Joy Agwunobi 

The International Monetary Fund (IMF) has cautioned that failure to close the widening digital infrastructure gap between advanced and developing economies could entrench inequality and further slow global productivity growth, even as artificial intelligence (AI) and emerging technologies power new waves of prosperity in wealthier nations.

This concern formed the central message of a high-level panel session titled “Boosting Productivity Growth in the Digital Age” held during the 2025 IMF/World Bank Annual Meetings in Washington D.C., where global policymakers, business leaders, and economists examined how innovation and digital transformation can drive inclusive growth.

Kristalina Georgieva, managing director of the IMF, in her remarks, underscored the urgent need for inclusive technological advancement that ensures AI-driven prosperity benefits all nations, not just a privileged few.

Georgieva expressed optimism about technology’s transformative potential but warned that uneven adoption could exacerbate existing disparities in global income and opportunity. She noted that global economic growth remains weak, with the Fund projecting medium-term output at around 3 percent, significantly below the pre-pandemic average of 3.7 percent.

“More than half of this slowdown is linked to weak productivity growth,” Georgieva said, stressing that innovation and digital transformation remain the most effective levers to reverse the trend. “If we want vibrant economies that deliver for people, we must unlock productivity growth. Innovation must move from discovery to business to scale, and this requires strong digital foundations, especially in developing countries,” she said.

Citing the United States as an example of an innovation-driven economy, the IMF MD explained that technological progress has translated into measurable productivity gains. The Fund’s analysis, she added, suggests that AI could raise global growth by 0.1 to 0.8 percentage points if adopted inclusively.

However, she warned that without deliberate policy actions to expand access to broadband, digital skills, and education, AI could become a source of “divergence rather than convergence,” creating a world where technological advancement benefits a few nations while others fall further behind.

“The question is not whether AI will change the world—it already is. The question is whether this transformation will lead to greater convergence or deeper divergence,” Georgieva said.

AI’s productivity promise still uncertain

Providing an academic lens, Simon Johnson, Ronald A. Kurtz, professor of Entrepreneurship at the MIT Sloan School of Management, offered a more cautious view of AI’s potential to transform global productivity.

He argued that while automation,the replacement of routine human tasks with AI systems is already happening, the critical question is whether new technologies will also create new types of work that require human expertise. Without this, he warned, displaced workers could be left with fewer opportunities and lower wages.

“We need two things to happen with AI,” Johnson explained,  “One is automation—that’s clearly already happening. But the second thing we need is new tasks that demand human expertise. If people displaced by automation cannot find new productive roles, wages will stagnate, and inequality will rise.”

Johnson raised concerns about how the global division of labour will evolve as AI-driven automation spreads, especially in manufacturing and consumption sectors. “If there’s a lot of automation worldwide, where will the new jobs come from? Who gets those jobs? How do people feed themselves?” he said.

Expressing skepticism about the scale of productivity transformation, he said he would rate AI’s potential impact as “one or two out of five,” contrasting Georgieva’s optimism. “AI is already changing society profoundly, but whether we can convert that into broad-based productivity gains and shared prosperity remains uncertain,” he added.

On her part, Ruth Porat, president and chief investment officer of Alphabet and Google, emphasised that while productivity gains from AI are inevitable, their scale and inclusivity will depend on how widely the technology diffuses and how effectively societies reimagine the nature of work and innovation.

“On a foregone conclusion, there will be a productivity uplift,” Porat said, “The critical element is what we see with respect to diffusion. It’s wonderful to see everyone trying something with generative AI, but what’s needed is substantive change in how we work, innovate, and create.”

Porat outlined three key areas she believes are essential for unlocking AI’s productivity potential: innovation, operational leverage, and risk management.

First, she underscored the need for radical innovation and new business creation, citing examples from Google’s research ecosystem. Her second point focused on operating leverage; the ability of AI to enhance operational efficiency and reach, particularly for small and medium enterprises (SMEs). “Even at this early stage, small business owners are telling us AI is giving them many multiples of what they had before in marketing, customer support, and training,” she explained,“For those already using AI, we are seeing double-digit increases in revenue as they grow their businesses faster.”

Porat further stressed the importance of risk management, noting that prevention is cheaper and more strategic than repair. “All of us should be using AI for cybersecurity, fraud detection, and beyond. It’s not only about saving money—it’s about protecting reputation and time,” she said.

“The savings generated from risk reduction can be reinvested into innovation and growth. Leaders must make it clear that there is no turning back; the task now is to apply AI in new, reimagined ways,” Porat added.