A Comprehensive Review on the Economics of Artificial Intelligence

Zayed Khalifa and Imene Rahal

MPRA Paper from University Library of Munich, Germany

Abstract: Artificial Intelligence (AI) is rapidly reshaping the global economic landscape as a transformative general-purpose technology with far-reaching implications. This paper provides a comprehensive review of the economics of AI by examining its effects on productivity, labor markets, capital accumulation, firm dynamics, innovation systems, and income distribution. It synthesizes theoretical frameworks and empirical evidence to analyze how AI alters traditional economic models, particularly through modifications to production functions and factor substitution relationships. The study further highlights the growing importance of data as a key economic input and strategic asset, as well as the emergence of “superstar firms” that leverage AI-driven advantages to achieve market dominance. In addition, the paper explores macroeconomic consequences, including productivity growth, structural transformation, and shifts in economic organization, while addressing critical challenges such as inequality, labor market polarization, market concentration, and regulatory limitations. The review concludes by outlining policy considerations aimed at ensuring that AI contributes to inclusive, equitable, and sustainable economic development.

Keywords: Artificial Intelligence; Digital Economy; Productivity Growth; Labor Market Transformation; Economic Inequality; Innovation Systems; Data Economics; Structural Change (search for similar items in EconPapers)
JEL-codes: O3 (search for similar items in EconPapers)
Date: 2026-01-10, Revised 2026-03-10
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