AI & The Future of Development

By DavidNash @ 2026-02-22T20:50 (+16)

This is a linkpost to https://gdea.substack.com/p/ai-and-the-future-of-development

I wrote this almost a year ago, and in AI terms it's very stale, but I hadn't seen much discussion of this intersection on the forum so thought it was still worth linking too.


From Malawian farmers getting chatbot advice on crop diseases to Indonesian fishermen improving catches and Kenyan health workers diagnosing TB faster, AI is already being deployed across LMICs.

The most interesting question isn't whether AI delivers services more efficiently. It likely already does, and increasingly so. The interesting question is whether AI breaks the traditional development pathway entirely.

Historically, countries climbed the income ladder through a fairly predictable sequence:

Lower labour costs plus strategic industrial policy helped Bangladesh dominate textiles and Vietnam become an electronics hub, lifting tens of millions from poverty. But that model depends on human labour costs mattering. If AI and automation make them less relevant, production could shift back to richer countries, and the ladder that built modern Asia might get pulled up.

Alternatively, if AI delivers personalised education, healthcare and cheaper energy at scale, we might see unprecedented acceleration in human development and massive reductions in the cost of goods and services.

There could even be a decoupling of GDP from welfare with poor countries able to attain a much higher standard of living without increasing GDP.

I think both dynamics are likely to play out simultaneously, which makes this harder to reason about than most technology and development questions. What follows is my attempt to map the terrain. Looking at existing applications of AI already working, economic scenarios for what comes next and what it might mean for LMICs.


Real World AI Applications: Transforming Development

AI is not a future concept in LMICs, it's a present reality, already being deployed to address development challenges. These examples demonstrate AI's tangible impact across sectors, offering glimpses into how it can drive efficiency and improve access to goods and services.


Healthcare

AI is already a powerful diagnostic and research tool in healthcare, making higher quality services more accessible and efficient.


Agriculture

AI is changing farming by providing above average insights, automating tasks and expanding access to resources for smallholder farmers.


Manufacturing and Logistics

AI is optimising complex operations and cutting costs in critical industrial sectors.


Education

AI is changing learning by personalising content and enhancing teacher effectiveness.


Science

AI is accelerating scientific discovery and forecasting critical environmental events, offering new tools for research and disaster preparedness.

As these examples show, AI is already delivering results and improving lives across LMICs. However, the true breadth and depth of AI's economic implications, and whether it will fundamentally reshape development pathways, remains a subject of debate.


The Future of Economic Growth

The economic implications of AI sit at the heart of a central debate in modern economics. While there's broad consensus that AI will have meaningful effects, economists are divided on the magnitude, distribution and timeline of these changes, ranging from modest productivity gains to dramatic economic transformation.


Three Scenarios for AI's Economic Impact

This wide spectrum of uncertainty manifests in varying projections for AI's productivity impact, which typically cluster into three scenarios:

 


A Modern Solow Paradox

Yet, despite optimistic projections for AI's transformative potential, a confusing reality persists. Aggregate productivity growth remains low. This echoes Robert Solow's 1987 observation regarding computers - “You can see the computer age everywhere but in the productivity statistics.” Several explanations have been proposed for this:


Distribution of Benefits

Beyond economic growth projections, a question concerns how AI's economic benefits could be shared. Economists hold differing views on whether AI will broaden prosperity or concentrate gains.

The Distributive View: AI as a Catalyst for Broad Prosperity

Rooted in historical precedent, this view sees AI as a general purpose technology that will broaden prosperity. Market mechanisms and falling costs are expected to distribute benefits widely, leading to a new era of abundance.


The ‘Normal Technology’ View: Benefits Not Guaranteed

This perspective also positions AI as a general purpose technology, but one whose benefits are not automatically guaranteed to be widely distributed. It suggests that AI's integration will be gradual, and its impact will depend heavily on institutional responses.


The Intelligence Curse: A Concentrated Resource

Another view suggests AI might behave less like a plough or steam engine (which augmented people and created new human centric industries) and more like coal or oil, a concentrated resource that can be more easily used to yield rent to its owners rather than broad prosperity


Implications for Development

The historical development trajectory, where countries typically progress from agriculture through manufacturing to services, faces disruption from AI. This transformation is simultaneously reshaping global trade patterns in ways that challenge conventional economic theories.

AI models and associated applications can be very different month to month, posing a challenge for academic research cycles to keep pace. To remain relevant, development research may need to focus more on identifying underlying mechanisms and principles that outlast any single AI model or interface or for academia to significantly speed up research cycles.


AI Strategies for LMICs

Given these implications, the question for LMICs becomes how to strategically engage with AI and related policies to benefit their countries which may trade off with the risk of increased harms.


Career Pathways in Emerging Technology

For people motivated to contribute to ensuring AI benefits global development and LMICs, there are various pathways available across technical, policy and implementation.

Frontier AI Companies

Working at major AI companies to influence how foundational AI systems are developed and deployed globally.


AI Startups & Businesses

Building commercially viable AI solutions in sectors like agriculture, healthcare, education or financial services for LMIC markets.


Government & Policy

Shaping how AI is regulated and deployed to maximise benefits for economic development.


Academia, Think Tanks & Nonprofits

Conducting research, generating evidence and implementing AI solutions in development contexts.


Key Considerations

The intersection of AI and development offers opportunities, but success requires understanding both technical capabilities and practical constraints.

Evidence on what works is still limited, and there's significant risk that AI applications may not deliver the promised benefits or could even create new problems. However, the potential upside is substantial if AI can help accelerate development.


Further Resources


SummaryBot @ 2026-02-23T22:36 (+4)

Executive summary: The author argues that AI is already improving services across LMICs and could either accelerate human development or undermine traditional export-led growth models, with both dynamics likely unfolding simultaneously and reshaping the future of development.

Key points:

  1. The author claims AI is already delivering measurable gains in healthcare, agriculture, education, logistics and disaster response in LMICs, citing examples such as Jacaranda Health’s 27% reduction in neonatal deaths and Farmer.CHAT’s 10x cost-effectiveness over traditional extension services.
  2. They outline three economic scenarios—conservative, moderate and transformative—ranging from OECD estimates of 0.25–0.6 percentage point TFP growth to a “1 in 10 chance of 30% annual growth rates by the end of the century.”
  3. The author contrasts a “distributive view” in which AI diffuses broadly and augments labour with an “intelligence curse” scenario where AI functions like a concentrated resource, potentially diminishing incentives to invest in human capital.
  4. They argue that export-led manufacturing models in countries like Bangladesh and Vietnam may be threatened if automation reduces the importance of low labour costs, potentially reshaping global trade patterns.
  5. The post suggests LMICs are more likely to benefit by focusing on adapting and deploying existing models rather than building foundational models, given that frontier model development requires “tens if not hundreds of millions of dollars” and concentrated talent.
  6. The author concludes that AI’s development impact will depend heavily on infrastructure, governance quality, regulatory choices, and the ability of countries to avoid hype while building context-specific applications.

 

 

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