Researchers from the Oxford Martin School have investigated the potential Generative AI has in transforming work across industries, boosting productivity and democratising innovation.

Contributing to a Citi Global Perspectives & Solutions report, they explored the opportunities and challenges of Generative AI – artificial intelligence capable of generating text, images, or other media – as well as highlighting the unsurprising attention policymakers around the world are paying to AI in general.

The researchers reported that Generative AI could drive a wave of potential opportunities for the technology value stack, as follows:

• Silicon – it is expected that Generative AI will fuel significant growth across the supply chain, led by greater demand for computing resources, networking, and memory chips.
• Infrastructure & Platforms – so-called hyperscalers such as cloud providers are working to build the underlying infrastructure that enables Generative AI applications, but over time the researchers expect to see more differentiation in this domain e.g. in the types of solutions offered, performance and pricing.
• Models and Machine Learning Operations – the open-source community is likely to be a key driver of innovation in this layer, which encompasses all types of models facilitating Generative AI.
• Software and Applications – the researchers expect nearly all software companies to be impacted in some form by Generative AI, but company-specific execution will be critical in navigating what is a fluid landscape.
• Services – it is believed that Generative AI represents a step forward from ongoing AI/automation initiatives across the IT and Business Process Management services.

Ian Goldin, Professor of Globalization and Development at the University of Oxford and report co-author, said:

‘Generative AI is a dual edged sword that offers enormous potential to accelerate solutions to a number of the world’s greatest challenges, with new health cures, energy and innovation. But it also could destroy jobs, undermine democracy and widen inequalities and the divisions within our society and between countries.

‘The challenge now is to develop the regulatory frameworks and guardrails required to ensure its benefits are widely shared and sustained.’

The report also highlights a series of challenges associated with the rise of Generative AI, including that:

• data used to train Generative AI systems are susceptible to bias or inaccuracies, for example where gender and race are concerned;
• the economics associated with the operation of large language models could trigger further increases in inequality between those who have access to these capabilities and those who do not;
• as language models become more coherent, they are also become more fluent at generating factually incorrect statements and fabricating falsehoods;
• training Generative AI requires software processing huge archives of images, text, and other forms of input, throwing up a series of legal risks including intellectual property (IP) infringement;
• the potential to displace jobs and increase inequality is greater and more rapidly disruptive than with previous waves of technology; and
• the transformative potential of Generative AI has triggered broader concerns around the existential threat posed by AI, particularly against a varied regulatory backdrop.

Pantelis Koutroumpis, Director of the Oxford Martin Programme on Technological and Economic Change at the Oxford Martin School and report co-author, said:

‘Generative AI has already shown an impressive potential across a range of applications over the recent months. The adoption of these technologies appears to correlate with a sizeable productivity boost, but their limitations are also evident to their users.

‘Beyond more data and better computing resources, these models excel when fed with high-quality human generated inputs. Balancing the incentives of content production and technological innovation through a fair redistribution of productivity gains will be a challenge for policy makers.’

Given the importance of AI as a foundational technology, the report concludes that the world is now in an ‘AI Arms Race’, with countries striving to establish scientific and technological dominance through research output and patenting.