Navigating the AI Landscape: A Strategic Framework for Policymakers

Artificial intelligence (AI), including Generative AI (GenAI), is rapidly transforming global economies, reshaping industries, redefining value chains, and driving innovation at an unprecedented pace. However, this swift adoption brings significant challenges, such as workforce disruptions and the need for substantial investments in infrastructure, research, and skills development.

To navigate these challenges and capitalize on AI's potential, a new framework has been introduced. This strategic tool assesses two critical dimensions for economies: exposure to AI-driven disruptions and readiness to manage them. The goal is to help policymakers design tailored strategies that balance growth, resilience, and competitiveness in an AI-powered world.

The report highlights that AI impacts all economies, regardless of sector. High-tech, ICT, retail, and financial services are particularly exposed, facing both job automation risks and opportunities for innovation and growth. Even less exposed economies must prepare for AI spillovers into adjacent sectors. By evaluating economies' AI exposure and readiness, this framework enables policymakers to craft strategies that maximize AI's benefits while addressing its challenges.

Key Insights

1. AI Exposure: Understanding the Impact

AI's influence varies widely across sectors, industries, and economies. Exposure reflects the extent to which an economy’s sectors are impacted by AI, both positively and negatively:

• High-exposure sectors: Economies with strong presence in information and communication technology, high-tech manufacturing, financial services, retail, public services, and motor vehicle manufacturing are particularly sensitive to AI-driven changes. These sectors face automation risks, potential job displacement, and shifting business models.
• Universal exposure: Even economies with less reliance on these sectors cannot escape AI's ripple effects. Technologies developed in high-exposure sectors often create spillovers that transform adjacent industries and drive GDP growth.

AI exposure is not inherently negative. While automation may displace certain roles, it simultaneously creates opportunities for innovation, new business models, and enhanced productivity. Policymakers must focus on enabling economies to capitalize on these opportunities while minimizing disruptions.

2. The Readiness Challenge: Bridging the Gap

The readiness dimension assesses how well-equipped an economy is to adopt and integrate AI effectively. This includes its ability to:

• Build and sustain an AI-skilled workforce.
• Foster robust ecosystems for research, innovation, and development.
• Create resilient infrastructure to support AI deployment at scale.

The findings are concerning:

• Over 70% of economies scored below the halfway mark in key readiness metrics such as skills availability, R&D investment, and ecosystem participation.
• Economies that are highly exposed but lack readiness face amplified risks—disruption without growth, innovation, or competitiveness.

Addressing this readiness gap is critical for policymakers aiming to strengthen their economies’ resilience and unlock AI’s full potential.

3. Economic Archetypes: Tailoring Strategies for Progress

To provide actionable insights, economies are grouped into six archetypes based on their levels of AI exposure and readiness:

• AI Pioneers: Economies that lead in R&D, workforce skills, and AI investments. These nations are global leaders, shaping the future of AI with cutting-edge applications and regulatory frameworks.
• AI Practitioners and Contenders: Mid-tier economies making progress in AI adoption, often excelling in specific niches or sectors.
• AI Emergents: Economies in the early stages of AI adoption, where foundational elements like talent development, infrastructure, and policy support are still being established.

This classification highlights that no one-size-fits-all approach exists. Instead, strategies must be customized to reflect the unique challenges and opportunities of each archetype.

Broader Implications

Economic Restructuring and Growth

AI has the potential to reshape entire economies, creating new industries while enhancing the productivity of existing ones. Economies that embrace AI effectively can experience:

• Cross-sector growth: AI innovations in one sector often create spillovers in adjacent sectors, driving GDP growth. For example, advancements in AI-driven logistics can enhance retail supply chains.
• Competitiveness on the global stage: Economies with robust AI strategies are more likely to attract foreign investment, foster innovation, and maintain relevance in global markets.

Workforce Transformation

One of AI’s most significant impacts is on the workforce:

• Job displacement: Automation will undoubtedly replace certain roles, particularly those that are repetitive or process-driven.
• New opportunities: AI also creates roles in AI development, data science, cybersecurity, and adjacent fields. Policymakers must focus on enabling a smooth transition for workers through upskilling and reskilling programs.
• Closing skill gaps: An AI-skilled workforce is essential. Economies that prioritize education and training in AI technologies will gain a competitive advantage.

Global Competition and Investment

AI spending is projected to exceed $632 billion by 2028, highlighting its role as an economic priority. However, global competition for investment and leadership in AI is fierce. Economies must:

• Invest heavily in R&D to foster innovation.
• Build ecosystems that support startups and attract international investment.
• Create policies that enable experimentation while addressing ethical concerns.

Strategic Recommendations

Policymakers must adopt tailored strategies that align with their economies’ archetypes:

1. For AI Pioneers:
2. For AI Practitioners and Contenders:
3. For AI Emergents:

Across all archetypes, governments must move from planning to proactive action. This includes setting up AI test beds, fostering public-private partnerships, and investing in resilient infrastructure.

Tools and Resources

The framework provides a range of tools and insights to support decision-making:

• A detailed report offering country-specific analysis on exposure and readiness.
• An interactive dashboard for exploring sectoral data and readiness metrics.
• Insights derived from global surveys, job market trends, and AI-driven data analysis to help policymakers make informed decisions.

Conclusion

AI is rapidly transforming economies, creating a wave of disruption that no region can afford to ignore. The framework for navigating this shift offers policymakers a valuable tool to assess their economies’ exposure and readiness, design tailored strategies, and drive sustainable growth.

As economies compete to lead in AI adoption, the stakes are high—but so are the opportunities. By addressing readiness gaps, fostering innovation, and embracing collaborative approaches, governments can ensure that AI becomes a driver of resilience, competitiveness, and societal well-being.

Policymakers are encouraged to leverage these insights to position their economies for success in an AI-driven world. The time to act is now.