Europe lagging behind the Global South in AI adoption, OECD report
The OECD's latest AI Policy Observatory report, published in January 2026, paints a sobering picture for European technology leaders. While the EU has focused heavily on regulation — most notably the AI Act — countries in Southeast Asia, Latin America, and Africa have been quietly deploying AI at scale across financial services, agriculture, and public health.
The numbers
The report surveyed 4,200 enterprises across 38 countries. Key findings include:
- 47% of enterprises in the Global South have at least one AI system in production, compared to 31% in the EU
- Average time from AI proof-of-concept to production deployment: 4.2 months (Global South) vs. 11.8 months (EU)
- AI investment as a percentage of IT budget: 18% (Global South) vs. 12% (EU)
The paradox is clear: Europe writes the rules for AI, but it's the rest of the world that's building with it.
Why the gap?
The report identifies three structural factors:
1. Legacy infrastructure burden
European enterprises, particularly in financial services, carry decades of technical debt. Mainframe systems, on-premise data centers, and monolithic architectures create friction for AI deployment. Meanwhile, companies in Kenya or Indonesia often build on cloud-native stacks from day one.
2. Regulatory caution vs. regulatory clarity
The EU AI Act, while well-intentioned, has created a chilling effect on experimentation. Companies report spending 6–9 months on compliance assessments before deploying even low-risk AI systems. By contrast, countries like Singapore and Brazil have adopted "sandbox" approaches that let companies experiment under light supervision before full regulation kicks in.
3. Talent distribution
Remote work has equalized access to AI talent. A machine learning engineer in Nairobi or São Paulo costs 40–60% less than one in Berlin or Paris, with comparable skill levels. The Global South is also producing more AI graduates per capita, driven by massive investments in STEM education.
What European companies can do
The report doesn't suggest that Europe abandon its regulatory leadership. Instead, it recommends a dual-track approach:
- Accelerate compliance tooling — Invest in automated AI auditing, model cards, and governance platforms that reduce the friction of responsible deployment
- Adopt progressive deployment — Use staged rollouts with built-in monitoring rather than waiting for perfect compliance before any deployment
- Build global AI teams — Leverage distributed talent pools rather than competing exclusively for local talent in overheated European markets
The message is clear: regulation without execution speed is a competitive disadvantage. Europe needs both.
