AI Will Double Global Economy Every Year, But Not Through 'Intelligence Explosion'

The global economy will grow by approximately 30% annually once artificial general intelligence (AGI) arrives, but not because of an "intelligence explosion" or "superintelligent" AI systems, according to prominent AI entrepreneurs and researchers Ege Erdil and Tamay Besiroglu.

This explosive economic growth will resemble a broader transformation across all sectors rather than merely accelerating software development or AI capability, End of Miles reports.

Rethinking the "Intelligence Explosion"

"I think [the intelligence explosion] is not a very useful concept," said Besiroglu, co-founder of Mechanize, a company focused on automating work. "It's kind of like calling the Industrial Revolution a horsepower explosion. Sure, during the Industrial Revolution, we saw this drastic acceleration in raw physical power, but there are many other things that were maybe equally important."

"In the case of the Industrial Revolution, it was a bunch of these complementary changes to many different sectors in the economy. So you had agriculture, you had transportation, you had law and finance, you had urbanization and moving from rural areas into cities. There were just many different innovations that happened simultaneously." Tamay Besiroglu, co-founder of Mechanize

The researchers, who previously ran Epoch AI, reject the narrow focus on intelligence as the primary driver of transformation. While they expect AI to eventually automate most human labor, they believe this will occur through a multi-decade process involving complementary changes across the entire economy.

Exponential Growth Without Superintelligence

Erdil and Besiroglu's analysis suggests the global economy could eventually double in size every 2-3 years, a growth rate of approximately 30% annually. This stands in stark contrast to current global growth rates around 3%.

"There's no reason fundamentally why economic growth can't be much faster than it is today," said Erdil. "It's probably as capped right now just because humans are such an important bottleneck. They both supply the labor. They play crucial roles in the process of discovery of various kinds of productivity growth."

"We have this view where actually this very broad upgrading of your technology and your economy is important rather than just having very good reasoners and very, very, very good reasoning tokens that gives us this acceleration." Tamay Besiroglu

Infrastructure, Not Just Intelligence

While many AI experts focus on the development of increasingly powerful software algorithms, Erdil and Besiroglu emphasize the importance of physical infrastructure, capital accumulation, and economic integration in enabling transformative growth.

"Producing this stuff takes a lot of infrastructure build-out," Erdil explained when discussing the necessary conditions for explosive growth. "The entire semiconductor supply chain... that industry depends on tons of inputs and materials. And it gets from probably tons of random places in the world. And creating that infrastructure, doubling, or tripling, whatever, that infrastructure, the entire thing. That's very hard work."

The researchers believe AI's transformation will ultimately resemble the Industrial Revolution in scale but occur much more rapidly. While initially concentrated in certain regions or countries, they expect the benefits to eventually spread globally, though not uniformly.

Economic Implications for Humans

In the early stages of this transition, the researchers predict human wages will likely increase as AI automates tasks that complement human work. However, long-term wages may fall due to competition with AI systems.

"Early on, probably also their wages are going to go up, because the AI systems are going to be automating things that are complementary to their work," said Erdil. "In the long term, eventually we do expect wages to fall just because of arbitrage with the AIs. But by that point, we think humans will own enormous amounts of capital."

The researchers emphasized that despite potential disruption, the overall wealth creation would be so massive that most people would be better off. Besiroglu estimated the benefits of accelerating this transition by even a single year could be worth "tens of trillions of dollars" in terms of increased welfare and reduced mortality.

"I think it's just hard to express in words the amount of wealth and increased variety of products that we would get in this world," Erdil noted. "It will probably be more than the difference between 1800 and today."