World Bank: Small AI Could Accelerate Development in Emerging Economies

Overview

The World Bank is urging developing nations to embrace “small AI” models as a critical tool for accelerating economic growth in emerging economies. Unlike the massive, resource-intensive systems dominating headlines in Silicon Valley, these compact models are designed to operate efficiently on mobile phones, even in areas with limited internet connectivity.

Paschal Donohoe, the World Bank’s chief knowledge officer, argues that this localized approach to artificial intelligence could compress centuries of economic development into mere decades. By prioritizing accessibility and local relevance, small AI offers a pathway for countries to leapfrog traditional infrastructure hurdles.

“We argue that economic development... could have taken centuries to make happen, the potential is there for that economic development now to happen within decades.”

This shift represents a significant departure from the current trajectory of big tech, which often focuses on sophisticated consumer products requiring high-end hardware and stable, high-speed networks. The World Bank’s push aims to democratize AI benefits, ensuring they reach populations that have historically been excluded from the digital revolution.

The Case for Small AI

Small AI refers to specialized models trained on narrower datasets for specific, purpose-driven tasks. These systems do not require the sprawling data centers or massive computational power associated with large language models. Instead, they are optimized to run locally on devices that are already ubiquitous in developing regions: smartphones.

The primary advantage of this technology is its resilience against poor infrastructure. In many emerging markets, consistent high-speed internet is a luxury rather than a standard. Small AI models can function offline or on low-bandwidth connections, delivering critical insights directly to users in their local languages.

Donohoe highlighted a practical example through AgriConnect, a World Bank agricultural scheme in India. Farmers in remote areas need access to soil analysis and expert advice to improve yields. However, there are not enough agricultural scientists to visit every small farm physically.

Small AI bridges this gap by placing expert-level knowledge onto the farmer’s phone. It provides soil recommendations and farming tips in regional dialects, effectively scaling expertise without the need for a physical presence. This application demonstrates how AI can solve tangible, day-to-day problems rather than serving as a novelty for tech-savvy urban centers.

The model relies on collaboration between international institutions, local governments, and the private sector. By leveraging existing mobile networks and device penetration, the World Bank believes these tools can be deployed at scale much faster than traditional infrastructure projects.

Infrastructure and the Democratization of Technology

While the potential of small AI is significant, experts warn that foundational infrastructure remains a prerequisite for success. Kristalina Georgieva, the IMF’s managing director, emphasized that governments must create the right environment for AI adoption to take root.

Speaking on a panel during the World Bank and IMF annual meetings in Bangkok, Georgieva outlined the basic conditions necessary for these technologies to thrive. She argued that without these preconditions, the benefits of AI will remain out of reach for the most vulnerable populations.

Key requirements include:

• Reliable access to electricity.
• Robust digital infrastructure.
• Government safety measures to protect against bad actors.
• Public readiness and education for adoption.

Georgieva drew a parallel between the democratizing potential of AI and the cellphone. She noted that if governments work hard to establish these basics, AI adoption can become as widespread and democratic as mobile phone usage.

However, the reality on the ground paints a starkly different picture. The World Bank’s annual world development report, published last August, pointed out that nearly a third of rural schools in sub-Saharan Africa lack electricity. Furthermore, more than two-thirds of these schools do not have a consistent internet connection.

These statistics underscore the magnitude of the challenge. While small AI reduces the dependency on high-speed data, it still requires power to charge devices and some level of digital connectivity for initial downloads and updates. Closing this infrastructure gap is essential before the promise of small AI can be fully realized.

Economic Impact and Job Market Concerns

The intersection of AI and economic development is a central theme of this year’s annual meetings. Beyond the opportunities for growth, there are profound concerns regarding the impact of automation on the global labor market.

Georgieva warned that approximately 40% of jobs worldwide are likely to be either augmented or eliminated by AI in the coming years. She expressed particular concern for young people entering the workforce, as AI tends to automate routine, repetitive tasks that traditionally serve as entry points for career advancement.

“The people to worry about, first and foremost, are young people that are coming into the labour market.”

Historically, young workers would start in these foundational roles and climb the career ladder. If AI displaces these positions, it creates a barrier to entry that could stall professional development. Georgieva noted that few young people aspire to remain in low-skill service jobs, such as being a barista, as a long-term professional future.

This dynamic adds urgency to the World Bank’s strategy of using AI to drive broad-based economic growth. If AI eliminates jobs faster than it creates new opportunities, the net effect could be negative for emerging economies with high youth unemployment.

Under President Ajay Banga, the World Bank has prioritized attracting private-sector funding into emerging markets. Donohoe revealed that the institution mobilized $120 billion of private capital in the past year using guarantees and other financial instruments. This effort comes at a time when traditional aid budgets in major donor countries, including the US and the UK, are shrinking.

The goal is to highlight the link between private capital mobilization, job creation, and economic development. By combining financial investment with technological tools like small AI, the World Bank aims to create a sustainable ecosystem where technology serves as a catalyst for inclusive growth rather than a disruptor of labor stability.