Your employer is (probably) unprepared for artificial intelligence
the economy, consider the tractor. Historians disagree about who invented the humble machine. Some say it was Richard Trevithick, a British engineer, in 1812.
Others argue that John Froelich, working in South Dakota in the early 1890s, has a better claim. Still others point out that few people used the word “tractor" until the start of the 20th century. All agree, though, that the tractor took a long time to make a mark.
In 1920 just 4% of American farms had one. Even by the 1950s less than half had tractors. Speculation about the consequences of ai—for jobs, productivity and quality of life—is at fever pitch.
The technology is awe-inspiring. And yet ai’s economic impact will be muted unless millions of firms beyond tech centres like Silicon Valley adopt it. That would mean far more than using the occasional chatbot.
Instead, it would involve the full-scale reorganisation of businesses, as well as their in-house data. “The diffusion of technological improvements", argues Nancy Stokey of the University of Chicago, “is arguably as critical as innovation for long-run growth." The importance of diffusion is illustrated by Japan and France. Japan is unusually innovative, producing on a per-person basis more patents a year than any country bar South Korea.
Japanese researchers can take credit for the invention of the qr code, the lithium-ion battery and 3d printing. But the country does a poor job of spreading new tech across its economy. Tokyo is far more productive than the rest of the country.
Cash still dominates. In the late 2010s only 47% of large firms used computers to manage supply chains, compared with 95% in New Zealand. According to our analysis, Japan is roughly 40% poorer than would be expected based on its
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