An image of a robot.
Global Economy Drivers Are Now Largely Automated
Automation and AI
Both automation and artificial intelligence (AI) are now changing the world of businesses and contributing to the economic growth of a country through production processes. They are also used to address adverse societal challenges in several areas of an economy, such as health and climate change.
Automation and AI technologies are also predicted to transform the nature of work and workplaces. Due to automation, machines are taking the place of humans in almost every field of life. Machines can do those tasks that humans are unable to perform. Due to this, many occupations are declining for humans due to automation. Some will grow in the future as there is more automation. According to a study, some industries may face up to 95% chances of obsolescence due to automation, such as telemarketing, bank loans, retail/sales, insurance, etc. The integration of AI in financial markets, particularly the use of some of the best automated forex trading robot, explains how AI is transforming this highly specialised field.
Historical Background
In short, automation is generally the use of technology to replace human labour and is totally responsible for the changes in the workforce. In the 19th century, when there was a rise in the industrial revolution driven by steam power until the arrival of programmable computers in the mid-20th century, automation caused serious societal impacts. Starting with shifting people from farms to cities and then from factories to offices, each of these societal shifts caused serious job losses in some fields and also provided some potential gains in others. Individuals’ skills and knowledge are being adapted by new technologies, which can cause a fear of technological unemployment throughout each transformation.
Major Industries in the Modern Global Economy
The following are some major industries that are affected by automation and AI:
Manufacturing
The manufacturing industry is the most affected by automation, as robots took the place of humans in this industry, causing a great job loss. The manufacturing industry is mostly affected by industrial robots that work in place of humans. In the 1960s, there was an immense rise in industrial robotics, which meant that factories became automated and work was done with the help of robots without human assistance. But still, many factories have human labor force working instead of robots.
Factors causing the Robotics Revolution
Many factories in Eastern countries, such as China, are still human-based as compared to Western advanced economies, such as the U.S. According to a recent survey by the World Bank, many factories in China—almost 77% of them—are threatening job holders with automation. The following four factors are fueling the revolution of factories into industrial robotics in China:
Cheaper Industrial Robots
First of all, industrial robots are becoming cheaper and more affordable for factory owners to replace their human labour with robots. The benefit is that the work is done more precisely, and production increases as robots do not rest.
Expensive Labour
Due to expensive Chinese labour, manufacturers prefer to replace human labour with robots. This has a huge economic impact on the labor market; however, manufacturers consider it a one-time investment rather than paying monthly wages to human labour.
Increased Productivity
As industrial robots become more advanced, they can work 24/7 without being tired and complete tasks with high accuracy and precision as compared to human beings. Human beings need time to rest and they perform less precise work.
Low Cost
The last factor is that Chinese factories produce products for Western corporations. Due to the lower cost of industrial robots, expensive labour, and productivity gains in China, Western corporations are also struggling to implement this setup in their homeland so that they can eliminate their international shipping costs. Due to the above four factors, Chinese factories are highly motivated to automate their operations so that they can lower their manufacturing costs and keep their corporate clients happy.
Transportation
Due to the advancements in self-driving technologies will lead to obsolete the truck, taxi, and delivery drivers in the near future. The transportation industry is also moving towards automation by autonomous vehicles. For example, self-driving cars are tested on the roads of California, and there are also autonomous trucks in this run, which requires a lot of investment in their AI development procedures. For example, Otto is a leading company in this regard and was recently bought by Uber for $700 million.
According to an estimate, one-third of all trucks that Americans have will be automated by 2025. Recently, there are probably 3.5 million truck divers in the United States that will become jobless due to automation and technological change.
Traditional taxi drivers, Uber, and Lyft are already on the list of causes of unemployment. Uber is the main game changer in this field, as it hired almost all robotics departments from Carnegie Mellon University in Pittsburg and Pennsylvania in 2014, where they have been testing self-driving taxis since 2016. Lyft also invested $500 million in autonomous vehicle technology.
