The role of AI in transforming local economies: exploring how AI technologies are impacting local businesses and labor markets

Zhiyi Meng

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: AI is emerging as a key disruptor of local economies. The impact of AI technologies including machine learning, automation and precision farming in reshaping local business landscape, unlocking innovation, enhancing productivity and creating net new jobs, is yet to be fully appreciated. This paper provides an analysis of the role of AI in revitalising local economies: how AI technologies are enabling small and medium sized enterprises (SME) to improve productivity, how rural economies can overcome labour shortages and supply chain issues and how to realise AIs transformative potential in the near term. It goes on to discuss the impact of AI on labour markets, the creation of net new jobs in data and drone related occupations and need for reskilling and upskilling. It also discusses the role of local governments in encouraging AI adoption through public-private partnerships, tax incentives and infrastructure improvements. The paper concludes with a discussion about how AI shapes the future of work, the need to address the digital divide and the role of AI in fostering sustainable economic development at the local level. This paper analyses the impact of AI on productivity, consumer engagement, supply chain optimisation and workforce transformation.

Keywords: artificial intelligence; local economies; business innovation; workforce transformation (search for similar items in EconPapers)
JEL-codes: H76 J24 L20 O33 R11 (search for similar items in EconPapers)
Pages: 6 pages
Date: 2024-11-15
New Economics Papers: this item is included in nep-sbm
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Published in Applied and Computational Engineering, 15, November, 2024, 108(1), pp. 1-6. ISSN: 2755-2721

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