Artificial Intelligence (AI) has become a pervasive force across all industries,reshaping the global workforce and fundamentally altering the dynamics of economic relations. With half of today’s workforce reliant on AI tools like ChatGPT and otherArtificial Narrow Intelligence (ANI) software, the impending disruption is undeniable.It is projected that by 2025, AI will claim approximately 85 million jobs, leading to significant lay-offs and restructuring across various sectors. Kunal Shah, the Founder and CEO of fintech unicorn CRED, anticipates that AI may render 90% of the workforce irrelevant within a decade.
In the contemporary landscape of global finance, AI stands out as a transformative force, particularly within financial institutions. Assets are increasingly digitized into data, and consumer trends dictate the demand for personalized products and experiences. AI algorithms have thus become the cornerstone of contemporary financial services, offering both opportunities and challenges for international economic relations.
However, the current global economy faces challenges, with geopolitical instability ranking among the top concerns for global growth. Despite this, fintech companies like BlackRock and Ping An OneConnect have capitalized on this uncertainty, developing world-class services fueled by advanced AI capabilities. Financial institutions are expanding their offerings beyond traditional products, becoming ecosystem curators and trusted guardians of data. Lloyds Banking Group, for instance, is integrating banking and insurance services with new API-enabled
propositions, signaling a paradigm shift towards efficiency, accountability, and transparency within the financial system.
Yet, amidst these developments, questions linger about the feasibility of developing cross-border solutions amidst growing divergence in financial and data regulations. The interplay between technology, finance, and geopolitics remains complex and uncertain, necessitating careful consideration and strategic foresight.
China, through its ambitious plan “Made in China 2025,” aims to establish itself as a world leader in artificial intelligence by 2030.3 Recognizing AI’s potential to bolste economic power, China’s leaders are strategically positioning the nation in the global AI race. While the US currently leads the AI index, China is swiftly closing the gap,with major tech giants like Microsoft, Meta, and Google actively driving innovation
and revenue growth in the AI sector.
The emergence of AI as a powerful geopolitical tool is reshaping traditional notions of war, weapons, and world order. Elon Musk warns that AI superiority at the national level could precipitate global conflicts, with implications for international relations.4 As nations vie for dominance in the AI sphere, geopolitical rivalries intensify,transcending territorial boundaries.
Reports indicate that countries like Iran and North Korea have begun leveraging AI for cyber operations, posing new threats to global security. The North Korean cyberespionage group, Kinsuky, and the Chinese group, Maverick Panda, are actively employing AI models to conduct sophisticated cyberattacks, underscoring
the transformative potential of AI in asymmetrical warfare.
The proliferation of AI also raises concerns about its impact on democracy. Countries around the world are grappling with the implications of AI on democratic systems.There is a palpable fear regarding the stability of democracy in a world rapidly embracing AI technologies. The question arises: will nations unite to establish
comprehensive regulations for AI, given its evolving capabilities?
Despite concerns, the likelihood of a full-blown democratic crisis remains relatively low. However, the advent of AI undoubtedly poses significant challenges to the quality of democratic governance. Historical data sheds light on past democratic breakdowns, revealing that 69 instances occurred between 1800 and 2007, leading to the rise of dictatorships. Interestingly, the majority of these breakdowns occurred in countries with an income below $2500, indicating a correlation between economic status and democratic resilience. Remarkably, no country with an income exceeding $10,000 has reverted to authoritarianism, highlighting the stabilizing influence of
economic prosperity on democratic institutions.
A prevailing hypothesis suggests that AI could potentially enhance the ethical standards of democracy, albeit with disruptive consequences for political actors. By disrupting existing incentives and power dynamics, AI has the capacity to compel stakeholders to reassess their support for democratic regimes. However, the ethical implications of AI vary across different socio-economic contexts. In less developed countries, where political horizons may be less ethical, AI-driven disruptions could exacerbate existing challenges. Conversely, advanced economies may confront heightened inequality and economic polarization exacerbated by AI adoption.
The juxtaposition of AI and democracy underscores the intricate interplay between technological advancement and political governance. While AI holds the promise of enhancing democratic processes, its unregulated proliferation may inadvertently undermine the foundational principles of democracy. As countries navigate this delicate balance, the imperative for collaborative efforts to establish robust regulatory frameworks for AI becomes increasingly evident.
Moreover, the “Black Box” problem presents a formidable challenge in AI development. The opacity of AI algorithms and the lack of transparency in decision-making processes raise questions about accountability and trust. As AI
continues to evolve, there is an urgent need for human oversight and evaluation to mitigate the risks associated with its deployment.
In conclusion, AI dynamics in global financial institutions are reshaping international economic relations in unprecedented ways. While AI promises innovation and efficiency, its widespread adoption poses complex challenges that demand careful consideration and proactive regulation. As nations navigate the evolving landscape of AI geopolitics, collaboration, transparency, and ethical governance will be essential in harnessing the full potential of AI while mitigating its risks.