AI boosting services exports, says World Bank economist

South Asia Chief Economist Franziska Ohnsorge flags India’s low net FDI flows

- VIKAS DHOOT

India’s computer services exports have risen 30 per cent since the advent of ChatGPT in November 2022, even as overall services exports have plateaued, World Bank’s South Asia Chief Economist Franziska Ohnsorge said.

She said Artificial Intelligence (AI) and the conclusion of more trade agreements, which can trigger a “manufacturing renaissance”, are the two big investment opportunities for India in coming years.

‘Although private investments in India have slowed down since the pandemic, they are still growing faster than other developing countries, but weak net foreign direct investment (FDI) flows are a concern, Ohnsorge indicated, noting that India’s FDI to GDP ratio has been low for a while and is well below other emerging markets.

‘Urging India to open up trade barriers and lower tariffs to enhance its market access from 12 per cent of GDP to about 50 per cent that many of its rivals have attained, Ohnsorge said this could trigger a manufacturing boom, and create more jobs for India’s youth to move them out of low productivity occupations like agriculture.

“The world is big... even if onetrading partner is becoming less accessible, others may become more accessible with trade agreements,” the economist said, referring to the US’ 50 per cent tariff on Indian goods imports and the country’s drive to secure trade deals with EU, Canada and other nations.