Tipping the scales: AI's dual impact on developing nations

Artificial Intelligence (AI) is transforming our world, and its potential to reshape development, especially in emerging markets and developing economies, is nothing short of revolutionary. But this isn't just about getting AI to help with scheduling or recipe recommendations, it's about real change, real challenges, and monumental opportunities.

Let's consider the pace at which technology has permeated our lives. It took 75 years for fixed telephones to reach 100 million users globally. In contrast, mobile phones achieved this milestone in just 16 years, and the internet took only 7 years. The Apple store took 2 years and strikingly, ChatGPT reached this number in a mere two months. This unprecedented rate of adoption not only highlights the transformative potential of AI but also sets the stage for a major shift in global connectivity and economic systems.

Leapfrogging to the Future: The Potential of AI

Imagine a classroom where every child receives personal tutoring from an AI resource, a remote village accessing world-class healthcare thanks to AI diagnostics, or governments using AI to improve flood forecasting so countries can better prepare in advance. This isn't wishful thinking, it's the transformative power of this technology.

• Education: With AI-powered tools, we can bridge critical gaps caused by teacher shortages—a staggering 58 million additional teachers are needed globally. In 2019, the average pupil-teacher ratio at the secondary school level in OECD countries was 13, but 22 in lower middle-income and low-income countries. Intelligent tutoring systems and personalized learning are necessary innovations for educational equity In Uganda, AI helps provide pro-bono legal education and services to citizens of rural communities who may not otherwise access legal redress, while in India, students using an AI-powered personalized learning tool scored higher in Hindi and math.

• Healthcare: The World Health Organization recommends at least 45 doctors, nurses, and midwives for every 10,000 people. However, many low-income countries only have a quarter of that number. But technology can help address this challenge. For instance, in South Africa, AI tools can be used to support diagnosis and treatment recommendations, freeing up doctors to spend more time with patients and improve care. For regions and countries where medical professionals are scarce, AI isn't just helpful; it's a lifesaver.

• Public Services and Financial Inclusion: From streamlining tax collections to social transfers and extending banking services to remote areas, AI can be the new backbone of efficient governance and financial empowerment. For example, in Togo, AI improved the targeting of a cash transfer program, helping to make sure funds were spent on those most in need.

• Boosting Productivity: AI can boost productivity growth by automating tasks, optimizing processes, and helping with decision-making. A recent study reports that consultants using generative AI completed 12% more tasks on average and completed tasks 25% more quickly. In 2023, Erik Brynjolfsson and his team found that generative AI has increased call center agent productivity by 14%, especially benefiting entry-level, lower-skilled workers.
  

The Other Side of the AI Coin: Risks of Widening the Divide

Despite the benefits, the AI wave also brings a tide of challenges. AI productivity gains are mainly captured by wealthy nations and major tech firms, creating a few global superstar companies. This risks widening the income gap as leading countries reap most of the benefits, leaving developing nations behind. Furthermore, AI could erode the competitive edge of many developing economies reliant on cheap labor.

As AI-fueled automation advances, it may reduce economic incentives for trade and investment, undermining traditional economic bases and potentially halting progress towards narrowing the income gap. And today, many developing countries need to create enough quality jobs for growing young populations. AI is expected to automate many occupations, upending traditional growth models and development strategies, disrupting the link between wage growth and productivity, and increasing unemployment and inequality. These imminent threats require careful navigation. Our recent Digital Progress and Trends Report 2023 expands on this in more detail.

Crafting a New AI Playbook for Development

How does the World Bank harness this transformative force responsibly? It's about laying solid foundations:

• Digital infrastructure: Robust broadband, data hosting capacity, and digital capabilities are essential to provide the foundations for growth in this digital era.

• Local AI ecosystems: Developing homegrown ICT industry and AI firms, fostering partnerships with international tech companies, and accelerating AI adoption in government can boost efficiency, stimulate demand, and drive societal acceptance.

• Skills development: From grassroots digital literacy to advanced AI research, upskilling and ensuring new skills are integrated into school curriculums and professional training is crucial.

• Sectoral strategies: Countries can carve out new areas for comparative advantages like ICT-business process outsourcing, tourism, and tailored services that could be augmented by AI.

• AI safeguards: The advent of big data and AI has raised significant privacy concerns, created new risks of algorithmic bias, magnified cybersecurity vulnerabilities, and turbocharged misinformation. Developing governance frameworks that ensure responsible use of AI through alignment with ethical standards and social values is vital.

Our commitment goes beyond advocacy; we're actively financing and facilitating the AI and digital transformation. Through funding, research, capacity building, and policy advice, we are paving the way for an inclusive AI-powered future. Collaboration with international partners and fostering global dialogue on responsible AI development are key to our agenda.

The AI revolution’s stakes are high, making cooperation across borders essential. No nation can tackle these complex challenges alone. With proactive policies and international support, developing countries can shape the trajectory of AI and maximize its benefits, but they must seize this transformative opportunity now.