The economic opportunity of generative AI in Estonia

Generative AI will boost global economic growth in the coming decade. It can increase productivity and boost Estonia’s competitiveness. To capture the next wave of AI benefits across society, Estonia needs to promote innovation, invest in skills and ensure clear rules.

An Implement Consulting Group study commissioned by Google has estimated generative AI’s GDP contribution and implications on jobs in Estonia. Capturing the full potential of generative AI, however, depends on a number of drivers of AI adoption – from a robust operating environment to the availability of skilled AI practitioners.

Key findings of the study

• Economic opportunity: Generative AI could boost Estonia’s GDP by EUR 2.5-3 billion, amounting to +8% GDP over ten years if widespread adoption is achieved.
  The gains come from three sources, including productivity increases from people working with generative AI, freed-up time from generative AI’s automation potential and the re-employment of time for other value-creating activities.
  
• Job implications: In Estonia, 61% of jobs are expected to work together with generative AI, 34% of jobs are likely to remain unaffected by generative AI, and only 5% of jobs are deemed highly exposed to generative AI, leading to some job closures. However, new jobs in the AI-powered economy are expected to replace those lost due to automation, resulting in unchanged employment levels.
  
• Key sectors benefitting: 80% of generative AI’s economic potential lies in service sectors, while manufacturing and other sectors can also benefit from other types of AI.
  
• AI readiness: Despite Estonia’s active commercial environment, the country lacks AI-related talent and R&D capacity, potentially hindering its ability to capture the full benefits of AI.

Estonia leads the EU in commercial AI ventures and startups but needs to leverage EU innovation efforts to fully capture the benefits of AI.