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Generative artificial intelligence (AI) has the potential to bring significant changes to the global economy, according to Goldman Sachs Research. Using advanced natural language processing tools in businesses and society could result in a 7% increase in global GDP (equivalent to nearly $7 trillion) and raise productivity growth by 1.5 percentage points over 10 years.

Generative AI can produce content indistinguishable from human-created output and facilitate communication between humans and machines, representing a significant advancement with substantial macroeconomic effects, according to Goldman Sachs economists Joseph Briggs and Devesh Kodnani.

Adopting new AI systems is expected to have a major impact on employment markets worldwide. The shifts in workflows triggered by these advancements could expose approximately 300 million full-time jobs to automation, state the economists. They estimate that around two-thirds of U.S. occupations are exposed to some degree of automation, with a quarter to half of the workload in those exposed occupations potentially being replaced. However, not all automated work will result in job losses; many jobs and industries are only partially exposed to automation and are more likely to be complemented by AI rather than substituted, according to the report.

Historically, jobs displaced by automation have been offset by the creation of new jobs, with the majority of long-term employment growth attributed to the emergence of new occupations following technological innovations. The report highlights that information technology innovations, for instance, led to the creation of professions such as webpage designers, software developers, and digital marketing professionals. This job creation also had follow-on effects, as the increase in aggregate income indirectly drove demand for service sector workers in industries like healthcare, education, and food services.

According to another report by Goldman Sachs Research, advancements in AI are also expected to have significant implications for the global enterprise software, healthcare, and financial services industries. With major tech companies poised to introduce their own generative AI tools, the enterprise software industry is entering the next wave of innovation, following the transformation brought about by the internet, mobile, and cloud computing.

ACCORDING TO KASH RANGAN, A SENIOR US SOFTWARE ANALYST AT GOLDMAN SACHS RESEARCH, generative AI can streamline business workflows, automate routine tasks, and give rise to a new generation of business applications. The technology is already being used in business applications to enhance the efficiency of knowledge workers, expedite drug development, and accelerate software code development, among other things. 

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Software companies are integrating generative AI into their product portfolios. Software-as-a-service firms, for example, are utilizing it to create opportunities for upselling and cross-selling, as well as enhancing customer retention and expansion. The report highlights multiple ways businesses can leverage generative AI for growth, such as through new production and application releases, charging premiums for AI-integrated offerings, and increasing prices over time as existing products are supplemented with AI-enabled features. Goldman Sachs Research estimates the total addressable market for generative AI software to be $150 billion, compared to $685 billion for the global software industry.

As more generative AI tools are developed and incorporated into existing software packages and technology platforms, various sectors of the economy stand to benefit. These benefits range from improved office productivity and sales efforts to advancements in architectural design and manufacturing, as well as enhanced patient diagnosis in healthcare and the detection of cyber fraud.

While much remains uncertain about how generative AI will impact the world economy and society, the potential effects are expected to be profound. However, it will take time for them to fully materialize.

_{Read the full article along with graphs on Goldman Sachs’ website}

_{https://www.goldmansachs.com/intelligence/pages/generative-ai-could-raise-global-gdp-by-7-percent.html}