Artificial Intelligence as a General Purpose Technology: An historical perspective

General Purpose Technologies (GPTs) are considered by economists to have a profound, but delayed, productivity impact. Many economists consider Artificial Intelligence as a GPT: As yet it has not affected the economy, but it is expected to provide a solution to the current productivity slowdown.

In a recent presentation for the Bank of England, Nick Crafts takes an historical perspective analysing the contributions of GPTs such as steam, electricity and information and communications technologies (ICT) to the economy. He draws lessons for AI, warning against placing too much expectation on AI to deliver productivity improvements and economic growth on its own.

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Crafts shows that the 'great invention' interpretation of economic history is problematic, and that previous industrial revolutions required other conditions to bring about economic success. He finds that in history, great inventions like the steam engine did not account for the majority of total-factor productivity growth.

Crafts concludes that technologies like AI are endogenous developments rather than exogenous shocks. The most direct way to catalyse economic growth and AI may be to address the market power of incumbent firms and promote greater economic competition.

This presentation was given at the online event, the impact of machine learning and AI on the UK economy and is summarised by David Bholat on Vox.eu