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ARTIFICIAL INTELLIGENCE AND THE STRUCTURAL TRANSFORMATION OF THE ECONOMY: OPPORTUNITIES AND CHALLENGES

Mohammed Alawad Elameen Yousif · Acta Innovations · 3 Nov 2026

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Abstract

This study analyzes the relationship between artificial intelligence (AI) and the structural transformation of the economy by examining the opportunities its applications offer for raising productivity, strengthening innovation, and reallocating resources across economic sectors, alongside challenges relating to the labor market, economic inequality, market-power concentration, and digital governance. The paper adopts a descriptive-analytical approach based on a review of relevant economic literature, studies, and international reports, focusing on the channels through which AI’s effects move from tasks and firms to sectors and the macroeconomy. The literature reviewed suggests that AI may improve production efficiency, enhance services, and create new economic activities. These gains, however, are not automatic: they depend on digital infrastructure, data quality, workforce skills, and firms’ ability to redesign production processes. AI’s effects on employment are not limited to the possible substitution of machines for some tasks; they also include augmenting workers’ capabilities, changing job content, and creating new tasks. The International Labor Organization indicates that approximately one-quarter of workers worldwide are in occupations exposed to generative AI to some degree, with job transformation generally more likely than complete elimination. The paper concludes that inclusive and sustainable structural transformation requires integrated policies combining investment in skills and digital infrastructure, stronger competition, social protection, and effective AI-governance frameworks. It recommends a human-centered economic approach that balances innovation with risk reduction and ensures a broader distribution of productivity gains.

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2026 (recently)
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