AI boom could widen inequality worldwide, with Asia most at risk: UN agency report

Key Concepts

• AI Disruption: The significant impact of Artificial Intelligence on global economies and societies.
• Global Inequality: The widening gap in wealth, opportunities, and development between countries.
• Capability Gap: The deficiency in skills, infrastructure, and resources that prevents developing countries from fully leveraging AI benefits.
• Vulnerability Gap: The increased exposure of developing countries to the negative consequences of AI due to their limited capacity to manage them.
• Human Development: A broader perspective on AI's impact beyond economic growth, encompassing human capabilities, security, and future generations.
• Hard Infrastructure: Physical components like electricity access and internet connectivity.
• Soft Infrastructure: Non-physical elements such as data registries, digital literacy, and governance frameworks.
• Labor Market Substitution Effects: The displacement of human workers by AI and automation.
• Routine Work: Tasks that are repetitive and predictable, making them more susceptible to automation.

AI and Global Inequality in Asia

A recent UN report highlights that Asia is at the forefront of the global AI disruption, hosting over half of the world's AI users. However, the report cautions that many Asian nations lack the necessary infrastructure to realize substantial gains from AI. The United Nations Development Programme (UNDP) warns that unmanaged AI could exacerbate existing inequalities between countries, a divide particularly evident in Asia due to significant disparities in income levels, digital capabilities, and governance.

Philip Shelikens, chief economist at the UNDP Asia-Pacific Regional Bureau, shared key insights from the report. He noted that while historical trends showed a divergence in income levels between countries, with some parts of Asia converging in the last 50 years, AI has the potential to reverse this trend and amplify global inequality. The report advocates for better management of AI to ensure inclusivity and benefit developing countries, enabling them to harness AI's advantages while mitigating its disruptions.

Reframing the AI Conversation

The global discourse on AI, according to Shelikens, needs a shift from "hysteria and hype" to a more balanced and holistic approach. The current focus often centers on economic growth and productivity. However, the UNDP report emphasizes examining AI's impact through the lens of human development, considering its effects on individuals' capabilities, human security, and the interests of future generations. It also analyzes AI's economic impact on growth and job creation, and its influence on governance.

The report's findings indicate that poorer countries are less equipped to capitalize on AI's benefits across these dimensions. For instance, while AI can enhance social protection programs by improving targeting of benefits, its effectiveness is limited in countries lacking robust data registries. Similarly, limited internet access among women in South Asia (around 40% have access via cell phones) restricts the applicability of AI for providing vital information. This highlights a dual challenge: a capability gap in poorer countries to leverage AI's benefits and a vulnerability gap due to greater exposure to AI's potential negative impacts.

Addressing the Capability Gap in Asia-Pacific

Asia-Pacific serves as a crucial testing ground for AI's rollout and its potential to drive prosperity, inclusion, and sustainability. Despite this, the region exhibits significant inequality, with a 200-fold income gap between the richest (Singapore) and poorest (Afghanistan) economies. The region also grapples with substantial social challenges: 1.3 billion informal sector workers, 700 million women out of the labor force, half a billion people living in poverty, and 200 million in extreme poverty.

The report's recommendations for addressing the capability gap are differentiated based on a country's starting point. For some nations, this involves investing in hard infrastructure such as electricity access and improving digital literacy skills. However, significant work is also needed on soft infrastructure. Shelikens stresses that focusing solely on physical infrastructure is a mistake; how people actually use technology is equally important.

For countries like Singapore and China, which are leading the AI race, the report suggests enormous potential to shape regional and global governance and to offer AI models that can benefit others.

Women's Vulnerability to Automation

The report specifically highlights that women's jobs are disproportionately exposed to automation. This is attributed to the typical composition of labor markets in countries like Bangladesh and the Philippines, where women are predominantly employed in labor-intensive sectors characterized by routine work.

AI-enabled robotics could lead to a new wave of automation in manufacturing, impacting industries like the garment sector in Bangladesh, which is largely staffed by women. Similarly, call centers and business process outsourcing (BPO) jobs in the Philippines, India, and Bangladesh, where women are significantly represented, are affected. While AI can enhance productivity in these roles, it also acts as a direct competitor. Shelikens clarifies that this vulnerability is not intrinsically gender-based but rather a consequence of women's concentration in sectors more susceptible to labor market substitution effects across the region.

Conclusion

The UN report underscores the dual nature of AI's impact in Asia: immense potential for progress alongside the risk of deepening existing inequalities. Addressing this requires a comprehensive strategy that invests in both hard and soft infrastructure, reframes the AI conversation to focus on human development, and implements differentiated solutions tailored to each country's capacity. Particular attention must be paid to the vulnerability of women in sectors prone to automation, ensuring that AI's benefits are shared equitably and its disruptions are effectively managed.