jordan pulse -

By Prof. Khaled Wasif Al-Wazani
Professor of Economics and Public Policy
Mohammed bin Rashid School of Government

Since its early days, economics has recognised three main factors of production: land, labour, and capital. Yet, in the early 20th century, a fourth factor—entrepreneurship or organisation—was added through the contributions of Frank Knight and Joseph Schumpeter. Today, with the world witnessing deep technological transformations, it has become necessary to consider a fifth factor of production: artificial intelligence (AI).

Just as entrepreneurship was introduced to highlight the role of management, risk-taking, and innovation, AI now emerges as a key enabler that enhances the productivity and performance of all other factors. International institutions estimate that by 2030, AI could add around $15 trillion to the global economy—an amount comparable to the size of the European Union’s GDP. Studies also AI has already boosted total productivity in many industries by up to 60%.

The ongoing transformation is reshaping the structure of production across all sectors—industrial, agricultural, and service-based. AI has become a vital partner in decision-making, process simplification, supply chain management, and in forecasting markets through optimal data-driven applications.

However, two main challenges arise: ethics of use and labour market disruption. On ethics, several advanced nations have started to legislate for fair and transparent AI use. In 2024, the Council of Europe adopted a framework convention requiring AI to respect fundamental freedoms and the rule of law. The European Union passed an AI Act categorising applications by risk level, imposing transparency and accountability standards. Italy also introduced a comprehensive national law ensuring safe and transparent AI practices.

As for the labour market, AI technologies are replacing numerous traditional jobs, causing some roles to disappear while creating new ones that demand high-level skills in data analysis, algorithm design, and smart solution development. Emerging engineering fields such as data engineering, prompt engineering, and technical command design are now leading innovation across industries.

This transformation calls for a policy shift—not only to new jobs but to re-skill the existing workforce and reimagine the future of education at all levels: school, vocational, and university.

The key question remains: Where do Arab economies stand in all this? Will they remain consumers of global innovation, or will they become producers and exporters of AI technologies? The UAE, Saudi Arabia, and Qatar have already made progress by adopting national AI strategies, but the greatest challenge for the region lies in developing local human talent capable of innovation, not just operation.

Integrating AI into Arab economic systems could enhance diversification and open new horizons for competitive knowledge industries. To achieve that, governments must re-engineer their priorities—investing heavily in quality education, allocating real budgets for research, and empowering startups in the AI sector.

AI is no longer a luxury—it is a core production driver, a defining element of global competitiveness. Those who fail to invest in it today may find themselves marginalised in tomorrow’s global economy.

The Arab world has the youth and knowledge resources to lead this transformation—but it must decide whether it will continue exporting talent, or become a region that empowers, attracts, and benefits from it.