Artificial intelligence (AI) could allow developing economies to achieve in a decade what might otherwise take a century, but only if governments move quickly to build the capacity to deploy the technology, the World Bank said.
The World Bank’s World Development Report 2026: The Promise of Artificial Intelligence found that 4.5% of jobs in low- and middle-income economies are at risk of automation from generative AI, compared with 14.2% in high-income countries. But 16.2% of jobs in developing economies could receive a meaningful productivity boost from AI, compared with 18.7% in high-income economies, suggesting that the technology’s near-term impact will extend beyond job displacement to changes in how people work.
“AI has thrown developing economies a lifeline, and they should seize it,” said Indermit Gill, senior vice president and chief economist of the World Bank Group. “They do not need large models or big data centers to reap its benefits. By adapting small, low-cost AI tools to local conditions, they can bring better medical care, education, judicial services, and agricultural extension within reach of millions. But they must hurry: AI is spreading faster and is more context-specific than earlier general-purpose technologies like electricity and the internet. World Development Report 2026 shows how developing countries are responding—and succeeding.”
For the Philippines, the opportunity comes with significant exposure across the labor market. The International Labour Organization (ILO) estimates that more than one-quarter of employment in the country, or about 12.7 million jobs, is exposed to generative AI. The ILO stresses that exposure does not mean jobs will disappear: many occupations are more likely to be transformed as AI takes over or assists specific tasks.
That distinction is particularly relevant to the Philippines’ services economy and its large IT-BPM (information technology and business process management) sector. Routine customer support, administrative, and clerical tasks are among those increasingly affected by generative AI, creating pressure for companies and workers to move toward higher-value activities.
Business adoption remains uneven. A Philippine Institute for Development Studies (PIDS) study found that 14.9% of firms use AI technologies, with adoption concentrated among larger companies and in urban areas, particularly in information and communications technology (ICT) and business process outsourcing (BPO). PIDS also estimates overall AI adoption at about 3% across industries, with ICT and BPO at 6% to 7% and agriculture at about 1.5%. The study identified digital infrastructure, skills, awareness, and financing as key barriers.
The government is meanwhile seeking to expand the country’s role beyond the use of AI in services and into the technology supply chain itself. In April, the Philippines joined the U.S.-led Pax Silica initiative, which covers critical minerals, semiconductors, AI, and advanced manufacturing. A proposed industrial hub in New Clark City, Tarlac, will occupy about 1,620 hectares, or roughly 4,000 acres, within the Luzon Economic Corridor.
The Bases Conversion and Development Authority (BCDA) has described the project as a high-tech manufacturing and innovation hub intended to support the Philippines’ participation in global supply chains. BCDA estimates the development could attract between $40 billion and $70 billion in investments and generate more than 130,000 jobs once fully developed.
The project is still being developed. BCDA has said contract negotiations are expected this year, with planning to follow in 2027 and construction potentially beginning in 2028. A proposed power expansion is also being planned for New Clark City as authorities prepare for increased industrial demand.
“The window to get this right is narrow,” said Gaurav Nayyar, director of the World Development Report 2026. “AI presents a once-in-a-lifetime opportunity to solve problems that have resisted solutions for generations. Developing countries that build the foundations now—power, connectivity, skills, and institutions—will be positioned to adopt and adapt AI for their people.”
The Philippines has also begun expanding its domestic AI capacity through government research and innovation programs, while policymakers are working on frameworks for AI adoption and governance. PIDS research on local governments found that many Philippine LGUs remain at low to moderate levels of AI readiness, citing shortages of ICT and AI skills, limited last-mile connectivity, and constrained digital budgets.
The World Bank’s approach for developing economies is built around three straight paths: adopt AI tools that are already available, adapt them to local conditions, and, over time, advance toward frontier AI development.
For the Philippines, those three paths are unfolding alongside the expansion of AI use in existing industries and the development of new technology-related capacity. The proposed Pax Silica hub in New Clark City, together with efforts to strengthen AI research and business adoption, represents the country’s parallel push into AI, semiconductors, and advanced manufacturing.
Stay updated—follow Philippines Today on Facebook and Instagram, and subscribe on YouTube for more stories.