The role of artificial intelligence (AI) tools and techniques in business and the global economy is a hot topic. This is not surprising given recent progress, breakthrough results, and demonstrations of AI, as well as the increasingly pervasive products and services already in wide use. All of this has led to speculation that AI may usher in radical-arguably unprecedented-changes in the way people live and work, and even help to accelerate progress toward meeting the United Nations’ Sustainable Development Goals (SDGs). Contributed by the McKinsey Global Institute (MGI) , the economic and business research arm of McKinsey & Company, this paper offers a framework for thinking about how to model the economic impact of AI, putting this exercise in the context of the research on the dynamically changing world of work in the light of automation, the need for a skills revolution, and the increasing and potential use of AI by companies.2 This paper focuses largely on the results of new economic modeling and simulation of the impact of AI on the world economy. As such, it should help to broaden collective understanding of how AI may impact economic activity, and potentially touch off a competitive race with implications for firms, labor markets, and economies. Key findings emerge: • AI has large potential to contribute to global economic activity. • The pattern of adoption and full absorption may be relatively rapid—at the high end of what has been observed with other technologies • The economic impact may emerge gradually and be visible only over time. • A key challenge is that adoption of AI could widen gaps between countries, companies, and workers