Artificial intelligence (AI) is no longer the stuff of science fiction; it is unleashing a new wave of technological change. In a few short years, the application of AI models has evolved from machine-learning algorithms that generate forecasts and predict optimization strategies to AI chatbots that generate content based on text, audio, and video inputs by humans. The potential economic impacts are manifold.
There is optimism about AI enabling developing countries to leapfrog development challenges by reducing human error, optimizing complex production and distribution processes, and facilitating decision-making. Examples abound. AI can help address long-standing market failures—for example, in credit markets, where banks can provide loans to more people by using AI algorithms to trace people’s digital presence and assess their creditworthiness. AI also has the potential to fill in skills gaps in areas such as education and health services, which lack skilled teachers and doctors. The use of AI-generated business advice, powered just through smartphones and high-speed internet, can make small enterprises more profitable and productive.
Such optimism should not be unbridled. AI could widen the gap between high- and lower-income countries because of its onerous requirements for computing power, data, and skills. Advances in AI could automate some tasks—resulting in job losses for some and lower wages for others. There are also concerns about competition and dependency—namely, that a few large technology companies headquartered in high-income countries could have an advantage in creating and deploying AI. Moreover, without appropriate safeguards, AI can reinforce biases, misdiagnose needs, or result in flawed decisions that could make the solution worse than the problem.
World Development Report 2026 will investigate the development implications of AI as a general-purpose technology (GPT) and assess what might be the best policy choices to leverage the benefits of AI while offsetting potential risks. In doing so, it will focus on the institutional and governance arrangements needed to ensure inclusive and responsible deployment of AI. The aim of the Report is to provide a developing-country perspective on a topic for which the academic and policy discussion has focused primarily on high-income countries.
