The global economy is moving into a new phase defined not by inflation fears or trade wars, but by a productivity-led expansion powered by artificial intelligence (AI), according to William Lee, Chief Economist and Managing Director at Global Economic Advisors.
Lee said this shift marks a decisive break from recent macro anxieties and will shape how capital is allocated across markets in the years ahead. Crucially, he stressed that this productivity boom is not limited to the US but is emerging globally, setting the foundation for a broad-based reacceleration in growth.
Lee argued that this transition will also change the rules of globalisation. The focus, he said, is moving away from tariffs and trade frictions toward capital flows and investment decisions. President Donald Trump’s administration, in his view, is signalling that companies should invest directly in the markets where they intend to sell. “The future is with capital flows and investments in the markets in which you want to sell,” Lee said, adding that this is already driving heavy investment into AI and the infrastructure that supports it, as firms seek efficiency gains and production closer to end markets.
To illustrate how AI-led productivity gains are already filtering through the economy, Lee stated a simple, real-world example. He described an electrician using an AI-powered app on his phone to schedule appointments, optimise travel routes and prepare bids for future jobs. “That is a blue-collar worker who’s now using AI-based apps to boost his own productivity,” Lee said, calling it “just a slight window into what’s to come.” He added that the strong productivity growth seen in the US so far has largely occurred without AI, implying that the most powerful impact of the technology is still ahead.
On the investment side, Lee acknowledged concerns around the scale of computational power required for AI and uncertainty over which applications will ultimately prove most valuable. Even so, he said the productivity gains will not be confined to large corporations and technology giants, but will spread across sectors and worker categories as AI adoption deepens.
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Turning to India, Lee identified the country as a potential major beneficiary of the global reorientation toward capital flows. He said investors are keen to leverage India’s resources and manufacturing capabilities to produce components needed for high-productivity investments worldwide. However, he flagged a key obstacle in the form of what he described as “political risk.”
Lee was clear that this risk does not stem from domestic instability. He praised Prime Minister Narendra Modi for doing a “phenomenal job” in positioning India as a global growth hub. Instead, the concern is geopolitical. India’s location within what Lee described as the “nexus of China, Russia, Iran, and the United States” has made Western investors question whether it is viable to commit large amounts of capital without clarity on where India stands strategically.
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For India to fully capitalise on the emerging global economic shift, Lee said clearer signalling is essential. This would mean unequivocally welcoming foreign investment, opening markets further and dismantling long-standing political barriers. “For me, the problem in India right now is not so much economic but political,” he said, underscoring that alignment and clarity will be critical if India is to attract the capital flows underpinning the next phase of global growth.
For the entire interview, watch the accompanying video