Artificial intelligence (AI)-poverty-economic growth nexus in selected BRICS-Plus countries: does the moderating role of governance matter?

Abstract

The BRICS nations (Brazil, Russia, India, China, and South Africa) aim to achieve Sustainable Development Goal (SDG) 1 (poverty eradication) and SDG 8 (sustainable economic growth), yet the moderating role of governance in artificial intelligence (AI)-poverty-growth nexus remains underexplored. Therefore, this study investigates the AI-poverty-economic growth nexus in selected BRICS-Plus countries (2012–2023), with governance as a moderating variable, using the Cross-Sectional Augmented Autoregressive Distributed Lag (CS-ARDL) technique. The results show a long-term equilibrium among variables, with unidirectional causality: (i) from growth to AI, and (ii) from AI to poverty and governance quality. The findings highlight AI’s transformative potential in tackling poverty and governance issues, with economic growth enabling AI advancements. This underscores the critical need to integrate AI within governance frameworks to address development challenges effectively. The short-run CS-ARDL results for the growth model indicate that AI and governance boost growth, though their interaction diminishes AI's impact. In the long-run, both sustain growth, with stricter governance moderating AI's potential. For the poverty model, AI increases poverty in the short-run, while governance reduces poverty by improving resource allocation and mitigating AI's impacts. The interaction between AI and governance highlights their role in moderating AI’s adverse effects. In the long-run, AI modestly worsens poverty, while governance alleviates poverty by promoting growth and redistributing AI-driven gains. The policy implications stress improving governance to balance AI’s economic benefits and mitigate poverty, emphasizing equitable resource allocation to harness AI’s potential for sustainable growth.