Wisconsin Public Radio

Manufacturing is still critical to the economy United States. Clyde Prestowitz, says it's time to start realizing the positive spillovers that manufacturing creates... Read more  

Events & Activities

Stephen Olson at Chinese Development Institute Conference

 

 Clyde Prestowitz giving presentation to CDI...

 

Steve Olson teaching trade negotiations at the Mekong Institute...

 

Stephen Olson to speak at upcoming workshop organized by the International Institute for Trade and Development on 

"Economics of GMS Agricultural trade in goods and services towards the world market"

Chiangmai, Thailand Sep 8-12.

The impact of AI and ML on the US Economy

Pervasive, Intelligent Cloud Ecosystems, Spectacular Firms and Frontier Firms: How Cloud Computing, the Internet of Things, Artificial Intelligence and “intelligent Analytics” will spur Growth and Jobs

Robert B. Cohen, Senior Fellow, Economic Strategy Institute, February 5, 2018
(click here to download the full report in PDF format)

How are Pervasive Cloud Ecosystems with the Internet of Things, Artificial Intelligence and Machine Learning Different from IT as we have known it? In 1995, Frances C. Cairncross1 proposed the term the “death of distance” to define how the Internet ties the world together so closely that the limitations of distance are overcome. Cairncross also argued that the Internet would support new types of innovation and be incorporated into many new products. She accurately described the early trajectory of the digital revolution.

As we discuss below, the “death of time” is a suitable, though strong, term for the next phase in the digital revolution. In this phase, several things change the relationship between software and data analysis and time. For one, firms more rapidly create and revise software. They use continuous integration and continuous delivery (CI/CD), microservices and other techniques that shorten these times. Target is a good example of this change2. Target was using “silos and processes that slowed innovation” and needed to “keep up with the pace of change” especially during the holidays when it received over 7 million orders from its stores. To address this, Target moved from a more traditional configuration management tool to an agile model that accelerated software development between 2015 and 2016. Target shortened its time to develop new software from 1440 minutes to 5 minutes, increased the number of applications it was using from 3 to 42 and expanded the number of software deployments it did each day from 2 or 3, to 90. In Appendix 1, we depict the enormous reduction in the time required to create new software in recent years. This places Target’s effort in a more general context. The decline we illustrate there is a 10,000-times reduction in the time to create new software over a 14-year period. Facebook, Google and Yahoo are other firms that have risen to the top of their fields by adopting new processes and building up internal skilled teams to speed software development.

Second, many firms move to employ “intelligent” data analysis where they apply artificial intelligence (AI) and machine learning (ML) to data gathered from sensors on machines – the Internet of Things (IoT) -- from websites, from transactions and from service and manufacturing processes within the firm to take actions to optimize operations. Firms that were early to deploy IoT and perform early machine analysis, such as Boeing3, Ford, Rolls-Royce, and John Deere have reported sizable efficiency gains from IoT alone. We would expect the efficiency gains from joining IoT to AI and ML plus “intelligent” data analysis – where machines adjust processes based upon analytics – might create even larger benefits.

[Download PDF to read full report]

1 Frances C. Cairncross, The Death of Distance: How the Communications Revolution Is Changing Our Lives, Harvard Business School Press, 2001. Cairncross’s first publication using this term was "'The Death of Distance,' The Economist, September 30, 1995.
2 Heather Mickman, “DevOps at Target: Year 3,” DevOps Enterprise Summit 2016, November 2016. https://www.youtube.com/watch?v=1FMktLCYukQ
3 See my study, “Boeing and Digital Data Innovation: Changing Infrastructure to enhance Data Analytics and Services offered to Airlines,” OECD “Enabling the Next Production Revolution” project, January 3, 2016.

Join our mailing list

Latest Publications


The Betrayal of American Prosperity.


The Trans-Paific Partnership and Japan.


Making the Mexian Miracle.


Industrial Policy and Rebalancing in the US and China.


The Evolving Role of China in International Institutions.

 

Contact us

Economic Strategy Institute

1730 Rhode Island Avenue, NW, Suite 414 |  Washington DC  |  20036
Ph (202) 213-7051  |  Fax (202) 965-1104  |  info@econstrat.org