According to a new report from the World Bank, developing countries are expected to benefit more from artificial intelligence adoption than they will suffer from job displacement. The technology is more likely to assist workers in these economies rather than leave them unemployed.
The report predicts that more affordable AI tools could boost growth momentum in developing economies. The World Bank's chief economist noted that, in general, developing nations have a larger potential upside from AI and face comparatively lower risks. Fewer than one in ten jobs in these countries are vulnerable to AI automation, whereas in high-income economies, that figure exceeds one-third.
This optimistic outlook contrasts with warnings from other experts who argue that AI could widen the gap between the global north and south. The World Bank's chief economist acknowledged that the research team initially focused on job-loss discussions in developed economies. However, they later discovered that AI is already delivering tangible efficiency gains in areas such as medical imaging diagnostics, clearing court backlogs, and weather forecasting, from India to Kenya.
The report emphasizes that while AI's macroeconomic productivity improvements remain difficult to measure precisely, the technology is helping to resolve human resource shortages that would otherwise take decades or even a century to address. Market data reflects divergent investor expectations on this trend: an index of large Indian IT outsourcing companies has fallen 18% this year, while South Korea's stock market, dominated by chipmakers, has risen 51%. However, over the past month, as doubts have grown about the sustainability of the AI investment boom, the Indian index has rebounded 12%, while the South Korean market has corrected by about one-fifth.
The report points out that AI adoption is rapidly spreading among small and medium-sized enterprises in emerging markets. In surveyed countries including India, Jordan, Kenya, Mexico, Nigeria, and Thailand, about one-fifth of businesses with more than five employees have recently used AI chatbots in their operations. In the United States, that figure is one-third.
The report warns that if developing countries fail to catch up through measures such as model adaptation, developed nations—which currently have higher AI adoption rates—will still achieve the greatest productivity gains. In an optimistic scenario, AI could raise the average maximum long-term growth rate for developing countries this decade from 4.1% to 4.9%, while for high-income nations, it could increase from 1.2% to 3.6%.
The World Bank's chief economist believes that the rise of "smaller models" means AI can still solve important, task-specific problems even in environments with limited local computing power, unstable electricity supply, or poor internet connectivity. The report also warns that massive government investments in data centers and chip production to compete for AI dominance could lead to a "development trap" if expected returns are not realized. For small economies at all income levels, closing the gap with leaders like the United States and China remains difficult, and local adaptation should be a priority.
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