Is generative AI a General Purpose Technology?

The rapid rise of generative AI has sparked discussions about its potentially transformative effects and whether the technology will bring significant benefits in the form of widespread productivity increases. Through a review of theoretical literature and early empirical evidence, including novel descriptive analysis, this study suggests that generative AI has considerable potential to qualify as a new general-purpose technology (GPT). Despite the early evidence, generative AI appears to exhibit the defining characteristics of GPTs: i) pervasiveness, ii) continuous improvement over time and iii) innovation spawning. While productivity gains may not materialise immediately, the evolution of earlier GPTs seems to provide encouraging signs that generative AI could lead to substantial improvements in productivity in the future, notably through the innovation-spawning channel. The full realisation of generative AI’s productivity potential in the long-term will depend on the implementation of relevant policies.