Cognitive automation and the future of economic development

Carlos Costa argues that the debate regarding artificial intelligence and the future of work is often misdirected. Rather than focusing solely on job destruction or the shift toward a service economy, the critical issue lies in determining which territories and companies will control transactable activities and how the resulting income will be distributed.

Costa refers to the current wave of AI as ‘cognitive automation.’ He posits that while this technology does not change the fundamental macroeconomic laws of proportionality, it profoundly alters the determinants of competitiveness. Specifically, it shifts the geography of where transactable production is located and where value is captured.

According to the analysis, cognitive automation tends to concentrate gains within territories and organizations that already possess significant capital, data, skills, infrastructure, and knowledge networks. This creates a risk of increasing structural imbalances, benefiting those with existing advantages while potentially leaving others behind.