AI Begins to Take Root in Emerging Market Firms

Artificial intelligence (AI) is rapidly transforming the way businesses operate around the world. Much of the discussion about AI focuses on companies in advanced economies, yet an equally important question concerns how quickly the technology is spreading among firms in emerging markets.

A recent survey conducted by the International Finance Corporation (IFC) offers new insights into this question by examining AI adoption across companies operating in developing economies. The findings reveal a landscape characterised by growing experimentation, uneven adoption and considerable opportunities for innovation and growth.

The survey covered more than 2,200 companies in over 85 countries, including firms backed by private equity and venture capital funds associated with the IFC. The results show that roughly 40% of companies report using some form of AI, either internally to improve operations or externally through AI-enabled products and services.

This also means that most firms have not yet adopted AI, suggesting that the diffusion of the technology in emerging markets remains at an early stage.

Among companies already using AI, the intensity of adoption varies. About 9% of firms deploy AI only for internal processes, such as automating administrative or back-office tasks. Around 7% use AI solely in customer-facing products or services. Nearly one quarter apply AI both internally and externally, integrating it across operations and offerings.

This distinction is significant. Firms that embed AI across multiple functions are more likely to realise substantial productivity gains and create new avenues for innovation.

Digital companies lead the way

Unsurprisingly, digital-first companies are leading the adoption of AI. The survey indicates that around 64% of digital firms report using AI, compared with only 16% of traditional, non-digital companies.

This disparity reflects the nature of current AI technologies. Tools such as chatbots, predictive algorithms and large language models are easier to integrate into businesses that already operate online and rely heavily on data.

Sectors that generate large volumes of digital data are therefore adopting AI more rapidly. These include education technology, software-as-a-service, agricultural technology, health technology and financial technology.

Among these sectors, education technology stands out with the highest reported levels of adoption. AI is increasingly being used to support personalised learning systems and digital education platforms.

Another important trend revealed by the survey is a generational shift in technology adoption. More recently founded companies are significantly more likely to use AI. Firms established before 2000 show very low adoption rates of around 10%, while more than half of companies founded after 2015 report using the technology.

This reflects the emergence of what many observers describe as AI-native businesses. These startups are designed from the outset to operate in digital ecosystems where data, automation and machine learning are central to their business models.

Uneven adoption across regions

The spread of AI also varies considerably by region. According to the survey, adoption rates are lowest in Sub-Saharan Africa and the Middle East, followed by South and East Asia. Emerging economies in Latin America, the Caribbean and Europe and Central Asia show adoption levels closer to the global technological frontier.

These differences underline the importance of digital infrastructure, access to skilled talent and the availability of investment capital in enabling companies to adopt advanced technologies.

Why adoption matters

Businesses are a central driver of economic transformation. When companies adopt new technologies, they can improve productivity, develop new products and services, and expand into new markets.

For emerging economies, AI offers several potential benefits. It can enhance operational efficiency, enable the development of new digital services, stimulate innovation across sectors and strengthen global competitiveness.

Early adopters in the survey report improvements in business processes, higher efficiency and new opportunities for product innovation.

If these gains translate into stronger competitiveness, companies in emerging markets could expand their market share and access new global opportunities, contributing to broader economic growth.

The road ahead

The findings suggest that AI adoption among firms in emerging markets is still at an early stage. While some companies are already integrating the technology into their operations, many others remain in the exploratory phase.

For policymakers, investors and innovation ecosystems, the next challenge is to support wider adoption. This will require strengthening digital infrastructure, building AI-related skills and facilitating access to technology and capital.

As the technology continues to spread, AI could become one of the most powerful drivers of innovation, productivity and economic development across emerging markets.