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AI and Human Development: Evidence from G20 Countries

Author

Listed:
  • Dubey, Rohan

    (National Institute of Public Finance and Policy)

  • Chakraborty, Lekha

    (National Institute of Public Finance and Policy)

Abstract

The rapid diffusion of artificial intelligence (AI) has generated widespread expectations of substantial productivity gains, yet empirical evidence on its macroeconomic effects remains limited. This paper provides across-country empirical assessment of the relationship between AI adoption and labour productivity using a newly constructed panel dataset covering G20 over the period 2012 2023. We develop two composite indices of AI adoption that capture both relative cross-country positioning and within-country evolution overtime, drawing on indicators of investment, innovation, computational capacity, and scientific output. Employing panel regressions with country and time fixed effects and a rich set of macroeconomic controls, we find evidence of a statistically significant short-run effect of AI diffusion on aggregate labour productivity. These results are robust across alternative index constructions and model specifications. We then extend our analysis to human development indicators and find that AI diffusion is positively associated with UNDP the Human Development Index (HDI). At the sametime, the magnitude and dynamics of the estimated effects suggest that productivity gains from AI are likely to materialize gradually and depend on complementary investments and structural conditions. Beyond the regression results, the indices developed in this paper provide a transparent framework for tracking AI diffusion and identifying areas of AI preparedness and technological lag, offering useful insights for future research and policy design.

Suggested Citation

  • Dubey, Rohan & Chakraborty, Lekha, 2026. "AI and Human Development: Evidence from G20 Countries," Working Papers 26/445, National Institute of Public Finance and Policy.
    • Handle: RePEc:npf:wpaper:26/445
    Note: Working Paper 445, 2026
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    References listed on IDEAS

    as
    1. Daron Acemoglu & Pascual Restrepo, 2024. "Automation and Rent Dissipation: Implications for Wages, Inequality, and Productivity," NBER Working Papers 32536, National Bureau of Economic Research, Inc.
    2. Amar Nath H K & Rahangdale, Nikhil, 2026. "Strengthening State Open Schools: A Need for a Dedicated and Focused Policy for School Dropouts," Working Papers 26/443, National Institute of Public Finance and Policy.
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