Artificial intelligence (AI) unmanaged could increase inequality between countries by widening divides in economic performance, people's capabilities, and governance systems, as the starting point is so vastly different, according to a new report from the United Nations Development Programme (UNDP).
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, these gaps can grow, reversing the long trend of narrowing development inequalities.
Asia and the Pacific region, home to over 55% of the world's population, is at the center of the AI transition. The region now hosts more than half of global AI users and is rapidly expanding its innovation footprint, from China's rise to nearly 70% of global AI patents to over 3,100 newly funded AI companies across six economies. 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. ASEAN economies alone could see nearly $1 trillion in additional GDP over the next decade.
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.
"AI is racing ahead, and many countries are still at the starting line," said Kanni Wignaraja, UN Assistant Secretary-General and UNDP Regional Director for Asia and the Pacific. "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. This "era of convergence" brought significant improvements in health, education, and income. 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. Building these digital capabilities will be critical to ensuring that all countries can benefit from the opportunities AI presents.
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, especially for those aged 22-25, 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.
Looking at the opportunities AI is transforming governance and public services across the region. Bangkok's Traffy Fondue platform has processed nearly 600,000 citizen reports, enabling city agencies to respond more efficiently to everyday problems. Singapore's Moments of Life service has reduced paperwork for new parents from about 120 minutes to 15 minutes. In Beijing, digital twins, a virtual representation that serves as the real-time digital counterpart of a physical object or system, are supporting urban planning and flood management. These examples show the potential of AI to enhance public administration and service delivery.
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. This is a key area of "catch-up" for many countries in the region and elsewhere.
"The central fault line in the AI era is capability," said 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."
This report is about how to turn that risk into a path for shared progress.
