Artificial Intelligence Could Revolutionize R&D and Innovation

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Artificial Intelligence Could Revolutionize R&D and Innovation

Each of the five Techno-Economic Revolutions has been driven by a bundle of complementary General-Purpose Technologies, or GPTs.  Beyond innovations in existing sectors, the rapidly improving price/performance of GPTs has led over time to the creation of entirely new applications and industries.  For example, in the Mass Production era, the steady declines in the price of electricity and improvement in the efficiency of electric motors led to the radical transformation of manufacturing in the early part of the 20th century with the advent of the assembly line.   It also led to the creation of the consumer appliance industry.   Similarly, the Digital Revolution saw the semiconductor industry take-off, which led to the historical transition from the industrial economy of the past two centuries to our ongoing information economy.  The opportunities created by the 12 GPTs of the digital revolution were examined in 2013’s Ride the Wave by Fred Rogers and Richard Lalich.

Among those perhaps the most difficult to assess is Artificial Intelligence, or AI.  Beyond its use by leading edge technology companies, we’re still in the early stages of AI deployment.  It’s only been in the last few years that major advances in machine learning have taken AI from the lab to early adopters in the marketplace. While considerable innovations and investments are required for its wider deployment, AI is likely to become one of the most important GPTs in the 21st century.

At a seminar last year, University of Toronto Professor Avi Goldfarb, offered a compelling explanation for AI as a GPT.   Goldfarb, along with his colleagues, has been conducting research on the economics of machine intelligence.  Goldfarb says, “The computer revolution can be viewed as being all about the dramatic reductions in the cost of arithmetic calculations. Over the years, we’ve learned to define all kinds of tasks—from inventory management to photography—in terms of such digital operations.  Similarly, the economic value of the internet revolution can be described as reducing the cost of communications and of search, thus enabling us to easily find and access all kinds of information.”   

In a 2017 article, Goldfarb and his colleagues wrote that the best way to assess the economic impact of a new radical technology is to look at how the technology reduces the cost of a widely used function...

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