Artificial Intelligence and Labor Productivity Paradox: The Economic Impact of AI in China, India, Japan, and Singapore

Abstract

Artificial intelligence is designed to generate technologies that potentially increase productivity and economic welfare. This study analyzes the relationship between GDP and high-technology exports, GDP per person employed, and unemployment rate in China, India, Japan, and Singapore. Recent concerns on technological unemployment claim that artificial intelligence disrupts the labor market which decreases employment over time. Using the multiple regression analysis, this study proved that Japan comparatively has better utilization of AI and labor productivity as all independent variables show significance to the GDP. Labor productivity in all countries is positively related to GDP. However, China and India showed signs of improper AI utilization as technological unemployment occurred. The unemployment rate in China is insignificant to its GDP, while India's unemployment rate is positively related to GDP, hence the jobless growth. In Singapore, the insignificance of high-tech exports to GDP is due to its lack of R&D investments these recent years. The results suggest that AI escalates growth through proper utilization trade liberalization, as exercised by Japan, as it helps the economy to be open and flexible to various free trade agreements which facilitates technological progress and enables the opening of new markets for growth and expansion, especially of artificial intelligence, which attracts and encourage foreign direct investments that will cater technology transfer, creation of new jobs, and economic growth.