Generative artificial intelligence, when combined with other existing AI tools, has the potential to transform the way companies and individuals work, Moody’s Investors Service said in a report released on Friday.
It can bridge skills gaps, contribute to longer-term economic growth and address demographic challenges, particularly with regards to the ageing population in some economies.
Broader adoption can also accelerate technological innovation, initially benefiting services and creative industries but eventually spreading across most sectors, the report said.
Economies that are unable or unwilling to foster wide adoption of generative AI applications risk losing competitiveness with negative consequences for longer-term growth. For example, some countries have banned the use of ChatGPT over ethical and privacy concerns.
However, the extensive use of generative AI may also result in job losses across advanced and emerging economies. Therefore, governments will face the challenge of weighing up the benefits of broad adoption against the likely social pressures.
“Economies with large services sectors and high labour costs will be most vulnerable. Political tensions may ensue, creating dilemmas for governments in their approach to AI policy. Ethical and security issues, including misuse of the technology are further risks,” the rating agency said in the report.
The economic impact of generative AI may take time to become tangible and improvements will likely take time to feed through to economic growth, the report said.
This is because any productivity boost will “involve material changes to companies' internal business processes and to the way services and goods are produced”. It will also depend on how fast generative AI diffuses across whole countries and business sectors.
Currently, the development of technology is concentrated within a handful of large companies based in the US, the world’s largest economy.
Those countries and industries with easy access to generative AI will outperform which could further exacerbate inequality, according to the report.
Microsoft-backed OpenAI’s ChatGPT and Google’s Bard are two front-runners in the burgeoning field. This month, the Abu Dhabi government-supported research centre Technology Innovation Institute launched Falcon 180B – an advanced version of its flagship language model – to boost generative AI capabilities in the region.
Next month, the UAE will host Dubai Assembly for Generative AI, which aims to shape the future of AI and introduce governments and societies to the opportunities it provides.
“Barriers to entry are high because it is expensive to develop the technology and vast data sets are needed to train the models effectively. If the technology is not widely or easily accessible, too expensive to adopt, or if access to it is restricted due to corporate or national and geopolitical interests, the macroeconomic benefits may be fewer,” Moody’s said.
Generative AI could add nearly $4.4 trillion annually to the global economy and will transform productivity across sectors with continued investment in the technology, according to a new study by consultancy McKinsey.
It has “enormous” economic potential and could raise global labour productivity growth by more than one percentage point a year in the next decade, Goldman Sachs said in a report in July.
In the long term, AI-related investment could reach 4 per cent of gross domestic product in the US and 2.5 per cent of GDP in other AI-leading countries in the next 10 years, it said.
In the short term, AI investment could grow quickly in the next couple of years, approaching $100 billion in the US and $200 billion globally by 2025, the report added.
Moody’s said an effective regulatory framework governing the use of generative AI is necessary to thwart social, political and policy challenges. To maximise benefits and minimise misuse, it is also essential to address generative AI-related issues of ethics, transparency, privacy and security.
However, regulating the use of the technology will be “challenging and complex”, Moody’s said.
“This stems from the inherent complexity and surprising power of generative AI models. Its generation of original content means regulators may not be able to fully guarantee or truly evaluate the behaviour or output of such models before they are rolled out.”
Governments with strong institutions and policies are better positioned to develop credible regulatory frameworks, the report said.
Should late investors consider cryptocurrencies?
Wealth managers recommend late investors to have a balanced portfolio that typically includes traditional assets such as cash, government and corporate bonds, equities, commodities and commercial property.
They do not usually recommend investing in Bitcoin or other cryptocurrencies due to the risk and volatility associated with them.
“It has produced eye-watering returns for some, whereas others have lost substantially as this has all depended purely on timing and when the buy-in was. If someone still has about 20 to 25 years until retirement, there isn’t any need to take such risks,” Rupert Connor of Abacus Financial Consultant says.
He adds that if a person is interested in owning a business or growing a property portfolio to increase their retirement income, this can be encouraged provided they keep in mind the overall risk profile of these assets.
Reputation
Taylor Swift
(Big Machine Records)
Abdul Jabar Qahraman was meeting supporters in his campaign office in the southern Afghan province of Helmand when a bomb hidden under a sofa exploded on Wednesday.
The blast in the provincial capital Lashkar Gah killed the Afghan election candidate and at least another three people, Interior Minister Wais Ahmad Barmak told reporters. Another three were wounded, while three suspects were detained, he said.
The Taliban – which controls much of Helmand and has vowed to disrupt the October 20 parliamentary elections – claimed responsibility for the attack.
Mr Qahraman was at least the 10th candidate killed so far during the campaign season, and the second from Lashkar Gah this month. Another candidate, Saleh Mohammad Asikzai, was among eight people killed in a suicide attack last week. Most of the slain candidates were murdered in targeted assassinations, including Avtar Singh Khalsa, the first Afghan Sikh to run for the lower house of the parliament.
The same week the Taliban warned candidates to withdraw from the elections. On Wednesday the group issued fresh warnings, calling on educational workers to stop schools from being used as polling centres.
China and the UAE agree comprehensive strategic partnership
China and the UAE forged even closer links between the two countries during the landmark state visit after finalising a ten-point agreement on a range of issues, from international affairs to the economy and trade and renewable energy.
1. Politics: The two countries agreed to support each other on issues of security and to work together on regional and international challenges. The nations also confirmed that the number of high-level state visits between China and the UAE will increase.
2. Economy: The UAE offers its full support to China's Belt and Road Initiative, which will combine a land 'economic belt" and a "maritime silk road" that will link China with the Arabian Gulf as well as Southeast, South and Central China, North Africa and, eventually, Europe.
3. Business and innovation: The two nations are committed to exploring new partnerships in sectors such as Artificial Intelligence, energy, the aviation and transport industries and have vowed to build economic co-operation through the UAE-China Business Committee.
4. Education, science and technology: The Partnership Programme between Arab countries in Science and Technology will encourage young Emirati scientists to conduct research in China, while the nations will work together on the peaceful use of nuclear energy, renewable energy and space projects.
5. Renewable energy and water: The two countries will partner to develop renewable energy schemes and work to reduce climate change. The nations have also reiterated their support for the Abu Dhabi-based International Renewable Energy Agency.
6. Oil and gas: The UAE and China will work in partnership in the crude oil trade and the exploration and development of oil and natural gas resources.
7. Military and law enforcement and security fields: Joint training will take place between the Chinese and UAE armed forces, while the two nations will step up efforts to combat terrorism and organised crime.
8. Culture and humanitarian issues: Joint cultural projects will be developed and partnerships will be cultivated on the preservation of heritage, contemporary art and tourism.
9. Movement between countries: China and the UAE made clear their intent to encourage travel between the countries through a wide-ranging visa waiver agreement.
10. Implementing the strategic partnership: The Intergovernmental Co-operation Committee, established last year, will be used to ensure the objectives of the partnership are implemented.
Red flags
- Promises of high, fixed or 'guaranteed' returns.
- Unregulated structured products or complex investments often used to bypass traditional safeguards.
- Lack of clear information, vague language, no access to audited financials.
- Overseas companies targeting investors in other jurisdictions - this can make legal recovery difficult.
- Hard-selling tactics - creating urgency, offering 'exclusive' deals.
Courtesy: Carol Glynn, founder of Conscious Finance Coaching
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