The impact of artificial intelligence (AI) on employment and economic growth in BRICS: Does the moderating role of governance Matter?

Abstract

The BRICS countries, namely Brazil, Russia, India, China, and South Africa, are committed to achieving and sustaining Sustainable Development Goal (SDG) 8 of the United Nations, which focuses on sustainable economic growth and productive employment and decent work for all. However, the empirical research question on how to effectively harness the use of artificial intelligence (AI) in the presence of governance dynamics is yet to be addressed in the literature, particularly concerning the BRICS economy. Hence, it is crucial to examine the impact of AI investment on employment and economic growth in the BRICS countries from 2012 to 2022, taking into account the moderating role of overall governance as well as specific governance indicators such as political governance, institutional governance, economic governance etc. Cross-Sectional Augmented Autoregressive Distributed Lag (CS-ARDL) technique is used to analyze the data. The findings of the study suggest a long-run equilibrium relationship among the variables analyzed in both the employment and growth models. The causality results for our main variables of interest differ in the employment-growth models. Based on the CS-ARDL results, the study recommends that BRICS governments and policymakers prioritize and enhance the integration of AI into their governance systems to promote employment and stimulate growth in both the short- and long-term. However, the study cautions against overlooking interaction between AI and general governance as it did not demonstrate support for growth, it is crucial to implement robust measures to mitigate any potential negative effects arising from AI's interaction with political and institutional governance. Therefore, the study proposes the formulation of AI-friendly governance policies among BRICS nations to stimulate employment and growth, recognizing the embryonic status of AI as a pivotal technology in the Fourth Industrial Revolution.