The Power of AI in Emerging Markets
Artificial intelligence is forecast to contribute $15.7 trillion to the global economy by 2030, delivering socioeconomic value to all sections of society over the coming years. And a substantial share of this total will accrue to emerging economies.
KREUZLINGEN – Artificial intelligence is permeating almost every aspect of life in advanced economies. From governments to businesses to individuals, AI’s reach is sweeping, and its implementation is proving transformational.
But the benefits are not just being felt in the developed world. AI is forecast to contribute $15.7 trillion to the global economy by 2030, delivering socioeconomic value to all sections of society over the coming years. And a substantial share of this total will accrue to emerging economies, where AI is already helping to address deep-rooted problems.
The enormous sums being invested in AI illustrate the potential many see in this new technology. According to estimates by the International Data Corporation, global spending on AI will reach roughly $36 billion in 2019, a remarkable 44% increase over 2018. That figure is expected to surpass $79 billion by 2022.
The reason so much money is being invested in AI is obvious: the worldwide business value to be derived from it is expected to soar to $3.9 trillion by 2022, more than three times the $1.2 trillion in value it generated in 2018. And it is not just that businesses are benefiting from adopting AI. They are also key agents of change, enabling millions in the developing world to benefit from increased efficiencies, both incremental and far-reaching.
Owing to AI’s sophistication, many believe it lends itself better to applications in developed economies. But AI is perhaps even more relevant in emerging markets, which are exploiting the opportunities it creates to produce significant social and economic gains. AI is enabling new products and models that are helping the poorest move up the economic ladder through solutions that leapfrog existing technologies.
For example, lack of access to credit has been a massive impediment to socioeconomic development, but now AI is helping to clear this bottleneck in the worlds’ remotest and poorest areas. From villages in Indonesia to agricultural land in Kenya and Madagascar, AI-enabled systems are helping make money accessible to small entrepreneurs and farmers – not just kick-starting a virtuous cycle of serving the underserved, but also potentially boosting growth and productivity. In the absence of traditional credit histories, alternative capital providers are using AI applications to rate potential borrowers and predict default. Prominent examples include M-Shwari in Kenya and Ant Financial across East Asia.
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Across emerging economies, farmers are able to use near-ubiquitous mobile devices to access AI-enabled services that provide real-time information on weather, water usage and requirements, soil conditions, and the weather, allowing them to make more informed operating decisions. This is but one example of how low-cost AI solutions are altering the lives of farmers globally. When it comes to industrial production, increased automation is boosting efficiency and reducing costs, helping to increase consumption in the process.
AI applications are also being used to help solve infrastructure solutions. This is particularly important in the context of emerging markets, where strong economic growth and rapid urbanization are placing existing assets under growing strain. Smart cities, smart grids, Internet-integrated traffic systems, driverless vehicles, and sensor-based technologies (to name a few) are all a part of this AI juggernaut. Given the speed of urbanization in Asia and Africa, the adoption of AI-based solutions in the provision of infrastructure will be necessary to keep cities running smoothly.
Nevertheless, challenges remain. An important one is the high cost of implementing AI in daily life. The technology may offer tremendous potential, but it must also be commercially viable. Another is data security. Questions related to privacy and the commodification of data will not abate anytime soon, and they must be answered.
In fact, both concerns must be convincingly addressed, because choosing whether to adopt AI often depends on it. And ensuring increased adoption and balanced implementation of AI technology will be crucial to emerging markets’ long-term economic growth and development. And as the technology matures, it will become both cheaper and better understood.
One other consideration for emerging economies is the changing nature of work, owing to the increased application of AI in production processes. AI-enabled innovations are arguably reducing demand for labor, which poses a major problem for countries with large working-age populations, such as India, Indonesia, and Bangladesh. But AI also creates a window of opportunity for the developing world to reskill its workforce in better, less labor-intensive jobs, and in doing so help the economy ascend the value chain.
Given the benefits that AI is already bringing to emerging economies, it is imperative that it be embraced more widely. Yes, governments will need to make nuanced judgments, given the challenges that certainly exist in adopting it and implementing it successfully. But the only way to overcome these challenges is to meet them head-on.