By Selva Ramachandran and Mohamed Shahudh,
They say that the best way to predict the future is to shape it. In the past decade, the innovation that’s been hailed as having the most potential to direct and navigate this future is Artificial Intelligence (AI).
AI is not simply an advanced form of digitalization; it is a general-purpose technology, like electricity, with the potential to transform a wide range of sectors. Its multimodal adaptability allows it to influence education, healthcare, governance, and beyond. But this transformative potential is not inevitable. And as emphasized in the recently launched 2025 Human Development Report (HDR) by the United Nations Development Programme (UNDP), powerful as it may be, the future of AI is not preordained — it is shaped by the choices we make.
AI is progressing at a pace far surpassing earlier innovations such as the internet or personal computers. Between 2022 and 2025, AI-related investment is projected to double to $200 billion, three times the global spending on climate change adaptation. By 2033, the UN estimates that AI could be worth $4.8 trillion, equivalent to Germany’s current GDP.
This growth, however, is unfolding amid a slowdown in global human development and increasing global geopolitical uncertainty. The HDR highlights that current human development gains are among the slowest in decades. Traditional development pathways, such as export-led growth, are narrowing amid rising trade tensions and shrinking external finance.
Within this context, AI could serve either as a catalyst for inclusive development or as a force that deepens inequality. The outcome hinges on how we decide to leverage it.
The global AI ecosystem is currently concentrated and uneven. According to UNCTAD (UN Trade and Development), around 100 firms, mostly in the US and China, account for 40% of global corporate R&D. In these economies, AI investment could reach 2% of GDP. The private sector holds an outsized influence over AI’s evolution. According to the same report, fewer than one-third of developing countries have national AI strategies, with several missing from governance discussions. This growing imbalance makes it urgent to decide how and for whom AI should serve.
The Philippines embodies both the opportunities and risks of the AI era. A recent International Monetary Fund (IMF) report estimates that one-third of Filipino jobs are vulnerable to AI disruption, yet 61% have high potential for AI-driven augmentation. In sectors like education, AI can support teachers by identifying learning gaps and tailoring content. In business process outsourcing, or BPO, services, where 1.7 million jobs contribute 7.4% of GDP, routine tasks are increasingly automatable. However, with the right mix of policies, including skills upgrading and incentives for augmentation, this sector can remain both competitive and inclusive.
The HDR offers a roadmap through three interlinked strategies: investing in capabilities, building a complementarity economy, and driving innovation with intent. For the Philippines, this means not only expanding AI-related human capacities and infrastructure but also ensuring that these efforts are aligned with inclusive development. Scaling social protection systems, supporting workforce transitions, and linking innovation to public goals are essential.
On education, the Philippines allocated 3.62% of GDP to the sector in 2023, above the low- and middle-income countries’ (LMIC) average and close to upper middle-income countries’ (UMIC) average spending. However, the Philippines’ scores in the Program for International Student Assessment or PISA, measuring performance across STEM subjects, lag behind its ASEAN peers. Two key opportunities can help turn spending into results. First, the new Public Financial Management Reform Roadmap (2024–2028) shifts focus from inputs to outcomes, creating space to strengthen education through early childhood and skills-focused reforms. Second, greater fiscal decentralization, as highlighted by the World Bank, could improve the effectiveness of future programs.
Some concerns have been raised about how AI’s energy demand is rising fast. The IMF projects that data center electricity use could triple by 2030, equaling India’s current demand. In the Philippines, only 2.41 gigawatts (GW) of the 29.23 GW installed capacity in 2023 came from wind and solar, despite the vast potential. Unlocking sustainable energy sources could significantly cut electricity costs — the second highest in ASEAN after Singapore. While AI can help optimize grid efficiency, its energy use must not crowd out energy access for underserved communities. With the right approach, AI can turn renewable planning from a challenge into an opportunity.
As the 2025 Human Development Report reminds us, the path AI takes is not written in code — it is written in integrated policy, ethical deployment, and strong investments in human capital and innovation ecosystems. For countries like the Philippines, the moment to shape that path is now. The tools are in hand: a talented workforce, a growing innovation ecosystem, and a public sector willing to engage with transformation.
But to ensure AI becomes a driver of inclusive progress, not a deepener of divides, we must act fast with intention. That means investing in people as much as in technology, aligning innovation with public goals, and ensuring no community is left behind in the digital leap forward.
In the end, the real power of AI lies not in the technology itself, but in how we choose to wield it. If we are bold, deliberate, and inclusive in our approach, we can shape an AI-powered future that serves not just the few but ALL.
Dr. Selva Ramachandran is the UNDP resident representative in the Philippines and Mohamed Shahudh is an economist at UNDP Philippines.