Running Head: Future of Economics 1

Future of Economics

Name

Affiliation
Future of Economics 2

Future of Economics

The future never really comes, but with each passing year, it is coming near, and in every
sector, uncertainty is at its peak due to changes at the global level. The disaster that the health
sector got exposed to since the start of the year 2020 has made changes over each sector, from
education, health and to business sectors, the set norms were put upside down (Clark and
Gevorkyan, 2020). With these changes, technological improvement has also made its
contribution to amplifying the growth. The technological advancement can be seen excelling for
the past few decades, and once innovation and invention become the part of the society.
However, the most significant change that should be taken into consideration is in the economic
world, which will be affected by a number of factors and from other sectors, and this all will lead
to the change in the study of economics as well. It is essential to analyze the expected changes in
the economic sector to present how the future of the economic sectors will look like.

The most significant changes that have been part of the recent economics has happened in
the field of technology. As presented by Tschang and Almirall (2021), artificial intelligence has
triggered a number of social and economic changes due to the advancement and deployment of
AI products. In different fields such as production, and services industries, transports and
logistics, have been impacted by the use of AI. These changes have induced a debate about the
impacts society and economies can have from AI. Researchers have presented a short term
impact of AI on labor productivity, and (Damioli, Van Roy and Vertesy, 2021) presented that the
use of AI in SMEs and services industries is expected to bring more productivity by increasing
the efficiency of the workforce and innovation. They also presented that the opportunities in the
technological use for the economics had low capital intensity, created organizational complexity
and therefore considered as a very difficult business activity; however, in the future, it is
expected that the economies will have a more diverse patent portfolio of AI and therefore the low
economic maturity of AI can be eliminated (Damioli, Van Roy and Vertesy, 2021). However, a
significant aspect related to this economic maturity is that this process will be time-consuming
for the economies before they can get fully benefited from the use of AI in economics.

Due to the change in the technologies in the organizations, the requirements for the
workforce are also changing. Artificial intelligence is changing the workplaces with extensive
development on a daily basis. As presented by Bolton et al. (2018), the recent development in AI
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where has been able to benefit organizations in diverse manners, also has increased threats
related to employment. There are several areas that have been effectively managed by the use of
AI, such as the organizations are able to manage to restructure themselves internally and get
advantages from the external competition. Different technologies such as analytics, cloud
computing and the internet of things have been combined with AI, and therefore has been able to
integrate different hardware and software to make the use of technology effective. And therefore,
the traditional workplaces are replaced by more sophisticated systems with continuous data
processing. However, this use of technologies in the organization has created greater concerns
for the employment rate as well. Such as in Amazon, there aren’t analysts and engineers; the use
of manual labor for lifting and placing goods is also very extensive, but the continuous
improvement in robotics and modularizing the work has presented a greater match of the manual
labor putting the job of this workforce in danger (Tschang and Almirall, 2021). These robotics
are much stronger and faster than human labor; therefore, they are expected to have a quick take
over the business world. Though this has increased threats for manual labor yet, there are
increased opportunities related to white-collar jobs, which are highly paying and require an
educated workforce (Tschang and Almirall, 2021). Therefore the organizations are focused on
hiring potential candidates who are equipped with the skills essential to handle these
technologies.

Digitalization hasn’t only changed the use of technology and workforce; it has impacted
the nature of business as well. The increased development in the ICT field has proposed a lot of
impact on economic development as well and therefore (Andreea and Elena, 2020) presents that
understanding of digitalization impact on economic and human development is essential so that
an extended level of favorable progress can be achieved. They have also presented that the
human development index is highly affected by fluctuation presented in the digitalization
process. Therefore the disparities which are resulted from the use of digitalization of economies
are required to be handled by effective use of entrepreneurship. As there are examples from
different countries of the EU, who have been able to handle these disparities by implementing
and adopting digitalization with the help of different channels, opportunities for other regions is
also present (Andreea and Elena, 2020).
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The presence of more data in more sectors has increased the individual focus, and with
the help of AI, the businesses are focusing on providing the customers with their personalized
experiences. And the customer behavior is also being changed. Therefore, the companies will
acquire those who are able to work with this artificial intelligence to enhance productivity and
meet the goals at a better pace. Gig companies are taking the place of traditional work. The
economy is moving the tendency of separating and breaking down tasks into individual tasks in
this way. This will enable businesses to assign these jobs to individuals who are capable of
completing them efficiently. Companies will be able to reduce staff inefficiency in this manner,
and AI will enable them to hire a more productive workforce. Research from Somjai,
Jermsittiparsert and Chankoson (2020) has presented that the initial economic indicators are
impacted by the use of AI. Adoption of the use of artificial intelligence has increased positive
attitude towards the use of artificial intelligence in the economies as it has helped the economists
to determine the impact on material investment and capital investment, effective use of data and
AI help to analyse the unemployment, higher-income output, return on investment and wage rate.
Therefore AI hasn’t only impacted the workforce but also the economic system in which they
will work. SION (2018), in his research, have been able to identify that the use of AI in the
economy will lead to greater changes in the trend related to the workforce utilization and
presence of human-related tasks, which are expected to be decreasing. The next five years are the
most significant in mapping the use of human labor and generating the job opportunities for the
workforce to accommodate them into the jobs that will require AI-related skills for the next ten
years.

