World Bank Says AI Throws Developing Economies a Lifeline, With 4.5% Jobs at Risk vs 14.2% in Rich Nations

AI Presents Historic Opportunity for Developing Economies

The World Bank released its World Development Report 2026 on Tuesday, declaring that AI has thrown developing economies a lifeline they must seize immediately1

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. Indermit Gill, the World Bank's chief economist, emphasized that emerging economies do not need vast resources or bespoke large language models to benefit from AI1

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. By adapting small, low-cost AI tools to local conditions, these nations can bring better medical care, education, judicial services and agricultural extension within reach of millions3

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Developing economies today are experiencing their weakest average growth performance in three decades5

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. AI could significantly boost that performance before the end of the 2020s while delivering tangible benefits to people3

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. The report suggests AI could enable developing countries to achieve in a decade what might otherwise take a century, provided governments move quickly to close gaps in power and connectivity, digital skills, and institutional capacity5

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Job Disruption Risks Lower for Developing Nations

Generative AI is three times more likely to threaten jobs in rich countries than in low and middle-income countries, according to the World Development Report1

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. The report found that 14.2% of jobs are at risk in high-income countries compared to just 4.5% in developing economies2

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. As a rule, developing economies today have more to gain and less to fear from AI than richer ones, with less than a tenth of their jobs susceptible to automation risks, compared with more than a third in high-income economies2

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The share of jobs expected to benefit from meaningful productivity gains through AI adoption is remarkably similar across income levels. The report estimates that 16.2% of jobs in developing economies could see productivity improvements, close to the 18.7% projected for high-income countries5

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. This suggests AI is more likely to lend workers a hand than put them out of work in these regions2

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India Leads AI Adoption Among Emerging Markets

India has emerged as a leading example of AI adoption among developing nations. The country has more AI-related activity on GitHub than any developed economy other than the United States4

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. The World Bank highlighted India's INDIAai Mission as a model for making computing infrastructure more affordable for startups, researchers and small businesses4

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Practical applications are already delivering results. Small farmers in Telangana are saving up to $560 through AI-based weather forecasts and agricultural forecasting4

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. Fintech lenders in India and Latin America are using AI-driven credit scoring to extend loans to small businesses and workers without formal banking histories4

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. The International Monetary Fund has projected that AI could boost Sub-Saharan Africa's economy by about 4% over the next decade under the right circumstances1

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Rapid Adoption Spreading Across Emerging Markets

AI adoption is spreading rapidly across small businesses in emerging markets. On average, about a fifth of firms with more than five employees surveyed in India, Jordan, Kenya, Mexico, Nigeria and Thailand had recently used AI chatbots in operations, compared to a third in the United States2

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. Health workers are using AI to speed diagnoses, teachers to improve lesson plans, and farmers to determine what to plant and when1

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Examples of AI for developing countries include increasing diabetes screening volumes in Bangladesh and reducing costs for Indian farmers through advanced weather forecasts3

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. The rise of small models, which run on fewer parameters needing less memory, means that AI can help solve important problems involving narrow tasks even when local computing power is limited, electricity is unreliable and internet service is dodgy2

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Infrastructure and Skills Gaps Must Be Addressed

The report emphasizes that governments must improve electricity and internet access, boost digital skills and expand access to smartphones and computing devices to fully realize AI's potential1

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. The window to get this right is narrow, according to Gaurav Nayyar, director of the report3

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. AI presents a once-in-a-lifetime opportunity to solve problems that have resisted solutions for generations3

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For the 6.8 billion people who live in low and middle-income countries, AI tools will need to be adapted to meet their needs where they are3

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. Solutions will need to be delivered through voice calls on basic mobile phones for those who cannot read or afford smartphones3

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. Simply importing an AI model does not mean it will work well locally3

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Growth Projections and Competitive Dynamics

In an optimistic scenario based on current adoption trends, AI will raise the average maximum long-run economic growth of developing nations from 4.1% to 4.9% this decade, the report projects2

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. For richer countries, the boost would be even more substantial, from 1.2% to 3.6%2

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. The report warns that advanced countries are still set to see the biggest productivity gains based on their current higher rates of AI adoption, unless developing countries can catch up through adaptation2

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The World Bank cautioned that efforts by governments to spend big on AI sovereignty, investing heavily in data centres and chip production in a race to develop the best AI models, could be a development trap given the risk they do not pay off2

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. For smaller economies at every level of income, it's really hard to close the gap with the United States and China, and adaptation has to be the mainstay, Gill stated2

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Risks and Trust Considerations

The report warned that AI could bring greater income inequality, stealthier misinformation, and political repression1

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. AI could widen gaps between countries, increase inequality within them, concentrate market power, weaken public trust in public institutions, and create new risks for safety, rights, and social cohesion3

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. Policymakers must build public trust as they expand AI use3

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Improved public services and better learning outcomes in schools will reinforce trust, but if AI embeds bias in government decisions or erodes data privacy, that trust will be difficult to recover3

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. While risks to employment in developing countries are low at the moment, the report warns that in the long run AI tools could cut off economic mobility by eliminating many of the middle-class jobs that enable it3

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. The cost of missing out would be severe. Today's developing economies missed the first Industrial Revolution and spent the next two centuries paying the price, Gill said, adding they cannot afford to miss this one1

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