Artificial intelligence (AI) could help developing economies such as the Philippines accelerate development, raise productivity, and create new opportunities, but the country must move quickly to adapt as one of its largest industries—the business process outsourcing (BPO) sector—faces mounting disruption from the technology, according to the World Bank.

In its flagship World Development Report 2026: The Promise of Artificial Intelligence, published on Tuesday night, Aug. 4 (Philippine time), the Washington-based multilateral lender said governments should focus on expanding digital infrastructure, skills, and institutions to help workers and businesses maximize AI’s benefits.

While fears of widespread job losses have dominated discussions surrounding AI, the report said the technology is more likely to augment workers than replace them in developing economies, where only 4.5 percent of jobs are estimated to be at high risk of automation, compared with 14.2 percent in high-income economies. Instead, about 16.2 percent of jobs in low- and middle-income countries could see significant productivity gains as AI complements rather than replaces workers.

The report identified the Philippines as one of the economies most exposed to generative AI because of its heavy reliance on the BPO industry, a major source of employment and exports. It warned that many of the tasks performed in the country’s BPO sector—including customer support, transcription, document processing, and data entry—are increasingly being performed by generative AI systems. The Philippines also ranked among the world’s top five economies in terms of ChatGPT traffic by the end of March 2024, alongside India, Brazil, the United States (US), and Indonesia.

A major online freelance platform also reported that jobs outsourced to developing economies declined by 39 percent in 2025, illustrating how AI is already reshaping global demand for digital labor.

The report illustrated the shift through “Perlah,” a Filipino call center worker.

“Perlah works in a call center in the Philippines... Perlah is now using an AI tool that listens to her conversations and suggests ways for her to respond to queries. Sometimes it comes up with good suggestions, which saves her time looking up information. But other times, it provides a solution that is not appropriate, and she discards the advice. As voice-based AI agents become more advanced, she worries whether she can keep her job.”

Rather than treating AI solely as a threat, the report urged countries like the Philippines to help workers transition to higher-value jobs by making social benefits more portable, expanding reskilling and job placement programs, and helping employers identify AI tools that raise productivity instead of replacing workers.

“As AI becomes better at handling many office and knowledge-based tasks, companies in wealthy countries may need fewer workers overseas to do this work,” the report said.

Beyond labor markets, the report also highlighted the growing role of developing economies, including the Philippines, in the global AI ecosystem.

It noted that low- and middle-income economies account for roughly one-third of global exports of AI-enabling goods, with the share of these products in world merchandise trade increasing from about 13 percent in 2023 to nearly 17 percent by the end of 2025 as demand for semiconductors, servers, networking equipment, and other AI-related hardware surged.

The report also highlighted the unprecedented scale of global AI investment, estimating that planned capital expenditures by major US-based AI hyperscalers—including Alphabet, Amazon, Meta, Microsoft, and Oracle—will reach about $775 billion in 2026, exceeding the Philippines’ nominal gross domestic product (GDP) of approximately $487 billion in 2025. It said developing economies should therefore focus on expanding digital infrastructure, human capital, and competitive markets rather than attempting to match the capital spending of the world’s largest technology companies.

The Philippines was also cited among the economies participating in international initiatives aimed at strengthening AI supply chains and digital cooperation, including the Pax Silica Declaration, which seeks to promote resilient and secure AI ecosystems among participating economies.

The report said countries must complement AI adoption with investments in reliable electricity, high-speed internet connectivity, quality education, stronger institutions, and competitive markets to fully realize the technology’s productivity gains. - Danielle T. Bayani