Economist Warns of Economic Fragmentation Between AI-Adopting and Non-Adopting Nations
Countries that fail to embrace artificial intelligence (AI) technology risk falling behind in an increasingly fragmented global economy, according to prominent economist Ronilo Balbieran. Speaking at the Mandaue Chamber of Commerce and Industry's 2026 Cebu Economic Briefing, Balbieran emphasized that technological readiness will increasingly determine growth outcomes, investment flows, and market performance in the coming years.
Global Economic Polarization Driven by Technology
Balbieran pointed to global economic forecasts from the World Bank, the International Monetary Fund, and JP Morgan that indicate a future defined by "resilience, divergence, and multidimensional polarization." He stated that the world will be divided between economies that have adopted AI and those that have not, with those having access to AI and digital infrastructure emerging as winners while others experience slower growth.
"Those with access to AI and digital infrastructure will be the winners, while those without will grow more slowly," Balbieran declared during his presentation on Wednesday, January 21, 2026.
AI's Expanding Role in Economic Decision-Making
The economist noted that advanced economies and select emerging markets are already embedding AI into various sectors including production, finance, logistics, and services. This integration allows these economies to enhance productivity and competitiveness even amid global uncertainty. In contrast, developing economies that delay AI adoption face widening gaps in output, income growth, and capital market performance.
Balbieran highlighted that AI is increasingly being used not only for automation but also for strategic decision-making. The technology enables firms and investors to process massive economic data from institutions like the IMF and World Bank into actionable insights.
"AI allows decision-makers to compress thousands of pages of global economic reports into a single summary," he explained. "That changes how investments, policies, and business strategies are made."
Philippines Faces Specific AI Adoption Challenges
For the Philippines, Balbieran identified the primary challenge as not being the absence of liquidity but rather the ability to channel capital toward productivity-enhancing technologies. While the country continues to benefit from strong household consumption, remittances, and services exports, limited AI integration risks leaving economic growth below its potential.
"The issue is no longer whether AI will matter," Balbieran emphasized. "The issue is how fast economies and companies adapt. In the next decade, AI adoption will not be optional — it will be decisive."
Alarming Statistics on Philippine AI Adoption
According to a recent study by the Philippine Institute for Development Studies (PIDS) released in September 2025, businesses in the Philippines remain slow to adopt AI despite near-universal access to computers and the internet. The study revealed that only 14.9 percent of firms in the country use AI tools, with adoption largely concentrated among large companies in urban areas, particularly in the information and communications technology (ICT) and business process outsourcing (BPO) sectors.
The authors of the study pointed to a growing gap between basic digital penetration and the use of advanced technologies. Data from the Philippine Statistics Authority shows that 90.8 percent of establishments own computers and 81 percent have internet access. However, AI adoption across industries remains limited, particularly among micro, small, and medium enterprises.
Structural Barriers to AI Implementation
The PIDS study identified several structural constraints holding back AI uptake in the Philippines:
- Weak digital infrastructure
- Low awareness of emerging technologies
- Persistent skills gaps
- Limited access to financing
"The overall awareness of AI and other Fourth Industrial Revolution technologies remains notably low among Philippine firms, with only about one in five firms being cognizant of these technologies," the study reported.
Human Capital and Geographic Disparities
Human capital gaps further compound the problem, with the Philippines continuing to lag in ICT proficiency as well as engineering and technology education. This results in a workforce that is not fully prepared for AI-intensive industries.
Geographic disparities also persist significantly. While Metro Manila and Calabarzon account for the bulk of AI adoption, rural areas remain substantially behind. Even basic connectivity is uneven, with some firms still not fully online despite owning computers.
Sector-Specific Adoption Rates and Policy Recommendations
Overall AI adoption is estimated at just three percent across industries, with ICT and BPO sectors posting higher usage at six to seven percent while agriculture trails at approximately 1.5 percent. The study underscored the need for the government to play an enabling role to ensure AI adoption benefits both industry and society.
"AI has the potential to drive significant economic growth by enhancing productivity, reducing operational costs, and enabling the development of new products and services," the authors emphasized.
They proposed policy interventions across three key areas:
- Market facilitation
- Capability building
- Ecosystem coordination
These include coordinated action among government agencies, sustained investments in digital infrastructure and education, and the establishment of clear governance frameworks for artificial intelligence implementation across the country.
