AI may boost government productivity by $1.75 trn a year

Sarah Wray, writing for ‘Cities Today’, covers a new report from Boston Consulting Group (BCG) which claims that use of generative artificial intelligence – GenAI – could create productivity gains of US$1.75 trillion per year in the public sector globally by 2033 – the essence of her article follows – the message is that, on balance, GenAI is expected to provide major benefits for taxpayers  – and that chimes with most other ‘expert opinion’ – indeed, the expectation seems to be that virtually all productivity improvement needed by all G7 nations (at least) will come from major investment in new technology, especially AI

Hence, one struggles to find other articles focused on other ways to improve productivity big-time, and at much less cost i.e. ways to reduce the huge ongoing waste of costly input resources experienced by most organisations in ALL sectors and/ or ways to tackle the inefficient selection and use of those existing resources – ways which do not involve major upfront investment – ways which are more affordable, sooner, especially to the long tail of under-performers which put a brake on national productivity levels and so overall Standards of Living – SoL

In addition, why is there so little mention of Quality of Life – QoL – the essential modern partner to SoL – the experts are clever people but seemingly overlook the serious flaws in official national (labour only) productivity statistics, yet base their theories and conclusions on them alone – most people now seek far more than just more ‘stuff’ as they climb higher rungs of ‘Maslow’s ladder’

The result is that, for now at least, we are told the ‘productivity puzzle’ persists – solutions may lie with new technology, so we must keep our fingers crossed – meanwhile, economic growth and (most) wages will continue to flat-line, and sunnier uplands remain over the horizon

But some of us are less gloomy!


Analysts project GenAI productivity gains of US$1.75 trillion per year in the public sector globally by 2033the projection reflects productivity gains across all national, state and local governments and across all domains such as legislative, administrative, courts, healthcare, education, transportation and security.

The projected annual benefits include:

  • US$519 billion a year across all governments in the US
  • US$128 billion in the UK
  • US$85 billion in Germany
  • US$83 billion in France
  • US$73 billion in Canada.


Future uses of AI – Pluses and Minuses:

According to the analysts, the highest potential current generative AI uses for the public sector include summarising documents and meetings, reviewing and drafting procurement contracts, customer engagement with citizens and businesses, and developing and testing software code.

However, the report finds that the conditions are not yet in place for government organisations to use generative AI at scale.

BCG highlighted risks related to accuracy, reliability and control, privacy and confidentiality, bias, and intellectual property ownership that must be addressed before the full potential of generative AI can be realised in the public sector.

“While public sector adoption of GenAI is still in the early stages, the profound potential of this technology cannot be overlooked,” said Miguel Carrasco, global leader for BCG’s Center for Digital Government. “The time to act is now. Public sector leaders must be prepared to experiment and innovate and accelerate the use of GenAI to maximise its substantial benefits for both government and citizens.”

GenAI impact on jobs:

The findings on “productivity gains” could raise concerns about generative AI leading to significant job cuts in the public sector. According to BCG, “modelling predicts the impact will be more nuanced.”

It says that although certain efficiencies may result in a decreased demand for labour, “governments will likely reinvest the gained productivity benefits to address citizens’ unmet needs or engage in higher value-added activities.”

“Scaling GenAI across the public sector will deliver value from taxpayer savings, a more engaged workforce and higher quality of public services,” said Richard Sargeant, a BCG managing director and partner.

“The productivity and personalisation benefits for citizens of AI-powered government will be vital in an era where government spending around the world will be challenged by tougher economic conditions and increasing demands for public services. Moreover, governments will demonstrate the technological competence and innovative capacity that sustains the covenant of trust between citizens and the state.”

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