ETHICAL GOVERNANCE OF AI AND ITS ECONOMIC CONSEQUENCES: A STUDY OF G7 ECONOMIES

Abstract

Artificial intelligence (AI) is reshaping economic landscapes by driving innovation, productivity, and structural transformation across industries. The integration of AI technologies in such advanced economies may well have serious implications for economic growth, in addition to ethical governance and labor market stability. This paper therefore attempts to analyze the impact of AI-as proxied by ICT services exports-on G7 countries' key economic indicators: GDP growth, R&D expenditure, and patent activity over the period 2014 to 2023. A panel data approach, collaborate with fixed effects estimation, includes variables for unemployment, GDP per capita, and AI patent publications in order to evaluate the multidimensional effect of AI on national economic performance. The result of a Hausman test indicates the appropriateness of the fixed effects model. The paper discusses the relationship between artificial intelligence (AI), innovation and economic performance in G7 countries. The analysis shows that without a strong innovation system as well as inclusive growth, AI activities alone cannot develop the economy. How do national R&D and wealth support each other is the connection between growth and innovation at national level smooth or rough, and why uncertain research results demonstrate that there's still much fissure in human society. Whether AI-driven progress is able to be both inclusive and sustainable will depend on the coordinated efforts of policy makers, investment in digital infrastructure as well as ethical governance.