Fanti and Gori (2010) have presented a significant study in which the impact of family
policies on economics. A dynamic overlapping impact of family policies has been identified on
macroeconomics both in the open and close economic system. In close economies, the
individuals prefer to alternate their production with the future consumptions, and therefore the
present consumption is lower. They are expected to have more childbearing intentions in the
future which these economies are suggested to have more policies like child tax to meet the
welfare of the coming generation (Fanti and Gori, 2010). However, there is another aspect seen
related to the population increase, which says that technology impacts the intentions of parents to
have children, and in open economies, there is a lower trend of bearing children, which means
the government has reduced the tax to maximize lifetime welfare and provide these parents have
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an opportunity to decide the number of children freely (Fanti and Gori, 2010). With the presence
of such aspects, there are expected to be greater impacts of technologies and family policies on
the childbearing intention and world population that will have several direct and indirect impacts
on economics.

There are several changes expected in the future related to the demographic trends in the
countries and their impact on their economics. As presented by Gevorgyan (2021), for a small
open economy, the increase in population will lead to the demand for investment. If the savings
of a country isn’t able to fulfil this demand, they will turn to the world capital markets to borrow
this investment. Hence increase in the population is associated with the beneficial investment and
generating more account deficits. A very significant aspect related to this investment is that there
will be a great difference between the trade accounts of different countries, making it an
international phenomenon (Gevorgyan 2021). However, the scholars present that the current
trade war has increased prosperity for the rich while the producers are getting nothing in return.
As a result, inequality acts as a threat to the global economy (KLEIN, 2021).

The changes and challenges that the economies will face in the future will require
extended changes in the studies related to economics as well. Therefore more branches of
economics will be introduced in the future to understand these changing trends. The only thing
that can help the nations to stay intact to the challenges of the future and grow is to timely
include these studies into their educational system and economies.
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References

Andreea, B. and Elena, L., 2020. The Relationship Between Entrepreneurship and Digitalization
- Spotlight on the EU Countries. Studies in Business and Economics, 15(3), pp.5-15.
Bolton, C., Machová, V., Kováčová, M. and Valášková, K., 2018. THE POWER OF HUMAN–
MACHINE COLLABORATION: ARTIFICIAL INTELLIGENCE, BUSINESS
AUTOMATION, AND THE SMART ECONOMY. Economics, Management, and
Financial Markets, 13(4), p.51.
Clark, C. and Gevorkyan, A., 2020. Artificial Intelligence and Human Flourishing. American
Journal of Economics and Sociology, 79(4), pp.1307-1344.
Damioli, G., Van Roy, V. and Vertesy, D., 2021. The impact of artificial intelligence on labor
productivity. Eurasian Business Review, 11(1), pp.1-25.
Fanti, L. and Gori, L., 2010. FAMILY POLICIES AND THE OPTIMAL POPULATION
GROWTH RATE: CLOSED AND SMALL OPEN ECONOMIES. Metroeconomica,
61(1), pp.96-123.
GEVORGYAN, K., 2021. DEMOGRAPHIC CHANGES AND CURRENT ACCOUNT
IMBALANCES. Journal of Economic Development, 46(3).
KLEIN, M., (2021). TRADE WARS ARE CLASS WARS. [S.l.]: YALE UNIVERSITY PRESS.

SION, G., 2018. HOW ARTIFICIAL INTELLIGENCE IS TRANSFORMING THE

ECONOMY. WILL COGNITIVELY ENHANCED MACHINES DECREASE AND
ELIMINATE TASKS FROM HUMAN WORKERS THROUGH
AUTOMATION?. Journal of Self-Governance and Management Economics, 6(4), p.31.
Somjai, S., Jermsittiparsert, K. and Chankoson, T., 2020. Determining the initial and subsequent
impact of artificial intelligence adoption on economy: a macroeconomic survey from
ASEAN. Journal of Intelligent & Fuzzy Systems, 39(4), pp.5459-5474.
Tschang, F. and Almirall, E., 2021. Artificial Intelligence as Augmenting Automation:
Implications for Employment. Academy of Management Perspectives, 35(4), pp.642-659.