Impact of AI Transformation, Financial Inclusion, and Operational Efficiency on Global Economic Growth: Dynamic GMM Approach

Using system Generalized Method of Moments (GMM) estimation, this study examines how AI adoption, financial inclusion, and operational efficiency affect GDP growth across 89 countries, for the period 2018 - 2023. The results show that GDP growth is positively affected by AI adoption, financial inclusion, quality of governance, and education. Conversely, operational efficiency and systemic financial risk show a negative correlation with economic performance, contrary to common assumption characterizations. These results are robust to a difference GMM approach; additionally, it is revealed that inflation, interest rates and R and D expenditure are bad for GDP indicating that macroeconomic instability, high borrowing cost and inefficient innovation investment hinders growth. Policymakers should promote AI adoption, financial inclusion, good governance, and education while mitigating financial risks, controlling inflation and interest rates, enhancing operational efficiency, and ensuring effective R&D investment to sustain GDP growth and economic stability.