AI and Human Development: Evidence from G20 Countries

Rohan Dubey () and Lekha Chakraborty ()
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Rohan Dubey: National Institute of Public Finance and Policy
Lekha Chakraborty: National Institute of Public Finance and Policy

Working Papers from National Institute of Public Finance and Policy

Abstract: The rapid diffusion of artificial intelligence (AI) has generated widespread expectations of substantial productivity gains, yet empirical evidence on its macroeconomic effects remains limited. This paper provides across-country empirical assessment of the relationship between AI adoption and labour productivity using a newly constructed panel dataset covering G20 over the period 2012–2023. We develop two composite indices of AI adoption that capture both relative cross-country positioning and within-country evolution overtime, drawing on indicators of investment, innovation, computational capacity, and scientific output. Employing panel regressions with country and time fixed effects and a rich set of macroeconomic controls, we find evidence of a statistically significant short-run effect of AI diffusion on aggregate labour productivity. These results are robust across alternative index constructions and model specifications. We then extend our analysis to human development indicators and find that AI diffusion is positively associated with UNDP the Human Development Index (HDI). At the sametime, the magnitude and dynamics of the estimated effects suggest that productivity gains from AI are likely to materialize gradually and depend on complementary investments and structural conditions. Beyond the regression results, the indices developed in this paper provide a transparent framework for tracking AI diffusion and identifying areas of AI preparedness and technological lag, offering useful insights for future research and policy design.

Date: 2026-03
Note: Working Paper 445, 2026
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