in the US

  • Figure 4. Employment Trends in Routine vs. Non-Routine Jobs

  • Figure 5. Population Aging and Automation

  • Figure 6. Federal Minimum Wage in the US, 1938-2020

  • Figure 7. Technology Adoption Lags

Technological Progress, Artificial Intelligence, and Inclusive Growth
Author: Mr. Anton Korinek, Mr. Martin Schindler, and Joseph Stiglitz