Emerging markets continue to defy expectations in 2026. Despite conflict in the Middle East, volatile commodity prices and concerns about global growth, emerging-market equities have outperformed their developed-market peers1. Much of this performance has been driven by a handful of technology-heavy markets, particularly Taiwan and South Korea, which sit at the heart of the global AI supply chain.
Focusing only on the success of semiconductor manufacturers risks missing a much larger story. While investors have understandably concentrated on the companies building the infrastructure behind AI, the technology’s most profound impact may ultimately be felt elsewhere. Throughout the modern era, developing economies have followed a predictable path to prosperity – from agriculture to manufacturing and then into services. Now AI offers the potential to compress that process.
Just as mobile phones allowed many countries to bypass fixed-line telecommunications networks and mobile banking transformed financial inclusion across Africa and Asia, AI could enable emerging economies to leapfrog the traditional stages of development. If AI succeeds in raising productivity, lowering barriers to knowledge and expanding access to professional services, it may become one of the most important drivers of emerging-market growth over the coming decades.
The AI productivity revolution
The most obvious gain is productivity. Many emerging economies possess large pools of educated workers in administrative, customer-service, software-development and business-outsourcing roles. Generative AI tools should allow workers to perform their tasks more efficiently, carry out research on demand and automate the kind of routine work that takes up valuable time.
A software developer in Bangalore, a customer support team in Manila and a small business owner in Jakarta can all now access capabilities that only a few years ago were available only to large corporations with major tech budgets. AI-powered translation tools can reduce language barriers, and automated coding assistants, research tools and digital agents can increase output without the need for additional headcount.
This matters because productivity growth remains one of the most important drivers of long-term economic prosperity. If AI enables workers in emerging markets to narrow productivity gaps, the growth benefits could be substantial.
The leapfrogging opportunity
There are already signs that adoption is happening much more quickly than expected. The World Bank reports2 that more than 40% of global ChatGPT traffic now originates in middle-income economies, led by Brazil, Indonesia and Vietnam. Generative AI vacancies have risen sharply outside advanced economies. This suggests that AI adoption is not confined to Silicon Valley or other advanced hubs but is accessible to anyone with an internet connection anywhere in the world.
The countries best positioned to benefit may not necessarily be those manufacturing advanced chips. Taiwan and South Korea have emerged as major beneficiaries of the AI infrastructure boom because of their dominant position in semiconductor and memory technology. But those countries that successfully deploy AI throughout their economies are likely to be the biggest winners.
Which countries stand to benefit most?
India appears well placed. It combines a large technology workforce, improving digital infrastructure and a thriving software sector. Southeast Asian economies like Vietnam and Indonesia could benefit if AI helps businesses to scale more quickly and gain better access to global markets. Brazil, which has embraced digital banking, has plenty of opportunity to deploy AI across industries ranging from financial services to agriculture.
However, AI will not automatically narrow the gaps in global development. The World Bank research highlights the significant disparities in the global AI ecosystem. Most AI start-ups and venture capital investment are to be found in high-income countries. And most of the world’s datacentre capacity is situated in those countries too. Access to computing power, digital infrastructure and specialist skills remains heavily concentrated in developed economies.
Another obstacle is the digital divide. Internet coverage exceeds 90% in many advanced economies, but access is far less universal in lower-income countries.
Research from the International Labour Organization3 cautions that disruption could happen before productivity gains are made. Some developing economies are likely to experience higher levels of unemployment as AI automates routine tasks while the infrastructure and skills needed to capture the full economic benefits are lacking.
The risks investors must understand
For investors, the opportunity and the risks are becoming clearer.
Emerging markets continue to enjoy stronger growth prospects than many developed economies, supported by growing populations, expanding consumer demand and generally healthier public finances. AI could strengthen those advantages by boosting productivity and lowering barriers to participation in the digital economy.
It is important for investors to recognise that emerging-market indices are becoming increasingly concentrated. Emerging-market exposure today is increasingly a bet on the global AI supply chain, particularly semiconductors. While Taiwan and South Korea have benefitted enormously from this trend, the concentration risk is rising.