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Thu 8 Feb 2018 05:43 PM

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Why the UAE and Saudi see artificial intelligence as an investment in the future

The UAE and Saudi Arabia are placing themselves at the forefront of the fourth industrial revolution through their investments in artificial intelligence

Why the UAE and Saudi see artificial intelligence as an investment in the future

The UAE and Saudi Arabia can be the key drivers of artificial intelligence (AI) as the science continues to transform the way governments and business operate – that’s the view of a new report from PwC Middle East.

AI, it says, could potentially contribute up to $15.7 trillion to the global economy in 2030 – more than the current output of China and India combined.

Of that, $6.6trn is likely to come from increased productivity, with $9.1tr from consumption side effects.

Nowhere is the shift towards AI more evident than in the Middle East, especially the Gulf. The report notes that governments in the Middle East “are beginning to realise the shift globally towards AI and advanced technology. They are faced with a choice between being a part of the technological disruption, or risk being left behind.

“The development of non-oil sectors through investment in AI technologies could strategically position the region for years to come,” it adds. “The world is moving towards AI and, in these early stages of development, there is a huge opportunity for the region to become a key player in driving the global agenda.”

Analysis by the International Data Corporation (IDC) estimated that spending on AI and cognitive intelligence systems in the Middle East and Africa will grow from $37.5m in 2017 to over $100m by 2021, representing a compound annual growth rate (CAGR) of 32 percent.

“The UAE and Saudi Arabia in particular have demonstrated strong commitment towards the development and implementation of AI technologies,” the report notes. “Businesses in this part of the region have been investing heavily in new technology, supported by governments as early consumers of the technology.”

AI in the UAE

As the report notes, UAE’s government has made AI a crucial part of its long-term strategic planning, a fact highlighted by the appointment of Omar bin Sultan Al Olama as the first Minister of State for AI in October 2017.

The government has already identified a number of sectors in which it plans to implement AI technology. They include Comae Technologies partnering with the Dubai Police to develop AI-based forensics solutions, and Alpha Systems Group developing an autonomous digital mobile booth which is designed to replicate doctors’ surgeries.

“The UAE’s dedicated strategy towards AI and its initiatives to support the development of technologies places it in a strong position to develop itself as one of the leaders for AI in the region, and quite possibly the world,” the report adds. “The government has demonstrated its commitment towards AI development in the country.”

AI in Saudi Arabia

While Saudi Arabia has no official AI strategy in place, the report notes that the technology may well have a role to play in the digitisation efforts outlined in Saudi Vision 2030 and the National Transformation Programme 2020.

“While there is some investment in AI in Saudi Arabia, supported by a commitment by the government to digitally transform the country, investment is largely driven through domestic sources, in particular the country’s Sovereign Wealth Fund,” the report says.

“In order to maintain momentum in the pace of technological advancement in the country, there is a need for it to attract more foreign investment.”

Economic Impact of AI

AI will have a significant impact both on the production side – labour productivity through automation – as well as on the consumption side, with AI impacting product enhancements such as personalisation as well as increased time available for leisure or work.

As a result, PwC believes AI will contribute $96bn to the UAE’s GDP in 2030, accounting for 13.6 percent of total GDP. In Saudi Arabia, AI is expected to contribute $135.2bn by 2030, or 12.4 percent of GDP, a figure which is largely a reflection of its large market and global reach.

“The emerging government focus on AI [in Saudi Arabia], combined with its size, create a strong potential for the country to become an AI leader in the region through attracting the right investment,” the report notes.

While compared to Saudi Arabia, the UAE has a significantly smaller domestic market, the report notes that the country’s existing – and ample – R&D infrastructure, combined with the ease of doing business in the country and the overall readiness of consumers to adopt AI, allow it to attract considerable investment in AI-based technologies.

“The need to innovate in order to maintain its competitive edge also provides the UAE with strong incentives to invest in AI,” the report adds. “The resulting push towards AI from the government, and the scale of investment it is therefore able to attract implies that the short term gains from AI are potentially larger in the UAE compared to the rest of the region.”

Notably, the report notes that the contribution of AI to the UAE and Saudi GDPs is roughly comparable to that of North America [14.5 percent] and Southern Europe [11.5 percent].

The impact on labour

According to a statistics from the Harvard Business Review, 46 percent of jobs in Saudi Arabia and 47 percent of jobs in the UAE are susceptible to automation, which will require government policies aimed at increasing human capital to counter the risk of AI-related job loss.

“While the imminent disruption driven by the fourth industrial revolution creates a challenge for labour markets, it also creates a massive opportunity,” the report says.

“Job automation is not synonymous with unemployment as it can also generate jobs in specialised sectors. Furthermore, increases in labour productivity and consumer choice resulting from AI adoption can boost overall economic output which can again generate additional jobs.”

Given the speeds at which AI technology is progressing – and the region’s overwhelmingly young and tech-savvy population – it seems certain that the significant economic benefits that can be reaped from AI will far outweigh any societal concerns.

The Economic Potential of Artificial Intelligence in the Middle East will be published by PwC this week.

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