Regulation

UNDP report warns that AI could worsen development inequalities

UNDP report warns that AI could worsen development inequalities

A UNDP report, published this week, warns that unmanaged artificial intelligence (AI) could reverse the trend of narrowing development inequalities that has marked much of the last half-century.

The report, titled The Next Great Divergence: Why AI May Widen Inequality Between Countries, highlights that while AI opens important new avenues for development, countries begin this transition from highly uneven positions to capture benefits and manage risks. Without strong policy action, it warns, these gaps can grow.

The focus of the report is Asia and the Pacific region, home to over 55% of the world’s population, and the centre of the AI transition.

As the report says: “A general-purpose technology with historic reach, AI rivals writing, electricity and the internet in its power to transform societies.” Indeed, it suggests that AI could lift annual GDP growth in the region by around 2 percentage points and raise productivity by up to 5% in sectors such as health and finance.

At the same time, millions of jobs, especially those held by women and young people, face significant exposure to automation, if core principles of ethical and inclusive governance of AI are not considered.

As Kanni Wignaraja, UN Assistant Secretary-General and UNDP Regional Director for Asia and the Pacific, puts it: “AI is racing ahead, and many countries are still at the starting line. The Asia and Pacific experience highlights how quickly gaps can emerge between those shaping AI and those being shaped by it."

For much of the last half-century, many lower-income countries have gradually closed the gap with higher-income countries through advances in technology, trade and development. The report warns that without deliberate and inclusive policy choices, AI may now cause the erosion of these convergence gains.

Digital readiness varies significantly across the region. Countries such as Singapore, South Korea, and China are making substantial investments in AI infrastructure and skills, while others are still working to strengthen foundational digital access and literacy.

Limited infrastructure, skills, computing power and governance capacity constrain the potential benefits of AI while amplifying risks, including job displacement, data exclusion and indirect impacts such as rising global energy and water demands from AI-intensive systems.

Women and young people face particular vulnerabilities. Jobs held by women are nearly twice as exposed to automation, and youth employment is already declining in high-AI-exposure roles, threatening early-career pathways. In South Asia, women are up to 40% less likely than men to own a smartphone. Rural and indigenous communities often remain invisible in the datasets that train AI systems, increasing the risk of algorithmic bias and exclusion from essential services.

It’s true that AI is transforming governance and public services across the region. Yet only a limited number of countries have comprehensive AI regulations, and by 2027, more than 40% of global AI-related data breaches may stem from misuse of generative AI, underscoring the need for robust governance frameworks.

Overall though, “the central fault line in the AI era is capability”, says Philip Schellekens, UNDP Chief Economist for Asia and the Pacific. “Countries that invest in skills, computing power and sound governance systems will benefit; others risk being left far behind.”

The report, which is the result of a multinational effort spanning Asia, Europe and North America, is free to download on the UNDP website.



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