OpenAI is an American artificial intelligence company that has recently collected $100 billion in investment from the world’s leading chip company, Nvidia. OpenAI will likely spend a similar amount on Nvidia chips as they plan to expand their facilities. The combination of this investment and lucrative business model has formed a successful path for OpenAI, as the company expects revenues to increase by 1000% by 2029.



The unequal growth of AI worldwide is forming “AI Poverty Traps” in LEDCs. Poverty Traps are defined as “any linked combination of barriers to growth and development that forms a circle, thus self-perpetuating unless the circle can be broken” (IB Economics, 2020, Oxford Edition, pg. 454). In simple terms, poverty or a lack of resources in one area, such as low incomes, causes a domino effect in other aspects, ultimately ‘trapping’ an economy from developing. Poverty traps were constructed by Ragnar Nurske in 1953 to demonstrate the difficulties faced by LEDCs in economic development. 



Now that we know what poverty traps are, how is AI feeding into this issue? AI's rapid development and limited accessibility are expected to exacerbate the inequality between MEDCs and LEDCs, as 60% of LEDCs lack the digital infrastructure needed to support AI on a national level. Since developed nations can afford to invest in and benefit from AI technology, they continue to develop at a rapid pace. Whilst, LEDCs lack of tech structures could “lock their entire economies” as they have to rely on technology from MEDCs, hence creating what scholars have defined as “AI Poverty Traps.”



One of the reasons LEDCs struggle to expand in AI is that it requires tech structures such as high-speed internet, which demands significant investment at a national level. Telecommunication companies, such as T-Mobile, play an essential role in reducing the inequality formed by AI. Investment in tech structures in LEDCs could expand the market and customer base available to Telecom companies, whilst striving for equitable development. Ultimately, the Telecom companies investments could save LEDCs from falling behind in development, however, due to these investments being high risk, many Telecom companies are reluctant to invest. Therefore, the government or other organisations will have to figure out other policies or techniques that will assist LEDC’s tech development. 



References:

Blink, Jocelyn, and Ian Dorton. 2020 Edition Economics Course Companion. Oxford IB Diploma Programme, 2020.

Evans, Brandon. “OpenAI expects revenue to balloon nearly 1000% by 2029: report.” Seeking Alpha, MSFT, 23 April 2025, https://seekingalpha.com/news/4434288-openai-expects-revenue-to-balloon-nearly-1000-percent-by-2029-report?source=acquisition_campaign_google&campaign_id=23048715531&internal_promotion=true&utm_source=google&utm_medium=cpc&utm_campaign=23048715531&adgroup_. Accessed 11 October 2025.



Shamim, Thorakkal. Nurkse's model of vicious circle of poverty theory: Is it applicable for dental profession in India, 10 March 2022, https://pmc.ncbi.nlm.nih.gov/articles/PMC9051713/. Accessed 11 October 2025.



Wheeler, Kitty. “Why Google and OpenAI’s Dominance Risks AI Poverty Traps.” AI Magazine, AI Magazine, 19 June 2025, https://aimagazine.com/articles/google-openai-risk-deepen-ai-poverty-traps. Accessed 11 October 2025.