World Bank chief praises South Korea's future response fund amid AI investment shift

World Bank Group President Ajay Banga praised South Korea's plan to establish a future response fund, calling it "a good idea," while urging closer cooperation to share the country's digital development experience with developing nations. He also said he proposed to Samsung the idea of refurbishing used mobile phones for redistribution.

On the wave of large-scale AI data center investment by global tech giants, Banga said bond markets are raising questions about the viability of those business models, though he expects investment to continue for some time.

Speaking to reporters Monday at the Grand Hyatt Hotel in Yongsan-gu, Seoul, on the sidelines of the Global AI and Digital Summit, Banga said South Korea has been "a real beneficiary of the global data center boom" and that he is familiar with the future response fund proposal. "I think it's a good idea," he said.

"If you spend all the money you're making now and the situation around AI changes later, that money will all be gone," he said. "Building a fund to prepare for emergencies is, I think, the fiscally wise thing to do."

The summit, a World Bank Group event running Tuesday through Thursday in Seoul, focuses on job creation and expanding growth opportunities in developing countries through AI and digital technology. It marks the first time the event has been held outside Washington, D.C., drawing more than 900 participants from over 160 countries.

Banga also expressed support for the fund as a buffer against labor market disruption from the spread of AI. "I think it's inevitable that large language models and their applications will cause some degree of labor market disruption," he said, adding that estimates vary but that roughly one-third of jobs in high-income countries will be affected to some degree.

He said AI-driven productivity gains would ultimately create more jobs over the long term, but acknowledged that "there will be a period of adjustment before we get there."

He noted that labor is taxed more heavily than capital in many economies, meaning job losses would place a greater burden on governments to support the unemployed. "In that sense too, I think it's good that Korea is building a future response fund to prepare for difficult circumstances," he said.

On global AI investment, Banga flagged the possibility of a correction. "The investment big tech companies are making is currently concentrated in large-scale data centers," he said. "But bond markets are raising questions about whether the business models of those data centers are viable."

"Because this sector has grown so strongly, there will be a correction, and after that there could be a rebound," he said. "There will be some correction, but investment in this area will continue for some time."

Asked about the impact of the AI investment boom on Asian economies including South Korea, Banga recounted a conversation with Thailand's deputy prime minister. "Thailand, unlike Korea, is also benefiting from the AI boom — but I told them that where there's a boom, there will also be difficulties," he said.

Banga described the South Korean government as a key partner in the World Bank's digital strategy. Recounting his meeting with President Lee Jae Myung that day, he noted that what the World Bank calls "AI for the People," South Korea calls "AI for All." "We have the same strategy," he said.

He also highlighted South Korea's experience building digital public infrastructure, explaining that countries at any level of economic development can use such a foundation to expand services ranging from digital ID systems to administrative services. About 60 developing countries are currently pursuing similar efforts, he said.

Banga pointed to specific areas of cooperation. "There is a digital knowledge hub built in Korea with financial support from the Korean government," he said. "It is doing the work of sharing Korea's digital experience with other countries."

He also hinted at potential collaboration with Samsung. "When I met with Samsung, I shared the idea of whether there was a way to repair old phones and provide them, since phone prices are just too high right now," he said. With memory chip shortages keeping handset prices elevated in the near term, the thinking is that refurbishing used phones from developed countries for reuse in developing nations could help expand digital access.

The World Bank used the summit to launch its first global digital strategy, identifying four priorities: expanding digital access, reducing the cost burden of devices, promoting digital services, and building AI capacity. The bank noted that about 1.2 billion young people in developing countries are expected to enter the labor market over the next 10 to 15 years, while only about 420 million jobs are projected to be created — making productivity gains and job creation through digital technology essential.

"Two point two billion people around the world lack access to the internet, and 95 percent of them are in low- and middle-income countries," Banga said. The World Bank plans to expand digital access for a total of 1 billion people — providing broadband internet to 600 million and internet-based services to 400 million.

Banga also emphasized the role of "small AI" — lightweight applications that can be deployed in agriculture, education and healthcare without large computing resources. He cited an AI tool that evaluates Spanish pronunciation among elementary school students in El Salvador and an app that allows farmers in India to identify crop diseases using their mobile phones.

He said the share of jobs affected by AI would fall below 10 percent in middle-income countries and that low-income countries could see only positive effects with no negative impact on employment. In developing economies, he said, AI is more likely to assist teachers, farmers and healthcare workers than to displace them.

"If we don't take into account the needs of developing countries in the AI revolution, they could be left behind," he said. "We will not just look at the problem — we will act to solve it."