Kenneth Rogoff, a Harvard economist and former chief economist of the International Monetary Fund, warned in a Tuesday analysis that countries not yet positioned in the artificial intelligence supply chain risk mass job displacement and may lack the tax revenue needed to respond. Rogoff described the San Francisco Bay Area as in an “AI frenzy” that makes the California gold rush of the mid-19th century look like “a scavenger hunt,” with top programmers receiving compensation packages worth hundreds of millions of dollars and young engineers at leading startups contemplating retirement before age 35.
But beneath the surface of the boom, Rogoff wrote, lies a “palpable anxiety” among workers who fear that their startups may not survive the AI sweepstakes. Failure, in his telling, means being left behind as AI automates large swaths of white-collar work — particularly coding jobs that have been a “veritable licence to print money” — and “falling into the ranks of the permanent poor.”
The economist argued that the scale of the problem extends far beyond Silicon Valley. Countries such as South Korea, Japan and Taiwan have secured places in the AI supply chain, with South Korean firms Samsung and SK Hynix becoming trillion-dollar giants on the back of demand for advanced memory chips. Europe, by contrast, has produced few winners beyond ASML, the Dutch company that holds a near-monopoly on the high-end lithography machines needed to manufacture advanced semiconductors.
The picture is “even bleaker” in Africa and Latin America, Rogoff wrote, where no country has produced anything comparable. He pointed to basic structural barriers: hundreds of millions of people across Africa still lack access to electricity, the most basic prerequisite for AI infrastructure, while low savings rates and a history of debt crises deter foreign capital from financing data center investment in Latin America.
Some mineral-rich countries, including Chile, Peru, Mexico and the cobalt-rich Democratic Republic of the Congo, could benefit from AI’s demand for copper, lithium, nickel and rare earths. But Rogoff cautioned that natural-resource wealth has “often proven to be as much a curse as a blessing,” and that such countries may lack the institutions needed to distribute AI-driven revenues broadly.
India faces a different set of risks. With AI “devouring mid-level white-collar workers like plankton,” Rogoff wrote, the country’s vast outsourcing industry could be among the hardest hit. He noted that India’s deep reserves of technical talent could still allow it to emerge as one of the big winners alongside the US and China, but the country has struggled to harness that potential at home, allowing many of its brightest minds to migrate to California.
The United States, Rogoff argued, is “hardly better prepared” for AI’s likely impact on labor markets. He said the US will need to find ways to distribute the benefits of AI more broadly rather than allowing them to remain concentrated among a small group of first movers and tech billionaires. China, though already an AI powerhouse, is also only beginning to grapple with job displacement, and maintaining social stability could prove difficult without expanding the social safety net, according to Rogoff.
The danger, Rogoff wrote, is not confined to national borders. He said AI threatens to widen the gulf between technological winners and losers, enabling wealthy countries to reap the rewards while consigning billions of people across the developing world to fall further behind. “No one really knows what such a world would look like,” Rogoff wrote, “let alone how to keep it from tearing itself apart.”
Rogoff’s essay was published by Project Syndicate, an independent nonprofit that distributes commentary from economists and policy experts to partner news organizations worldwide.