COVERLEAD

Generative AI – Opportunities & Challenges
By Naoyuki Haraoka
The Japan Electronics and Information Technology Industries
Association (JEITA) announced an outlook for world demand forgenerative AI in December 2023. According to this outlook, in2030 it will total $211 billion, 20 times more than in 2023.
Meanwhile, the Japanese market for generative AI will be worth
1.77 trillion yen, 15 times more than in 2023. This will be theoutcome of the continuous expansion of areas where generative
AI can be applied. Above all, the manufacturing sector would bethe leading contributor to the expansion of the market forgenerative AI, since its application covers a wide variety of areas
including business support and product development support.
Generative AI would also spread across the finance, publicservice, and telecommunications sectors. This would naturally
impact the global economy, human civilization and even nationalsecurity.
Being optimistic, we could see almost continuous higheconomic growth, supported by high labor productivity andincreases in demand, achieved by the expansionary use ofgenerative AI. Countries suffering from depopulation would nothave to worry about consequent deflation. History tells us that theindustrial revolutions of the late 18th century and early 19thcentury, or the IT revolution in the late 20th century and early 21stcentury, pushed the global economy onto a much higher growth
track than before through the tremendous increase in productivity
and demand, and completely transformed human civilization.
Given these facts, we can well believe that innovation will play thecritical role of game changer.
It was the global financial crisis in 2007-2008 that disrupted thisperiod of high growth. It was subprime lending, the product offinancial engineering, a derivative of IT, that put an end to thisgrowth. Since then, the global economy has generally beenstagnant and craving for large-scale innovation that could lift it
onto a distinctly higher track again.
At this moment, we are standing on the threshold of a new era
where innovation beckons. However, new technology occasionallyscares people with its unexpected outcomes. Human beings are in
general conservative and tend to be cautious about what is notwell known or understood by them. The Luddite movement in thehttps://www.jef.or.jp/journal/

early 19th century in England where the Industrial Revolution
began and started to impact the economy and people’s lives isevidence of this. Non-skilled workers, mostly on low wages, wereconcerned about their jobs being taken away completely bymachines and started destroying them with hammers. But history
eventually showed that new technology brought exactly theopposite outcome, with high economic growth and the creation ofmany job opportunities and a more affluent society. The rapid
emergence of generative AI would probably bring the same sort ofoutcome, in which immediate concerns would eventually beturned into expectations of greater affluence achieved by AI.
The May/June 2024 issue highlights the opportunities andchallenges posed by generative AI and explores how to minimize
concerns while maximizing merits. As can be seen in the articles,
discussions on these issues have only just begun, but it isimportant for us at this point in time to start exploring how to turngenerative AI into sources of happiness and not tragedy.
Following our usual Roundtable discussion among experts thatcovers AI’s merits and demerits, we introduce an interview withDr. Christian Huebner from the Konrad Adenauer Foundation, andtwo more with Prof. Shinichi Yamaguchi of GLOCOM, the Centerfor Global Communications, at the International University ofJapan, and Kunihiro Tanaka, founder and CEO of SAKURA InternetInc., both young members of the AI Strategic Council to theJapanese prime minister. Generative AI could be an engine ofJapan’s growth strategy, while in Europe it may be treated withgreater prudence in terms of ethics and human rights.
Finally, an interview with OECD Director Jerry Sheehan shows
the importance of international cooperation for better guidance on
AI governance in maximizing its merits and mitigating itsdemerits. The Hiroshima AI Process initiated by Japanese Prime
Minister Fumio Kishida is a key to such efforts.
With these articles, we hope that people cautious about using
ChatGPT and concerned about the implications of AI for humanjobs would be more proactive in using it in their daily work.
Naoyuki Haraoka is editor-in-chief of Japan SPOTLIGHT & executive
managing director of the Japan Economic Foundation (JEF).

Japan SPOTLIGHT • May / June 20247