Artificial Intelligence And Growth In Advanced And Emerging Economies

Bonisiwe Shabane

-Dec 28, 2025, 12:19 PM

artificial intelligence and growth in advanced and emerging economies

We study how generative artificial intelligence (AI) affects short-run growth across countries. Our analysis covers 56 economies and 16 industries. We combine two elements. First, industries differ in how much they rely on cognitive and knowledge-based tasks, and so differ in their exposure to AI. Second, countries differ in their readiness to adopt new technology, based on their digital infrastructure, human capital, innovation capacity and regulatory frameworks. We measure industry exposure using data from the United States and country readiness using the International Monetary Fund's AI preparedness index.

We then link these measures to the change in real value added in each country-industry pair between 2022 and 2023. Existing research focuses mainly on the United States and large advanced economies. Much less is known about how emerging market and developing economies stand to benefit from AI in the near term. Yet the structure of their economies differs, and many have weaker digital infrastructures. This raises the possibility that AI may widen global income gaps. Our paper provides one of the first global assessments of how sectoral exposure and country readiness interact to shape short-run growth.

We find that industries that rely more on knowledge and skilled labour gain the most from AI. Countries with stronger digital infrastructure, clearer regulatory frameworks and a more skilled workforce also see larger growth effects. Advanced economies tend to score higher on these dimensions, so they are likely to benefit more from generative AI in the short term. Many emerging market economies gain less, partly because their production structures are more concentrated in low-exposure sectors and partly because they are less prepared to adopt new technologies. These patterns hold even when we account for the use of robots. Overall, the spread of AI could widen global income gaps in the near future.

This paper investigates whether the positive effects of generative artificial intelligence (gen AI) on growth rate of value added differ across countries in the short run. Using an empirical strategy inspired by Rajan and Zingales (1998) and a dataset covering 56 economies and 16 industries, we find that the differential growth effects arise from variations in sectoral exposure to cognitive... Our results suggest that, on average, gen AI is likely to benefit advanced economies more than emerging market economies, thereby widening global income disparities in the near term. Keywords: generative artificial intelligence, emerging market economies, economic growth, productivity differentials, technological readiness, sectoral exposure to AI AI is fundamentally transforming the way we interact with technology. Image: REUTERS/Priyanshu Singh

AI has become firmly embedded across industries this year, as trust and acceptance in the technology has accelerated. As adoption continues to grow, so too have the ways companies are using AI across and within different sectors and regions. At the Forum's 2025 Annual Meeting of the New Champions, a panel of experts explored how the adoption of AI is playing out and what the deviations in usage could mean for business collaboration. Watch the full session below. Keen to learn more about the cross-industry impacts of AI? Developed in collaboration with Accenture, the AI in Action: Beyond Experimentation to Transform Industry Forum report provides a comprehensive analysis of the impacts of emerging AI technologies on industries.

Online harms – such as child sexual exploitation, scams, privacy violations and disinformation – are growing both in complexity and volume. Images for download on the MIT News office website are made available to non-commercial entities, press and the general public under a Creative Commons Attribution Non-Commercial No Derivatives license. You may not alter the images provided, other than to crop them to size. A credit line must be used when reproducing images; if one is not provided below, credit the images to "MIT." For all the talk about artificial intelligence upending the world, its economic effects remain uncertain. There is massive investment in AI but little clarity about what it will produce.

Examining AI has become a significant part of Nobel-winning economist Daron Acemoglu’s work. An Institute Professor at MIT, Acemoglu has long studied the impact of technology in society, from modeling the large-scale adoption of innovations to conducting empirical studies about the impact of robots on jobs. In October, Acemoglu also shared the 2024 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel with two collaborators, Simon Johnson PhD ’89 of the MIT Sloan School of Management and James... Their work shows that democracies with robust rights sustain better growth over time than other forms of government do. Since a lot of growth comes from technological innovation, the way societies use AI is of keen interest to Acemoglu, who has published a variety of papers about the economics of the technology in... Daniel Björkegren is an assistant professor of international and public affairs at Columbia University, New York City, New York, USA.

How will artificial intelligence reshape the global economy? Some economists predict only a small boost — around a 0.9% increase in gross domestic product over the next ten years1. Others foresee a revolution that might add between US$17 trillion and $26 trillion to annual global economic output and automate up to half of today’s jobs by 20452. But even before the full impacts materialize, beliefs about our AI future affect the economy today — steering young people’s career choices, guiding government policy and driving vast investment flows into semiconductors and other... Why evaluating the impact of AI needs to start now Given the high stakes, many researchers and policymakers are increasingly attempting to precisely quantify the causal impact of AI through natural experiments and randomized controlled trials.

In such studies, one group gains access to an AI tool while another continues under normal conditions; other factors are held fixed. Researchers can then analyse outcomes such as productivity, satisfaction and learning. Yet, when applied to AI, this type of evidence faces two challenges. First, by the time they are published, causal estimates of AI’s effects can be outdated. For instance, one study found that call-centre workers handled queries 15% faster when using 2020 AI tools3. Another showed that software developers with access to coding assistants in 2022–23 completed 26% more tasks than did those without such tools4.

But AI capabilities are advancing at an astounding pace. For example, since ChatGPT’s release in 2022, AI tools can now correctly handle three times as many simulated customer-support chats on their own as they could before5. The better, cheaper AI of tomorrow will produce different economic effects. Part of the book series: Future of Business and Finance ((FBF)) AI has replaced some workers and is soon to do more. An important question to raise here is how AI impacts an economy.

This work is a review of the current literature on the impact of AI on economic growth. The goal is to disclose and delineate the complex literature to identify the common areas of the research reviewed and point out the research gap. The general agreement of the literature reviewed is that AI promotes economic growth. There are three common areas of the current research reviewed. The first one is artificial intelligence and productivity growth. Researchers use different theoretical models to prove that AI increases productivity.

Meanwhile, other researchers hold different views on empirical research. Although much empirical research finds that AI promotes productivity growth, the relationship is stable and significant. Some, however, come with opposing views to the extent that developing countries benefit less or face a decline in GDP with AI technology. The second area is artificial intelligence and idea production and innovation, which is mainly theoretical analysis. By introducing an idea production function or knowledge production function, researchers found that AI can aid idea production and promote the overall rate of innovation, thus leading to economic growth. The third area is firm-level analysis.

Due to the difficulty of data acquisition on AI applications at the firm’s level, the research is limited. The current finding is that AI can help promote firm productivity and grow larger. Besides, we took use cases from China, India, Brazil, and South Africa as examples of the Global South economies and discussed their AI policies and implications. With the scanty literature focused on the Global South AI, this work draws baseline research with directions for future works to cover the literature gap. This is a preview of subscription content, log in via an institution to check access. Brooke Tanner, Josie Stewart, Nicol Turner Lee

Artificial intelligence (AI) is fast becoming the defining technology of our time. A new UN Trade and Development (UNCTAD) report projects the global AI market will soar from $189 billion in 2023 to $4.8 trillion by 2033 – a 25-fold increase in just a decade. By then, AI could quadruple its share of the global frontier technology market, rising from 7% to 29% and emerging as the sector’s dominant force. But AI’s rapid growth risks widening global divides. Development is highly concentrated, with advanced and large economies benefiting from a deeper talent pool of workers with the needed skills. In 2022, just 100 companies – mainly in the United States and China – accounted for 40% of global AI research and development (R&D).

Combined, the two countries hold 60% of all AI patents and produce a third of global AI publications. AI is already reshaping industries – from content creation and product design to automated coding and customer service.

Artificial Intelligence And Growth In Advanced And Emerging Economies

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