How Automation and AI create Opportunities
According to recent research, our society needs automation, AI systems, and their related improvements in order to provide value to businesses and contribute to economic growth. The following are some new opportunities that automation and AI provide to businesses, society, and the GDP growth of a country:
Rapid Technological Advancements
As compared to traditional industrial automation and advanced robots, the new trend of autonomous systems is more capable of performing tasks, from autonomous trucks on roads to automated check-outs in grocery stores or other brands. Generative AI also provides its services by involving human capabilities in computer vision, natural language processing (NLP), and machine learning (ML).
Potential to Transform Businesses
Both automation and AI technologies generate value in different products and services. Many companies are using them to perform multiple routine tasks, such as personalised product recommendations, find anomalies in the production process, and recognise fraudulent transactions.
Potential to Tackle Climate Change
Automation and AI have the potential to tackle the global issue of climate change to a great extent. For example, some researchers are using ML to modify climate models, which can give better solutions to the problem of climate change.
Benefits of Automation
There are some major economic benefits of automation, like labor productivity growth, improved product quality, and reduced costs for both businesses and consumers.
The Rise of Robotics
In expanding automation, the rise of robotics played an important role. This enables the precise, more efficient, and consistent performance of tasks that were previously done by humans. With the help of automated robotic systems, businesses can replace repetitive manual tasks, which will lead to increased productivity and greater output. More crucial products can be produced rapidly and provided to those who totally rely on them at affordable prices.
Improvements in Productivity
There are huge and scalable improvements in productivity with the help of robotics. For example, an engineering company focuses on designing and manufacturing customised machines that are used for factory automation and increase the production yield by 500% by using the same robots.
Reduced Costs
The rise in production yield due to automation can reduce the costs of goods produced, which improves the availability or access of the general public to these advanced products. Moreover, when machines work in place of humans continuously due to automation, people have more time to be creative, which can lead to technological innovations in many fields, such as finance, health care, and agriculture.
Disadvantages of Automation and AI
Just like automation and AI provide potential benefits to our society and contribute to economic growth, they also have some disadvantages:
Jobs are Automated
According to a survey done on 2000 work activities in almost 800 different occupations, some of them can easily be automated as compared to others. Because those jobs require physical activities consisting of precise and predictable data processing and data collection. That is why jobs are going to be automated soon because robots can perform complex tasks with more precision and accuracy as compared to humans.
Jobs are Lost
Due to automation and AI, workers are losing their jobs as robots integrate into factories to perform human tasks. An analysis predicts that there will be a job loss of 400 million workers, which will affect 15% of the global workforce that will be automated in the years 2016–2030.
Jobs are Changed
Most of the jobs that are being lost or gained will be changed as more machines are used in factories that complement the work of human beings. Partial automation and AI algorithms are used to change job descriptions in the workplace. As employees at Retailer Amazon who previously lifted and stacked heavy objects are now robot operators, monitor the automated arms and resolve issues such as hindrances in the flow of objects.
Scalable Solutions to Societal Challenges
The following are some scalable solutions to societal challenges in different areas:
Ensuring Robust Economic and Productivity Growth
Productive growth is a major contributor to a country’s economic growth. Individuals and businesses need to ensure robust economic and productive growth in a country because both are crucial to attain.
Changing Business Dynamism
A suitable environment for small-sized businesses and a competitive environment for large businesses foster business dynamism and contribute to job growth as well. In order to increase growth, competition, and boost productivity, there should be simplified taxes, regulations, and other incentives for AI adoption.
Investing in Human Capital
It is critical in some countries to invest in worker training. Policy makers can encourage businesses or other factors to invest in human capital by using tax benefits and other incentives leading to job creation, increased wages, learning, and other types of capital, such as R&D (research and development).
Conclusion
In conclusion, automation plays an important role in modernising technology as well as causing unemployment. The more routinized a work, there is more chances of it to be automated. There are more chances that a robot or a computer will start doing a person’s tasks if a person’s job involves repetitive tasks. Many lower-end workers are losing their jobs as machines can flip a burger just like a human being.
