Will AI Really Boost Productivity?

Today’s Nikkei featured a striking headline: “82% of Economists Expect AI to Boost Productivity.”

The article highlights a significant divide in expert opinion. While the majority are optimistic, Nobel laureate Daron Acemoglu offers a sobering counterpoint, estimating that AI will contribute less than 0.1% to annual productivity growth.

His skepticism is rooted in the “huge uncertainty” surrounding which tasks can actually be automated and whether the resulting cost savings will truly be significant.

This skepticism brings us to the Solow Paradox—the famous observation that technological progress is visible everywhere except in productivity statistics.

The paradox arises because mere adoption of a tool is not enough. To boost productivity, organizations must undergo radical change. Education systems, business processes, and institutional cultures often lag years behind technological innovation.

For Japan, the challenge is particularly steep. According to the Organisation for Economic Co-operation and Development (OECD), Japan’s annual productivity boost from AI is projected at 0.51%, roughly half of the 0.99% expected for the United States.

Several structural factors explain this gap. First, AI adoption in core business operations remains lower in Japan than in the United States. Second, Japan’s employment culture—which emphasizes long-term job security—makes it difficult to implement the bold task restructuring or labor reallocation needed to maximize AI’s benefits.

Furthermore, many Japanese companies currently focus heavily on process innovation—using AI mainly for efficiency improvements and labor saving. While this approach helps mitigate labor shortages, it does not generate strong economic growth.

The analysis suggests that to achieve a growth rate exceeding 1%, Japan must pivot toward product innovation—using AI to create entirely new products and services, particularly in essential service sectors such as healthcare and logistics.

In conclusion, AI’s potential to revitalize the Japanese economy depends less on the technology itself and more on social and organizational agility. If AI is used only to replace human labor, growth will likely remain limited. But if it is used to augment human capabilities and create new markets, Japan may finally overcome the Solow Paradox and move toward a more prosperous future.