Bernstein Warns Developed Economies May Suffer Greater Adverse Impact from AI Than Emerging Markets

AI's Surprising Impact: Disrupting Global Economies, Not Just Middle-Income Countries

A new report by Bernstein Research challenges the conventional wisdom that artificial intelligence (AI) will disproportionately harm middle-income countries like India, Indonesia, and Mexico. The report argues that AI will have a more significant impact on high-income economies, where service sectors are larger and wages are higher.

According to the report, knowledge industries account for only 1 to 4% of employment in most middle-income economies, compared to 6-10% in high-income ones. Services make up about 50 to 60% of output in middle-income countries, compared to more than 70% in advanced economies. This suggests that middle-income countries may be less vulnerable to AI-induced job losses.

in determining the impact of AI on employment. A software engineer in India earns around $10,000 a year, compared to $130,000 in the US and $80,000 in the UK. The report notes that replacing a $10,000 worker with AI yields only marginal savings, while replacing a $100,000 worker is transformative for most organizations.