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# The Future of Economic Growth: AI, Population Decline, and the Uncertain Path Ahead

The recent webinar titled "The Governance and Economics of AI" brought together leading economists to explore the complex interplay between artificial intelligence, economic growth, and the looming challenges posed by declining global fertility rates. Moderated by Anton Korinek from the University of Virginia, the discussion presented varied perspectives on whether the world might face an "artificial intelligence explosion" or find itself on an "empty planet" devoid of economic vitality.

## Historical Perspectives on Economic Growth

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Anton Korinek opened the session with insightful historical context regarding economic growth, highlighting the post-war trajectory that many advanced economies have experienced. Historically, economic growth theory focused on understanding the steady state and the reasons behind it, often referring to the "Calder facts." The resurgence in growth theory, largely bolstered by advancements in AI, has led to new hypotheses suggesting that future growth might not follow historical patterns due to the transformative potential of AI technologies.

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Ben Jones, one of the speakers, emphasized that rather than viewing AI as merely a tool for production, it might fundamentally change the knowledge production function itself. In his paper, co-authored with Chad Jones and Philippe Aghion, Ben examined various growth models and proposed that if AI can enhance creativity and the production of knowledge, we could witness a significant acceleration in long-term economic growth.

## The AI Explosion vs. Stagnation

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Ben Jones presented a dual perspective on the potential for growth driven by AI. The first scenario he outlined discussed what a "type 1 growth explosion" might look like, where the economy experiences sustained rapid growth rates due to effective automation. This model operates under the assumption that AI could ultimately replace human labor across various sectors.

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In contrast, Chad Jones approached the topic from a more cautionary angle, questioning whether sustained economic growth is guaranteed. Providing a counter-narrative, he argued that with falling fertility rates, the global population could face stagnation, potentially leading to an "empty planet" result where living standards cease to rise. The implications of this finding are profound — if population levels decline rapidly and fertility rates fall below replacement levels, economic growth could stall or reverse.

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Chad's research underscores how traditional growth models, which often presume constant or expanding populations, may need to be rethought in light of demographic shifts. He highlighted that high-income countries already face fertility rates below replacement levels, leading to stagnant or declining populations, which fundamentally alters the trajectory of economic growth.

## The Critical Role of Policy and Human Creativity

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As the discussion progressed, Rachel Nye and Philip Trammell, both discussants, emphasized the importance of policy intervention in addressing declining fertility rates. Rachel articulated the alarming potential of the empty planet result and suggested that significant policy measures would be required to encourage higher birth rates. She noted that simply offering childcare subsidies may not suffice, given the complex interplay of social norms, gender roles, and economic incentives that influence family planning decisions.

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Philip added that understanding the incentives for human capital development — i.e., the creation of conditions that lead to innovation and technological advancement — is essential. He pointed out that while AI could enhance productivity, it raises questions about whether it can fully replace the human element within the knowledge production function.

## Imagination and Innovation: The Human Element

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A significant takeaway from the discussions was the ongoing relevance of human creativity and intuition in the growth process. While Ben’s models suggest automation may lead to sustained growth, Rachel’s insights into the limits of AI's capabilities highlight a critical point: machines can process data and recognize patterns, but they may fall short in understanding the subtleties of human emotion, creativity, and cognition.

The contrasting arguments between the speakers illustrated a broader concern regarding the future of growth: Can we rely solely on AI, or do we need to nurture human innovation? The question remains whether AI can significantly augment human creativity or whether it will create a dependency on an increasingly rare talent pool of skilled individuals.

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## Conclusion: A Fork in the Road

In conclusion, the interplay between artificial intelligence, demographic changes, and economic growth reveals a landscape filled with uncertainty. There is a dual narrative forming where the potential for an AI-driven economic renaissance exists alongside dire warnings of population decline and stagnation.

The contributions from all speakers suggest that while technological innovation holds promise for boosting economic growth, we must also be vigilant about the human and institutional elements that underpin this advancement. As we stand at this fork in the road, it is clear that decision-makers must take into account both the acceleration of AI capabilities and the societal implications of declining birth rates to ensure a sustainable economic future.

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As the discussion concluded, the attendees were left pondering the delicate balance between harnessing the power of AI and cultivating the human ingenuity necessary for enduring growth. With future webinars on the governance and economics of AI scheduled, it is likely that these pressing issues will continue to spark conversation and exploration in the realm of economic growth theory.