Emerging Markets Lead Global AI and Data Center Surge: A Paradigm Shift in Tech Geopolitics

June 15, 2025

As the AI race intensifies in the Global North, propelled by trillion-dollar tech empires and a wave of regulatory chess games, a quieter but equally consequential revolution is taking place in the Global South. No longer passive consumers of digital innovation, countries across Africa, Southeast Asia, and Latin America are becoming pivotal players in the global AI and data center boom. This shift—marked by major infrastructure investments, energy innovations, and AI policy realignments—is beginning to redefine the geography of global computation.

Based on recent data from the United Nations Economic and Social Council [1], over 70% of government officials in emerging markets expect AI to compensate for what the UN calls an “unprecedented slowdown” in productivity growth, driven largely by labor displacement, declining output per capita, and outdated industrial frameworks. This insight frames a growing realization that AI is not just a technology story—it is a development strategy.

For years, the prevailing narrative positioned emerging economies as passive recipients of Silicon Valley’s breakthroughs, adapting them through local lenses. Yet, the proliferation of large-scale AI infrastructure projects in countries such as Kenya, Malaysia, Vietnam, and Brazil suggests a role reversal. A prime example is Google’s recent $236 million investment in Malaysia to develop a hyperscale data center and AI hub—its second major investment in the country following a $2 billion commitment earlier in 2024 [2]. These developments are not isolated. In Kenya, Microsoft and UAE-based G42 are co-leading a $1 billion AI initiative powered by geothermal energy [3]. The project is being developed in conjunction with Kenya’s Ministry of Information, Communications, and the Digital Economy, and is expected to significantly enhance domestic AI processing capabilities while enabling low-carbon compute capacity for regional partners.

Consequently, the implications of these moves stretch far beyond technology. They represent a restructuring of the economic agency. Instead of outsourcing compute or data storage to the West, emerging markets are becoming foundational components of the global AI supply chain.

The Logic of Infrastructure: Why Data Centers Are Going Global

Despite widespread optimism in mature markets, the expansion of AI infrastructure in emerging economies is not solely demand-driven. It is cost-calibrated, energy-optimized, and politically incentivized. The increasing pressure on U.S. and European data grids, compounded by regulatory bottlenecks and mounting ESG compliance demands, is incentivizing multinational firms to deploy infrastructure where costs are low, power is green, and governments are welcoming. Based on industry estimates [4], data centers in regions such as East Africa, Southeast Asia, and Northern Latin America offer operational costs that are 30–50% lower than their OECD counterparts.

Moreover, favorable climate conditions—including Chile’s temperate valleys and Kenya’s high-altitude plains—allow for reduced cooling costs, which traditionally account for over 40% of a data center’s energy footprint [5]. The synergy between renewable energy and digital infrastructure is critical. Kenya, for instance, is leveraging its geothermal energy reserves in the Rift Valley to build scalable, green data ecosystems that could eventually service not only AI firms, but also regional health systems, digital ID programs, and agricultural prediction tools.

The emerging strategy across many of these nations appears to be two-pronged: increase domestic productivity through AI while exporting digital services to generate new revenue channels. In Vietnam, the government is subsidizing AI-driven language translation tools tailored to rural education systems, while also developing enterprise-level AI solutions for export to Japan and South Korea [6]. In Brazil, AI-based logistics and customs solutions are reducing port delays and finding customers in Europe, even as domestic agencies deploy AI to improve urban planning in favelas [7].

This dual mandate—local empowerment and global service delivery—redefines the role of emerging economies. Rather than chasing digital sovereignty as a defensive tactic, many are adopting it as a springboard. Based on findings from the AI Development Index 2024 [8], countries like India, Chile, and South Africa are now actively contributing to global AI research repositories and shaping open-source model architectures. It remains to be seen whether this momentum can be institutionalized through broader reforms in education, IP protection, and cross-border data frameworks.

Energy Sovereignty and the Geopolitics of Compute

If AI is the new electricity, then control over compute capacity becomes a matter of national resilience. Emerging markets, long vulnerable to energy dependency, are now leveraging this AI boom to assert energy sovereignty. Unlike Western economies where digital expansion often collides with fragile power grids and aging utilities, many developing countries are integrating AI planning with long-term energy strategies.

The geothermal-powered data center initiative in Kenya is emblematic of this trend. By anchoring AI capacity to renewable energy sources, countries can pursue digital expansion without compromising on climate commitments. According to projections from the International Energy Agency [9], by 2027, over 60% of new data center capacity in Sub-Saharan Africa will be powered by renewables. This not only satisfies ESG metrics sought by global investors but also builds domestic resilience against fuel shocks and currency volatility.

