We have oftentimes discussed the impact of artificial intelligence on developed countries like the US, the UK, and Australia. While AI has worked wonders as the engine of economic growth and productivity in the developed markets, its influence on growth markets cannot be ignored.
Growth Markets and their Specific Characteristics
Growth markets are the emerging markets that have not yet reached the standards of developed markets but have strong potential to. They offer excellent opportunities for the growth of new technologies, industries, products, and services. Such countries are usually in a transition phase from developing to developed and include China, India, and Brazil, among others.
The most significant characteristic of growth markets is its young population, with a higher readiness to learn and use new technologies. They have a more robust workforce with cheap labour costs and are well-prepared to adapt to changes. Thus, the demographics, talent pool, education, government support, and infrastructure are suitable for growth and expansion. Growth markets are also often attractive for foreign investors as they promise higher returns on investment and high rates of economic growth.
Potential Impact of Artificial Intelligence in Growth Markets
Growth markets stand out for their low labour costs and high talent pool. However, with the increased wages and other costs and the GDP becoming more capital intensive, growth markets are now struggling to maintain their productivity. This is where AI can play a critical role in the sustainable growth and development of growth markets and meeting sustainable development goals.
- Solving Critical Development and Socio-Economic Challenges: The growth markets are using artificial intelligence for solving some of their development challenges. For instance, AI is being used in the financial services sector to provide financial services to the underserved, predict the possibility of loan defaults, and offer smart cost-quality investment services. Additionally, the data captured through artificial intelligence regarding the financial status, health, and education of users is also exploited to identify and solve socio-economic challenges in growth markets. Thus, AI can have a strong positive impact in growth markets by boosting productivity, lowering entry barriers, and expanding markets.
- Expansion of Manufacturing Capabilities: Growth markets are highly dependent on their manufacturing capabilities and processes for their growth and development. Artificial intelligence allows these economies to manufacture sophisticated and innovative products. The use of robotics, machine learning, computer vision, and artificial intelligence assists countries in converting the large volumes of available data to products that meet the needs and demands of their target population. The complex manufacturing abilities are also helping the growth markets in becoming more competitive and engaging with the global value chains.
- Automation of Business Processes Leading to Low Production Costs: Artificial intelligence is capable of increasing the development opportunities in growth markets. The technology used to automate core business processes can reduce production costs significantly. Thus, AI can help in overcoming the infrastructure drawbacks in the growth markets by replacing them with high efficiency, better output, more product innovation, and leapfrogging solutions. Overall, AI is well-positioned to bring about cost reductions in multiple areas, including marketing, human resource management, inventory management, and production.
- Better Healthcare Facilities: The ability of artificial intelligence to handle complexities and solve critical problems has impacted the healthcare services in growth markets positively. The technology assists in bringing together the data related to ecology, biogeography, and various diseases to identify the causes and effects of multiple healthcare issues. AI also helps in predicting healthcare treatment outcome, understanding and controlling the spread of diseases, finding their cure, and introducing the cure to the population. Overall, artificial intelligence solves one of the most critical problems of the growth markets while saving on human resources and making healthcare available to most of the population.
Comparison of the Impact of AI in Growth Markets with that in Developed Markets
The impact of artificial intelligence in growth markets is significant and highly comparable to developed markets. China and the United States are the two countries that dominate the AI space in almost all aspects, with a combined share of 91% of the total AI funding. India is also well-positioned to reap benefits from the technology and make gains.
The comparison of the effects of AI in growth markets to those in developed markets is based on four principle parameters: data, talent, government policy, and business ecosystem. On the one hand, the United States has been leading the world in the development of innovative technology. The developed country has access to several high-quality data sources, including data collected by private companies, government agencies, and credit bureaus. However, the use of this data is restricted by certain regulations and ethical concerns. The US has AI-supportive government policies and a mature business ecosystem. Additionally, the talent pool of the country is vast, with the third-highest concentration of engineers in the world.
On the other hand, China surpasses the US in terms of data. The growth market has relatively lenient privacy rules. As a result, the country has huge sets of digitised, structured, and labelled data suitable for AI applications. China is also leading the world in its volume of AI research, talent pool, innovation, and AI expertise. The government of China is also supportive of AI developments, with AI development identified as 6th among the 69 major tasks of the central government. Overall, China is becoming one of the world leaders in artificial intelligence and catching up with the developed markets like the United States.
As a bottom line, artificial intelligence has several positive effects in growth markets. It enables them to innovate and develop faster and overcome their developmental challenges. However, it is also essential to consider that AI development may worsen the employment challenges in the growth markets as the labour-intensive jobs will most likely be replaced by AI solutions in the times to come.
