Articles on Islamic Economics

Highlights of Human Development Report 2025


Muhammad Hammad

Artificial intelligence (AI) is advancing at a rapid pace. Yet as AI surges forward, human development stalls. Decades of progress, reflected in the Human Development Index, have flatlined, with no clear recovery from the blows dealt by the Covid-19 pandemic and subsequent crises. We are at a crossroads: while AI promises to redefine our future, it also risks deepening the divides of a world already off balance. Are we on the verge of an AI-powered renaissance—or sleepwalking into a future ruled by inequality and eroded freedoms?

This year’s Human Development report examines what distinguishes this new era of AI from previous digital transformations and what those differences could mean for human development (Chapter 1), including how AI can enhance or subvert human agency (Chapter 2). People are already interacting with AI in different ways at different stages of life, in effect scoping out possibilities, good and bad, and underscoring how context and choices can make all the difference (Chapter 3).

Human agency is the price when people buy into AI hype, which can exacerbate exclusion (Chapter 4) and harm sustainability. And, of course, who produces AI and for what matter a lot for everyone (Chapter 5).

Empowering people to make artificial intelligence work for human development

As artificial intelligence (AI) races ahead, the chapter turns the focus to people, not just to those who build AI, but to how people everywhere can use it to improve their lives. This is the most relevant question from a human development perspective.

Used in the right way, AI offers an opportunity to expand human capabilities. The chapter challenges unhelpful myths about AI replicating humans and calls for reimagining the relationship between people and this powerful new technology. Despite all the things that AI can do, it cannot replace human judgment.

Thinking beyond replacing humans reveals opportunities for AI to augment human development and enhance the unique contributions of human intelligence, including expanding human scientific and expressive creativity.

The vocabulary around AI often misleads, starting with the term “intelligence.” While useful for describing AI abilities, intelligence should not imply that machines are acquiring human traits. AI is not able to frame problems or act on its behalf. Because AI can do some things so well, some people assume that humans will not be needed to do those things. It was predicted in 2016 that within a decade, advances in AI medical imaging would lead to the disappearance of radiologists. Extrapolations along the same lines continue to posit that artificial general intelligence will leave no work for people.

From tools to agents: Rewiring artificial intelligence to promote human development

To artificial intelligence (AI), decisions are merely tasks to automate. Yet to humans, choice is the currency of agency and the affordance of freedom. As AI becomes integrated into our world, it raises the possibility of automating tedious decisions alongside the specter of inadvertently ceding human agency.

The consequences of carelessly ceding agency will be felt not just by individuals in moments but through cumulative consequences for collectives and cultures. Averting loss of human agency to machines requires going beyond a quest for more agentic models and instead favoring the development of AI that expands, rather than contracts, human choice, agency, and freedoms.

The rapid growth in AI’s capabilities, development, and deployment results in a similarly dramatic increase in how AI directly and indirectly learns from, interacts with, and affects the physical world. AI can be fed information from any internet-connected sensors monitoring and managing pandemics, as well as evaluating broader disease patterns. And the impact of AI in economic contexts is widespread.

Artificial intelligence across life stages: Insights from a people-centered perspective

People at each life stage use artificial intelligence (AI) with varying frequency and for different purposes, influenced largely by the institutions they are embedded in. Nearly half of students and a quarter of working people use AI-powered applications more than once a week, primarily for education and work. In contrast, only 15 percent of nonworking people and 9 percent of retired individuals do so, mostly for entertainment and health. These differences in frequency and purpose of use shape how AI affects people’s lives.

The life stage perspective reveals three policy imperatives—the “three I’s”—for advancing human development:

  • Invest in universal access to electricity, internet, digital devices, and the skills needed to use them effectively.
  • Inform people of the risks and opportunities of AI, enabling them to make informed choices about when and how to use it.
  • Include people of all ages, genders, ethnicities, and backgrounds in AI design and development, and bring firms into inclusive policy conversations on how to make AI work for people.

Framing narratives to reimagine artificial intelligence to advance human development

As the impact of artificial intelligence (AI) on human development remains uncertain, narratives can play a crucial role in shaping our choices. Rather than a techno-determinist narrative that assumes that AI alone will either solve all our problems or threaten the future of humanity, AI’s direction and deployment will be contingent on individual and collective choices.

Institutional and social choices can enable AI to expand people’s capabilities and agency, as illustrated through AI’s applications for people with disabilities, care systems, and gender equality, as well as in conceptualizing and mitigating AI bias. To do so, existing benchmarks to evaluate AI’s progress and safety should be complemented with ones that assess the impact on advancing human development.

Power, influence, and choice in the Algorithmic Age

Much of this Report focuses on the demand side of artificial intelligence (AI). This chapter shifts the lens to the supply side, asking what kinds of AI tools are developed, for what purposes, and by whom.

The chapter examines “power over” people: how AI producers and sometimes AI itself can affect people’s prospects (in positive and negative ways), alter their options (the choices they can exercise), or influence their beliefs and preferences (including what they value and have reason to value).

In this sense, algorithmic intermediaries are subtly shaping the fabric of society and influencing human relations and behavior in ways both profound and unseen. To examine in detail how AI “power over” is manifested, take the recommender systems widely deployed in web search and digital platforms. This type of AI is one of the most consequential ways that AI algorithms mediate and influence human relations, interacting with social, political, and economic processes, shaped by and shaping economic incentives, regulations, and social norms.

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