Analysis of AI's Economic Impact: UAE and Saudi Arabia Report, 2019

This report examines the economic impact of Artificial Intelligence (AI) on the United Arab Emirates (UAE) and Saudi Arabia, two nations heavily reliant on hydrocarbon reserves. The study, based on a report by The Economist Intelligence Unit, explores how these countries are adopting AI to diversify their economies and enhance productivity, particularly in the context of fluctuating oil prices. The report highlights strategies and policies implemented by both nations, including the appointment of AI ministers and the development of AI-powered cities, with substantial investments allocated to AI ventures. It analyzes the positive relationship between AI usage and economic growth, emphasizing the reliance on private consumption and public expenditure for GDP growth. The report also discusses the challenges and opportunities of AI implementation, including the need for data privacy, robust ethical frameworks, and the creation of an ecosystem to support research and development. The overall recommendation is to ensure a safe and consistent data supply to maximize the economic benefits of AI, addressing existing challenges in the oil and natural gas sectors and potentially predicting demand and detecting health issues. The report concludes that while the potential of AI is significant, successful implementation requires addressing key challenges to realize the desired economic contributions.

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United Arab Emirates (UAE) and Saudi Arabia are two countries that are well endowed
with large quantities of hydrocarbon reserves which grant them a significant place in the world
market as far as global and regional geopolitics are concerned. These two nations are dominated
by natural gas and oil as resources which contribute to about a third of their Gross Domestic
products (GDP). Although UAE and Saudi Arabia are endowed with abundant oil and natural
gas, they have failed to realize diversity in their economies, and as well their productivity
growths have been slow. The above is attributed to low levels of technology while extracting and
processing these abundant hydrocarbon reserves. Besides, the ever-fluctuating oil prices on the
world markets have also failed the two nations' attempts to realize desirable productivity growth
and diversity of their economies. To enhance the productivity and diversity of their economies,
UAE and Saudi Arabia are now adopting Artificial Intelligence to utilize available opportunities
in the world markets. Economist Intelligence Unit (EIU) estimates that UAE's and Saudi Arabia's
GDP growth rates are likely to average around 3.5% and 2.2% respectively between 2018 and
2030 during the use of AI (The Economist Intelligence Unit, 2019). The above projections by
EIU are depicted on the graph below.

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Both nations have devoted strategies and policies to help make use of artificial intelligence in the
exploitation of their abundant oil and natural gas resources. UAE made an appointment of a
minister for artificial intelligence and as well as publicized a national artificial intelligence
strategy. On the other hand, Saudi Arabia has stipulated a plan to have a city which is powered
by artificial intelligence in the desert. To execute the above plan, Saudi Arabia has set aside
US$100bn for establishing capital ventures that are focused firmly on artificial intelligence. Most
importantly, artificial intelligence and economic growth have a positive relationship in that a rise
in the use of artificial intelligence results in increases in economic growth. Also, absence or low
levels of artificial intelligence usage imply low levels of economic growth (The Economist
Intelligence Unit, 2019).
According to EIU, UAE and Saudi Arabia are both relying on private consumption for
enhancing their steady growths in GDPs. As such, half of Saudi Arabia's GDP and a third of
GDP growth in UAEs are attributed to private consumption. Public expenditure is another
element which contributes about a quarter to the growth of Saudi Arabia GDP. In regards to the

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UAE, net exports are contributing more significant than a third of its GDP. These contributions
have been categorized as unproductive growth because lowly endowed countries are realizing
considerable diversity and productivity of their economies as compared to UAE and Saudi
Arabia as leading oil exporters (The Economist Intelligence Unit, 2019). Therefore, UAE and
Saudi Arabia will need to heavily depend on private consumption as a tool to offset their low
rates of productivity growths as shown on the graphs below.
Although UAE and Saudi Arabia governments are solidly backing the use of artificial
intelligence as a way of boosting their productivity and diversifying their economies, the
economic impact of artificial intelligence remains unclear. Artificial intelligence is demonstrated
in the form of the ability to undertake automation, prediction, personalization, understanding,
and detection by an economy to boost its productivity. The ways mentioned above in which
artificial intelligence is demonstrated act as opportunities for countries to address existing
challenges in the oil and natural gas exploitation. In due course, UAE and Saudi Arabia have the
opportunity to make predictions demand of their hydrocarbon reserves and can as well detect

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health diseases and complications associated with their projects in the exploitation of these
natural resources (The Economist Intelligence Unit, 2019).
Although artificial intelligence will widen opportunities to both UAE and Saudi Arabia,
the road map of this tool is quite challenging. As such, creation of an ecosystem will be the
prerequisite for both nations to undertake research and development, address gaps in skills and to
as well sufficiently supply data about its projects. During the execution of the above processes in
ecosystem, elements of data privacy and robust ethical frameworks will need to be prioritized by
the two nations if at all desirable economic contributions of artificial intelligence are to be
realized. Moreover, failure to utilize data privacy and robust ethical frameworks will result in
wastage of resources from the use of artificial intelligence. The article recommends that both
nations should ensure safe and consistent data supply about applications that are making use of
artificial intelligence to diversify their economies in the future (The Economist Intelligence Unit,
2019).

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Reference
The Economist Intelligence Unit (2019).Scaling Up: The Potential Economic Impact of Artificial
Intelligence in the UAE and Saudi Arabia, p. 4 - 47