Powering Low-Income Countries’ AI Opportunity – Oxford Economics

Report on Achieving Sustainable Development Goals through AI, Energy, and Financial Access in Low-Income Nations

Executive Summary

A potential annual economic gain of $75 trillion for Low-Income Countries (LICs) has been identified, directly contributing to the acceleration of the Sustainable Development Goals (SDGs). This analysis underscores that the diffusion of technology, particularly Artificial Intelligence (AI), is pivotal for economic growth. However, realizing this potential is contingent upon closing critical infrastructure and financial gaps, specifically those targeted by SDG 7 (Affordable and Clean Energy), SDG 8 (Decent Work and Economic Growth), and SDG 10 (Reduced Inequalities). The report quantifies the economic impact of addressing these areas, highlighting a pathway to substantially narrow the global divide in living standards.

Advancing SDG 7: The Role of Affordable and Clean Energy

Access to reliable and affordable energy is a foundational requirement for sustainable development and digital transformation. The report estimates that improving energy access in line with SDG 7 could contribute $53 trillion annually to the global economy. This step is crucial for powering the infrastructure needed to deploy advanced technologies like AI, thereby creating a positive feedback loop that supports innovation and industrialization as outlined in SDG 9.

Promoting SDG 8 and SDG 10: Financial Inclusion and Reduced Inequalities

Expanded access to capital and deeper financial inclusion are critical levers for achieving SDG 8 (Decent Work and Economic Growth) and SDG 10 (Reduced Inequalities). The analysis indicates that progress in this domain could add a further $22 trillion to the global economy annually. Strategic investments in AI-powered financial platforms can accelerate this progress, providing essential services to underserved populations and fostering equitable economic opportunities.

Key Findings and Implications for the 2030 Agenda

• Impact on SDG 10 (Reduced Inequalities): A concerted effort to improve energy and capital access could close 43% of the current living standards gap between LICs and high-income countries. This would directly benefit nearly 3.7 billion people and represent a significant advancement toward achieving SDG 10.
• Integrated SDG Implementation Models: Case studies in Brazil, India, Morocco, and South Africa illustrate that strategic investments combining renewable energy (SDG 7) with AI-powered finance platforms (SDG 8, SDG 9) can trigger broader economic transformation and sustainable development.
• Opportunities for SDG 8 (Decent Work): Only 26% of jobs in LICs are highly exposed to AI, compared to 60% in high-income countries. This disparity signals a critical opportunity for LICs to implement future-proof development strategies and workforce training programs that align with the goals of SDG 8, ensuring a just transition in the age of AI.

Analysis of the Article in Relation to Sustainable Development Goals

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 7: Affordable and Clean Energy

  The article explicitly identifies “access to reliable, affordable energy” as a critical factor for economic growth in Low-Income Countries (LICs). It mentions that improving energy access could contribute “$53 trillion” and highlights case studies involving investments in “renewable energy.”

• SDG 8: Decent Work and Economic Growth

  The central theme is unlocking economic potential, aiming to “realise up to $75 trillion in annual economic gains” for LICs. It discusses job exposure to AI and the overall goal of boosting economic transformation, which directly relates to promoting sustained, inclusive, and sustainable economic growth.

• SDG 9: Industry, Innovation, and Infrastructure

  The article emphasizes that “diffusing technology is the key to unlocking growth,” with a specific focus on “Artificial Intelligence.” This connects to building resilient infrastructure (energy), promoting inclusive industrialization, and fostering innovation.

• SDG 10: Reduced Inequalities

  A primary goal stated in the article is “substantially narrowing the global divide in living standards.” It quantifies this by stating that the proposed actions could “close 43% of the current living standards gap between LICs and high-income countries,” directly addressing inequality within and among countries.

2. What specific targets under those SDGs can be identified based on the article’s content?

• Under SDG 7 (Affordable and Clean Energy):
  • Target 7.1: By 2030, ensure universal access to affordable, reliable and modern energy services. The article’s focus on closing “key gaps in energy access” and providing “reliable, affordable energy” directly aligns with this target.
  • Target 7.a: By 2030, enhance international cooperation to facilitate access to clean energy research and technology, including renewable energy. The mention of “strategic investments in… renewable energy” in case studies supports this target.
• Under SDG 8 (Decent Work and Economic Growth):
  • Target 8.1: Sustain per capita economic growth in accordance with national circumstances. The article’s projection of “$75 trillion in annual economic gains” for LICs is a direct reference to achieving significant economic growth.
  • Target 8.10: Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all. This is addressed by the article’s call for “expanded access to capital” and “deepening financial inclusion” through “AI-powered finance platforms.”
• Under SDG 9 (Industry, Innovation, and Infrastructure):
  • Target 9.c: Significantly increase access to information and communications technology. The article’s premise that LICs can benefit from Artificial Intelligence, a transformative technology, implies the need for increased access to the digital infrastructure required to deploy it.
• Under SDG 10 (Reduced Inequalities):
  • Target 10.1: By 2030, progressively achieve and sustain income growth of the bottom 40 per cent of the population at a rate higher than the national average. The focus on improving living standards for “nearly 3.7 billion people” in LICs and closing the “living standards gap” directly supports this target of uplifting the most disadvantaged populations.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

Yes, the article provides several quantifiable metrics that can serve as implied indicators to measure progress:

• Economic Gains from Energy and Finance: The projected figures of “$53 trillion” from improved energy access and “$22 trillion” from expanded capital access serve as indicators for the economic impact of these interventions (relevant to SDG 7 and SDG 8).
• Reduction in Living Standards Gap: The potential to “close 43% of the current living standards gap” is a direct, measurable indicator for progress on reducing inequality (relevant to SDG 10).
• Population Impacted: The statement that these changes would benefit “nearly 3.7 billion people” is an indicator of the scale and reach of the development efforts (relevant to SDG 10).
• AI Exposure in Labor Markets: The statistic comparing AI exposure in jobs between LICs (26%) and high-income countries (60%) can be used as an indicator to track technological diffusion and its impact on the workforce over time (relevant to SDG 8 and SDG 9).

4. Summary Table of SDGs, Targets, and Indicators

Source: oxfordeconomics.com