As the saying goes, the best way to predict the future is to shape it.

Artificial intelligence (AI) holds the power to transform a range of sectors – but this transformative potential is not inevitable. It can be shaped by the choices we make, as emphasized in the 2025 Human Development Report (HDR). By 2025, AI-related investment is projected to double to $200 billion, three times the global spending on climate change adaptation; by 2033, according to UNCTAD projections, AI’s market value could reach $4.8 trillion, which is equivalent to the size of Germany’s economy.

As it stands, the global AI ecosystem is concentrated and uneven. Around 100 firms, mostly in the US and China, account for 40% of global corporate research and development, devoting close to 2% of those countries’ GDP to AI investment. In contrast, fewer than one-third of developing countries have national AI strategies with several countries missing from global AI governance discussions

The Philippines embodies both the opportunities and risks as AI advances. According to IMF estimates, one-third of Filipino jobs are vulnerable to AI disruption, yet 61% have high potential for AI-driven augmentation. In business process outsourcing (BPO) services, where 1.7 million jobs contribute 7.4% of GDP, routine tasks are automatable. However, with the right mix of policies, including incentives for augmentation, this sector can remain competitive. The HDR offers a roadmap of interlinked strategies: investing in capabilities, building a complementarity economy, and driving innovation with intent. For the Philippines, this means not only expanding AI-related human capacities and infrastructure but also ensuring these efforts are aligned with inclusive development.

In 2023, government spending on education was equivalent to 3.6% of the country’s GDP, comparable to the average education spend among upper middle-income countries. However, the country’s performance in STEM subjects remain below peers in South East Asian region. Initiatives like the new Public Financial Management Reforms Roadmap (2024–2028), which creates space to strengthen education through early childhood and skills-focused reforms, and greater fiscal decentralization could help improve results. As AI reshapes the nature of work, the HDR underscores the urgency of cultivating critical, creative, and relational thinking—not just as technical skills but as part of a broader mindset shift toward adaptability, resilience, and lifelong learning in a workplace defined by big data and constant change.

Meanwhile, not to be ignored is AI’s outsize energy demand. Electricity use by data centers is projected to triple to 1,500 terawatt-hours by 2030, equaling India’s current demand. In the Philippines, only 2.41 gigawatt (GW) of the 29.23 GW installed capacity in 2023 came from wind and solar, despite vast potential. Unlocking this could cut electricity costs, the second highest in ASEAN after Singapore.

With the right approach, the Philippines can harness AI to enhance renewable energy planning and expand access, turning a challenge into an opportunity. The country has the talent, momentum, and institutional capacity to lead. Realizing this potential will depend on integrated policy, strong investments in human capital and innovation ecosystems.

Note: This excerpt is from UNDP Philippines’ recently published op-ed, Rising with the Machines: Harnessing AI for Human Development, featured in BusinessWorld.