Artificial intelligence has no shortage of critics — from visionaries like Elon Musk, who once compared A.I. to “summoning the demon” in a horror film, to everyday workers who fear being replaced by machines.
But A.I. and other new technologies could take off in countries with a shortage of young workers, according to Rob Subbaraman, chief economist for Asia ex-Japan at Nomura. Those include Japan, China, South Korea and Taiwan.
“If you don’t embrace these new artificial intelligence, robotics and ways to make up for shortages of youth labor, you’re going to have a slowdown of potential growth,” he told CNBC’s “Capital Connection” on Monday.
A country’s growth potential is driven by labor, capital and productivity. Slowdown in a country’s labor force growth means it has to rely a lot more on productivity in order to maintain its growth.
That’s where machines can help, since they can process information faster and carry out tasks more quickly than humans.
Subbaraman pointed to Japan as a place an A.I. revolution could kick off. “Because Japan’s got a falling and aging population, it really needs machines, A.I. and all this to start replacing labor,” he said.
Japanese Prime Minister Shinzo Abe said in March that his government does not fear A.I. and that the technology could actually help the country to grow. It’s already in place: Earlier this year, Japan opened two hotels that are staffed mostly by robots.
Japan stunned markets on Monday by reporting a much-stronger-than-expected 4 percent annualized GDP growth. The country has been mired in low growth since the 1980s.
Subbaraman: Here’s what must happen next
Many low-skill jobs are already being automated, including data entry keyers, telemarketers and hand sewers. The counter-argument is that A.I. will create new industries and jobs.
Subbaraman said the key thing for governments is going to be re-training workers so that they’ll have the necessary skills for new jobs that’ll come into being.
“Governments need to be forward-looking and start acting now in terms of retraining workers, encouraging labor mobility, spending more of their fiscal budget on this,” he said. “That’s where I think they need to start moving a lot faster than they have.”
Globally, A.I. could drive global gross domestic product (GDP) higher by 14 percent in 2030, which would be an equivalent of an additional $15.7 trillion, professional services firm PwC said in a June report. Improved labor productivity is expected to make up for over half of all economic gains from A.I. between 2016 and 2030, said PwC.
But today, A.I. adoption outside the tech sector is still at an experimental stage, according to consulting firm McKinsey. In a recent report, McKinsey said only 20 percent of 3,000 decision-makers surveyed revealed that they use any A.I.-related technology on a large scale or within a core part of their businesses.