Artificial Intelligence, Welfare Transmission and Inclusive Development in the Asia‐Pacific: A Dual‐Pathway Framework

ABSTRACT

Artificial intelligence is transforming labour demand, productivity growth and industrial upgrading in the Asia‐Pacific region. Its developmental consequences depend less on whether AI automates or augments tasks than on whether productivity gains remain connected to household welfare and public finance. This article proposes a dual‐pathway framework in which inclusive development can be sustained either through labour‐mediated gains in wages, employment, skills and formal labour‐market participation or through fiscal‐mediated capture and redistribution of AI‐generated capital, data, platform, land and public‐asset rents. Synthesizing four strands of literature (task‐based technological change and AI exposure; generative AI, skills and workplace productivity; inequality, labour shares and welfare‐state finance; and Asia‐Pacific development, global value chains and state capacity), the article develops an organizing framework in which AI transition remains viable only when combined labour‐market and fiscal transmission covers adjustment costs. Transmission is summarized by a welfare‐transmission coefficient and the same condition is expressed in decoupling form through a Decoupling Index, the coefficient's complement, to compare economies in which productivity growth becomes detached from labour income and the tax base. China, Japan and Vietnam serve as illustrative anchors rather than standalone cases.