Increases in capital and labor are no longer driving the levels of economic growth the world has become accustomed to and desires.
Fortunately, a new factor of production is on the horizon, and it promises to transform the basis of economic growth for countries across the world.
There has been marked decline in the ability of increases in capital investment and in labor to propel economic progress.
These two levers are the traditional drivers of production, yet they are no longer able to sustain the steady march of prosperity enjoyed in previous decades in most developed economies.
But long-term pessimism is unwarranted.
With the recent convergence of a transformative set of technologies, economies are entering a new era in which artificial intelligence (AI) has the potential to overcome the physical limitations of capital and labor and open up new sources of value and growth.
My point of view: knowledge became a driver of production somewhere in the 1970’s. It did not result in a growth of the real economy. As Robert Solow stated “we see computers everywhere except in the productivity statistics. AI will become dominant but looking at the nature of the work of many service workers, it will not create the economic growht of the post-World War II boom.