The New Paradigm of Informal Economies Under GAI-Driven Innovation

Nagamatsu, A., Tou, Y., & Watanabe, C. (2025). The New Paradigm of Informal Economies Under GAI-Driven Innovation. Telecom 6 (2) p. 39. 10.3390/telecom6020039.

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Abstract

As globalization deepens, concerns over global fragmentation have intensified, accompanied by rising expectations that the Global South will emerge as a key driver of innovation, competitiveness, advanced markets, and high-quality employment. The widespread diffusion of the Internet and smartphones across developing countries suggests the possibility of leapfrog growth, highlighting the informal economy as a potential source of innovation. Recent developments in generative artificial intelligence (GAI) have further underscored the opportunity for collaborative engagement between developed and developing countries to awaken and harness sleeping innovation resources. This study investigates the dynamism of such international collaboration, focusing on digitalization-related challenges and its contributions to leapfrog growth. The interconnections among Internet usage, smartphone penetration, and economic development are examined, revealing the formation of a self-propagating cycle facilitated by GAI. A mathematical model is constructed to demonstrate the dependency of growth on sleeping resources inherent in the informal economy, which is empirically validated through data from nine African countries. Using the coevolutionary dynamics of Amazon and AWS as a conceptual reference, a novel framework is proposed for international collaborative utilization of sleeping innovation resources, offering new insights into GAI-driven innovation rooted in the informal economy.

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