AI diffusion network connecting futuristic cities and rustic villages

AI Divide: Blessing or Curse for Developing Economies?

Elliot Brynn in Tech & Innovation December 2025 • 3 min read.

"Navigating the opportunities and risks as AI spreads across the globe, exploring the delicate balance for low-middle income countries."

Artificial intelligence (AI) is rapidly changing our world, sparking debates about its impact on jobs and the economy. While much of the conversation focuses on developed nations, it's crucial to understand how AI affects low-to-middle-income countries (LMICs). These nations, home to 83% of the world’s population, often have fragile economies and labor markets, making them particularly vulnerable to the disruptions—both positive and negative—that AI can bring.

For LMICs, the spread of AI presents a tricky balancing act. On one hand, embracing AI could boost economic competitiveness and create new opportunities. On the other, slow adoption could lead to stagnation, while rapid внедрение could worsen unemployment and inequality. So, how can these countries navigate this complex landscape?

This article explores the multifaceted nature of AI diffusion in LMICs, drawing on recent research to examine the pathways, rates, and potential consequences of AI adoption. By understanding these dynamics, we can identify strategies to maximize the benefits of AI while minimizing its risks, paving the way for a more equitable and prosperous future.

How Does AI Reach Developing Nations?

AI diffusion network connecting futuristic cities and rustic villages

Understanding how AI technologies spread is crucial. Research identifies three main pathways:

Global Value Chains: Think of these as the roads that goods and services travel around the world. As countries integrate into these chains, they’re exposed to new technologies and have more incentive to innovate and compete.

Increased Competition: Forces companies to adopt new technologies.
Logistics and Translation Improvements: AI enhances these, making trade smoother.
Higher Tech Intensity: Countries deeply involved in global value chains tend to adopt new technologies faster.
Both Importing and Exporting Matter: Participating in both directions helps facilitate technology spread.

Knowledge Flows: This involves the sharing of ideas and expertise, rather than physical goods. It happens through:

The Path Forward: Balancing Risks and Rewards

AI's journey into LMICs is filled with both promise and peril. By carefully considering the pathways of diffusion, promoting inclusive policies, and addressing the unique challenges faced by these nations, we can harness the power of AI to create a more equitable and prosperous world for all.

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Everything You Need To Know

What are the main pathways through which AI technologies spread to Low-to-Middle-Income Countries (LMICs)?

AI technologies reach Low-to-Middle-Income Countries (LMICs) primarily through three main pathways. First, via Global Value Chains, which act as conduits for goods and services, encouraging technology adoption due to increased competition and efficiency improvements in areas like logistics and translation. Secondly, Knowledge Flows facilitate the sharing of ideas and expertise. Finally, Foreign Direct Investment (FDI) can significantly boost technology transfer and implementation within these economies.

How do Global Value Chains influence the adoption of AI in LMICs?

Global Value Chains play a pivotal role in accelerating AI adoption in Low-to-Middle-Income Countries (LMICs). Participation in these chains, particularly the integration into both import and export activities, exposes companies to new technologies. This increased exposure fosters a need to innovate and compete. The pressure from competition stimulates the adoption of new technologies. Moreover, AI enhances the efficiency of logistics and translation, thereby smoothing trade processes and accelerating technology integration.

What are the potential benefits and risks for LMICs as they embrace AI?

For Low-to-Middle-Income Countries (LMICs), embracing AI presents both opportunities and challenges. On the benefit side, AI can enhance economic competitiveness and create new opportunities for growth. However, rapid adoption could lead to increased unemployment and exacerbate existing inequalities. Slow adoption, conversely, may result in economic stagnation. Successfully navigating this requires a careful balance, with proactive strategies to harness AI's benefits while mitigating its risks, ensuring a more equitable and prosperous future.

What is the significance of Knowledge Flows and Foreign Direct Investment (FDI) in the context of AI adoption in LMICs?

Knowledge Flows and Foreign Direct Investment (FDI) are crucial for AI adoption in Low-to-Middle-Income Countries (LMICs). Knowledge Flows involve the sharing of expertise and ideas, which is vital for understanding, adapting, and implementing AI technologies. Simultaneously, FDI acts as a catalyst by facilitating technology transfer and implementation. It introduces advanced technologies and provides the necessary financial resources and infrastructure, accelerating the integration of AI within these economies. Both aspects are critical for a successful AI journey.

How can LMICs navigate the complex landscape of AI to ensure a more equitable and prosperous future?

To navigate the complex landscape of AI and ensure a more equitable and prosperous future, Low-to-Middle-Income Countries (LMICs) must carefully consider the pathways of AI diffusion, promote inclusive policies, and address the unique challenges they face. This includes strategically leveraging Global Value Chains, enhancing Knowledge Flows, and attracting beneficial Foreign Direct Investment (FDI). Furthermore, it necessitates proactive measures to manage the risks associated with AI, such as unemployment and inequality, by investing in education, retraining programs, and social safety nets. The goal is to maximize the benefits of AI while minimizing its adverse effects, paving the way for inclusive growth and shared prosperity.