World Bank Report says AI could deepen inequality in developing economies
Productivity Divide Threatens Developing Economies
Artificial intelligence productivity benefits could be more than twice as large in advanced economies compared to developing nations if current trends persist, according to the World Bank’s World Development Report 2026. For low- and middle-income countries, the technology risks deepening inequality rather than serving as an equalizer, as global developers and investors grapple with how to build digital systems that function within state institutions.
Many governments still operate on outdated administrative frameworks, making basic tasks like accessing public services difficult for citizens. In developing economies, the primary debate centers on ensuring AI tools serve people directly by functioning in local languages and processing regional data. That integration requires strong state capacity and significant investment in local institutions.
Building State Capacity Requires Digital Public Infrastructure Integration
International Monetary Fund Managing Director Kristalina Georgieva noted at the IMF-World Bank Annual Meetings in October that adoption hinges on electricity access, digital connectivity, and trained workers. However, access alone remains only part of the barrier. Building state capacity to implement these tools requires integrating AI directly into existing public programs rather than treating them as isolated applications.
Successful deployment depends on foundational digital public infrastructure, including e-government service delivery, digital identification systems, secure payment platforms, and reliable data exchanges. Fragmented vertical systems and weak digitization actively constrain AI performance and safety. Once those baseline networks are established, AI can help detect fraud, cyberattacks, and systemic anomalies.
State-Led Implementation Models in Practice
Several regional governments have begun establishing specialized frameworks to manage this technological shift. Maharashtra built MahaVISTAAR, a free AI advisory service allowing farmers to query crop, weather, and pest information via app, voice call, or chat in their native language. More than 740,000 farmers have joined the platform at a cost of less than 18 cents per farmer. Meanwhile, the provincial government in Punjab established a dedicated artificial intelligence office to collaborate with local researchers on public-health applications.
Core Elements for Governing Bodies
Effective integration demands three core elements from governing bodies. First, leadership must identify practical use cases, maintain cross-ministry coordination, and enforce binding decisions to prevent duplicate projects. Second, civil services require technical talent pipelines capable of acquiring, evaluating, and regulating advanced systems. Third, secure data exchange layers must underpin all e-government delivery.
The future trajectory of these technologies rests on choices made by developers, funders, and policymakers regarding funding, deployment, and institutional design. Whether public administration successfully reaches citizens will depend on these foundational investments rather than the pace of technological development alone.