Whether AI can crack the Solow paradox is the era's big question

livemint.com:

ChatGPT and Bard captured public attention. The initial excitement has now been tempered with some scepticism about these AI tools, but there is hope that they will keep improving with newer versions.

In fact, as Jaspreet Bindra wrote in these pages last week: “The problem is not the technology, but our expectations of it… The moment we temper our expectations, we may see it for what it is: a near-miraculous technology that unleashes the power of language and creativity." The possible impact of AI on economic growth should also be seen in the context of recent concerns among some economists. Many of them fear the combination of declining populations and greater difficulty in finding new ideas that can increase productivity across the economy in effect means that the world will gradually lose economic momentum, and perhaps even approach the stationary state that the very first economists such as Adam Smith, David Ricardo and John Stuart Mill had predicted.

The first wave of research on whether the use of AI tools increases labour productivity has generally been focused on specific tasks rather than a wider arc of human activities, and understandably so, given the relatively recent use of AI tools. There are now some early indications that the use of AI tools can increase productivity in many standard processes.

What is less clear is whether AI can write the next great novel or come up with the next great scientific breakthrough on its own. However, what really matters for an economy is whether the introduction of a new technology improves human productivity in a ubiquitous manner across a wide variety of human activity.