The Impact of Artificial Intelligence on Output Growth: A Direct and Indirect Analysis

The impact of technology on output growth can manifest in direct and indirect ways. Directly, technology can influence production factors such as capital and labor, while indirectly, it can affect the marginal production of inputs and alter the diminishing marginal returns of these factors, including R&D. Chen and Xin (2021) note that the unique enabling technology and technical features of artificial intelligence distinguish it from traditional technological revolutions. Through intelligent upgrades to data, business, collaboration, and interaction capabilities, AI can streamline production content and linkages, leading to increased effectiveness and productivity. This, in turn, can improve the output capacity of human capital factors, creating a pathway towards economic growth by improving the efficiency of enterprise technology application and alleviating factor misallocation (Jing et al., 2019). In light of these insights, we propose hypothesis 1.