Economic Impacts: Beyond GDP, Toward Inclusive Digital Growth

While headline figures often highlight GDP boosts from AI adoption, the deeper impacts lie in how AI infrastructure redistributes opportunities. In India, AI development zones are being established in Tier II and Tier III cities, generating new employment corridors. In Nigeria, a pilot project is integrating AI training modules into vocational schools, with early results showing increased job placement in digital services. And in Indonesia, community-run data centers are emerging, managed by local cooperatives with state support.

Yet, it remains to be seen whether such models can scale without institutional reform. The risk of asymmetry—where foreign firms own infrastructure but locals remain mere users—persists. As such, regulatory capacity becomes as important as investment capital. African and Latin American countries are now working with international bodies to establish ethical AI standards, data localization policies, and public-private governance frameworks. Whether these efforts lead to lasting value capture or merely temporary growth blips will depend on how effectively national digital strategies can converge with local needs.

Conclusion: A New Atlas for AI Expansion

As 2025 unfolds, the map of AI power is redrawing itself. No longer confined to Silicon Valley, Beijing, or London, the epicenters of AI innovation are beginning to surface in Nairobi, Kuala Lumpur, Bengaluru, São Paulo, and Hanoi. These are not peripheral nodes but emerging command centers in a global computational economy.

Should the trend persist, emerging markets may not only host the infrastructure of the next digital era—they may shape its ethos. Whether it is through energy-smart data centers, community-first AI deployment, or multi-nodal governance models, the Global South is not merely catching up. It is charting a new course.

And while the jury is still out on whether these gains will translate into long-term sovereignty or remain proxies for multinational expansion, one thing is clear: the center of gravity in AI is moving.

Not west. Not east.

But south.

References

[1] OECD. 2023. “BUSINESS INSIGHTS on EMERGING MARKETS 2023.” https://www.oecd.org/content/dam/oecd/en/publications/reports/2023/10/business-insights-on-emerging-markets-2023_592e972e/8c17b199-en.pdf.

[2] Rosendar, Yessar. 2025. “Google Doubles down on Malaysia with $236 Million Data Center Deal Awarded to Gamuda.” Forbes. May 6, 2025. https://www.forbes.com/sites/yessarrosendar/2025/05/06/google-doubles-down-on-malaysia-with-236-million-data-center-deal-awarded-to-gamuda/.

[3]Microsoft . 2024. “Microsoft and G42 Announce $1 Billion Comprehensive Digital Ecosystem Initiative for Kenya – Source.” Source. May 22, 2024. https://news.microsoft.com/source/2024/05/22/microsoft-and-g42-announce-1-billion-comprehensive-digital-ecosystem-initiative-for-kenya/.

[4] World Bank. 2025. “Data Centers at the Core of Cloud and Data Infrastructure .” Https://Thedocs.worldbank.org/En/Doc/61714f214ed04bcd6e9623ad0e215897-0400012021/Related/9781464820656-Ch5.Pdf.

[5] UN Habitat. 2018. “ENERGY and RESOURCE EFFICIENT URBAN NEIGHBOURHOOD DESIGN PRINCIPLES for TROPICAL COUNTRIES Practitioner’s Guidebook.” https://unhabitat.org/sites/default/files/2020/06/gh046e_compressed.pdf.

[6] B&Company. 2025. “Increasing Cooperation between Vietnamese and Japanese Enterprises in the Field of AI – B-Company.” B-Company. May 21, 2025. https://b-company.jp/increasing-cooperation-between-vietnamese-and-japanese-enterprises-in-the-field-of-ai/.

[7] WCO. 2024. “How Brazil Transformed Customs Control through Artificial Intelligence and Other Technologies.” WCO News. 2024. https://mag.wcoomd.org/magazine/wco-news-105-issue-3-2024/brazil-ai-and-other-technologies/.

[8] Amazon. 2025. “Artificial Intelligence Index Report 2025.” https://hai-production.s3.amazonaws.com/files/hai_ai_index_report_2025.pdf.

[9]IEA. 2025. “AI Is Set to Drive Surging Electricity Demand from Data Centres While Offering the Potential to Transform How the Energy Sector Works – News – IEA.” IEA. April 10, 2025. https://www.iea.org/news/ai-is-set-to-drive-surging-electricity-demand-from-data-centres-while-offering-the-potential-to-transform-how-the-energy-sector-works.

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