AI and Digital Public Infrastructure: A New Beacon for Inclusive Growth in Pacific Island Nations

Across the vast South Pacific, the ancestors of island nations once relied on the patterns of stars, winds, and ocean waves to chart sea routes across a maritime expanse of roughly 30 million square kilometers. Through observation, experience, and collective coordination, they achieved some of early humanity's most astonishing long-distance migrations. Hundreds of years later, as digital technologies reshape the depth and breadth of the global economy, the Pacific island countries once again stand at the starting point of a new voyage. A newly released report by the Observer Research Foundation (ORF), *Navigating by New Stars: AI and DPI as the Pacific's Wayfinding to Inclusive Growth*, points out that the convergence of artificial intelligence (AI) and digital public infrastructure (DPI) could become the "new stars" guiding these countries toward inclusive growth. But the report also warns that if the traditional supply-side model of "build connectivity first, then wait for applications" is followed, digital transformation in the Pacific is destined to continue stalling.

I. The Pacific's Digital Transformation Predicament

The Pacific Island Countries (PICs) consist of 14 sovereign states, geographically extremely dispersed, spanning thousands of kilometers from Papua New Guinea to the Cook Islands. The region has more than 700 languages and a deep tradition of community self-governance, yet population sizes are generally small, with some countries having fewer than 100,000 permanent residents. These characteristics—"small, scattered, numerous, and diverse"—make many digital solutions that work well in large economies ill-suited to local conditions.

The ORF report characterizes the current digital development predicament as a "pilot paradise, scaling hell": numerous digital projects funded by international aid agencies or development banks have completed proof-of-concept, yet few systems can be replicated and scaled across different countries. The reason is that most projects start from the technology supply side—first laying optical cables, building data centers, and distributing devices—and then assume that local users will naturally adopt them. However, in the absence of application scenarios, local-language support, and community participation, infrastructure often degenerates into "idle assets."

The report argues that the real problem is not insufficient connectivity but "value misalignment." Digital development must begin with the social and economic goals ultimately to be achieved, then work backward to determine what digital infrastructure, data governance rules, and application services are needed. This value-driven methodology is precisely derived from the islanders' traditional "wayfinding"—not relying on fixed maps, but constantly adjusting the course according to the target direction.

II. AI + DPI: A Regional-Level Institutional Innovation## II. AI+DPI: A Regional-Level Institutional Innovation

Digital public infrastructure generally refers to foundational digital services such as identity authentication, payment and remittance, and data exchange. These platforms have the attributes of public goods. If designed jointly at the regional level, they can not only avoid the high costs of each country developing its own separately, but also achieve cross-border interoperability through unified standards. The ORF report emphasizes that superimposing artificial intelligence on DPI can further solve the language and service challenges of the Pacific — AI-driven translation, speech recognition, and automated content generation can enable government services to cover hundreds of local languages, allowing residents of remote islands to access public services equal to those in cities, without having to wait for commercial institutions to enter for profit.

From an economic perspective, the appeal of this model lies in its combination of "shared scale" and "sovereign autonomy." Fourteen countries sharing a single core platform can significantly reduce each country's per capita construction and operation costs; at the same time, countries still retain control over data sovereignty and policy-making. This is especially consistent with the Pacific island countries' demands in recent years regarding digital sovereignty — they do not want to become data colonies of foreign tech companies or major powers.

The report also suggests that the integration of AI and DPI can create demand for local professional talent, rather than outsourcing technical work to external vendors on a long-term basis. When the shared platform operates, countries will need new types of positions such as data analysts, AI trainers, and multilingual corpus curators, which will cultivate new high-value-added sectors for island economies that have traditionally relied on tourism and fisheries.

III. Regional Implications: What It Means for Australia, New Zealand, and the Wider Oceania

From the perspective of the regional economic landscape, the digital transformation of Pacific island countries cannot occur in isolation. Australia and New Zealand, as the two developed economies in Oceania, have deep historical, trade, and security ties with the island countries. If the island countries build a regional data network with DPI as its cornerstone, the aid and trade structures of Australia and New Zealand will undergo significant adjustments.

First, the focus of aid may shift from physical infrastructure to digital governance capacity building. Over the past decades, Australian aid to Pacific neighbors has invested heavily in hard projects such as ports, airports, and roads. If DPI becomes a new generation of public infrastructure, Australia and New Zealand should consider supporting regional identity trust frameworks, cross-border data flow rules, and cybersecurity emergency response systems. This is not only a contribution to the development of neighboring countries, but also helps sustain the geo-economic influence of Australia and New Zealand in the Pacific region.

Second, the trade structure will change. Digital services trade is already common among developed countries, but Pacific island countries have long been absent from it. A shared DPI can extend services such as telemedicine, online education, and digital marketing to the island countries, so that service exports no longer depend on the physical movement of people. Fintech and data security companies in New Zealand and Australia can also participate in platform construction in a compliant manner, forming new commercial links.Of course, regional cooperation is not without challenges. Countries differ in their degree of informatization, their legal frameworks are uneven, and their data governance capacity varies. How to formulate unified interoperability standards while preserving each country's flexibility will be a core challenge in regional negotiations. The ORF report points out that, if mishandled, DPI could repeat the mistakes of past aid projects—being hijacked by external resources rather than empowering local communities. Therefore, regional cooperation should be led by the island states themselves, with Australia, New Zealand, and other partners providing technical, financial, and knowledge support rather than making decisions on their behalf.

IV. Long-Term Trends: From "Digital Aid" to "Digital Community"

Looking ahead three years, Pacific island states are likely to first launch several small-scale, high-value DPI pilots, such as establishing data-sharing mechanisms for disaster early warning, public health, and agricultural technology extension. These are areas where pain points are most acute and early results are most easily achieved. In three to five years, if the pilots demonstrate clear benefits, a regional digital identity and payments layer is expected to take shape, giving rise to cross-border e-commerce and digital services markets. On a five-to-ten-year horizon, if the Pacific can successfully navigate this path, its significance will far surpass the region itself—it will become a breakthrough for small states to gain a voice in international digital governance.

The report specifically cautions that the fairness and accessibility of AI systems need to be embedded in governance structures from the very beginning. If training data does not include local languages, AI will only amplify rather than reduce inequality. Historical experience shows that technology upgrades that cannot be embedded in local governance logic often merely repeat old problems in new forms.

For observers of the Oceanian economy, the real point of interest in the Pacific digital transformation lies not in how new a technology is, but in whether it can connect the region's long-fragmented economies more closely. Once digital infrastructure is built, its spillover effects will permeate every field—tourism, fisheries, energy, climate finance, and beyond—becoming the foundational framework for future regional economic growth.

Conclusion

From traditional wayfinding to digital wayfinding, what Pacific island states need is not to catch up with developed countries, but to find their own course. AI and DPI offer promising navigation tools, but they are only tools. The true direction comes from the island states' own pursuit of inclusive growth and their capacity for regional collective action. The ORF report's insight is that the starting point of digital transformation should not be infrastructure, but the lives people want to lead. If Oceanian countries can reach a consensus on this point, the Pacific's economic narrative will be completely rewritten.

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*Source: Alok Gupta, "Navigating by New Stars: AI and DPI as the Pacific's Wayfinding to Inclusive Growth", ORF Issue Brief No. 892, Observer Research Foundation, August 2026. Link: https://www.orfonline.org/research/navigating-by-new-stars-ai-and-dpi-as-the-pacific-s-wayfinding-to-inclusive-growth*