Invest wisely, double GDP
Industries in the United Arab Emirates (UAE) will invest $20 billion in the next three years on mobile-supported apps like artificial intelligence, the Internet of Things, blockchain, Fintech, robotics and the mobile infrastructure to support according to a new report by the Boston Consulting Group (BCG). Digital technology fuelled at least two thirds of the growth in national productivity in the past decade and will account for 25 per cent to 30 per cent of global gross domestic product (GDP) over the next decade, the report said. The UAE is well positioned to double the contribution of its digital economy to GDP to 19.4 per cent from 9.7 per cent within the next 10 years, according to a report in Emirates news site The National.
The government of the UAE recently unveiled a 10-year plan to double size of Dubai economy, which hinges on the country’s digital economy strategy, the global consultancy added. The UAE’s national digital economy is expected to surpass $140 billion in 2031, an astonishing growth rate from today’s estimate of around $38 billion, as reported by the Dubai Chamber of Digital Economy. His Eminence Omar Sultan Al Olama, Minister of State for Artificial Intelligence, Digital Economy and Remote Work Applications, Chairman of Dubai Chamber of Digital Economy, said that doubling the contribution of the digital economy to the UAE’s GDP from 9.7% to over 20% by 2031, reflects Dubai’s endeavours to establish itself as a key tech hub and leading global destination for digital companies.
The UAE Cabinet also approved the formation of the Higher Committee for Government Digital Transformation last year. Greater use of automation, robotics and a “historic explosion of data and intelligence in the coming years” present significant opportunity for unprecedented disruption and wealth creation in the UAE, according to the BCG report. “For government decision makers, the digital economy’s expansion carries major strategic implications,” it said.
Dubai is seeking to cement its position as a global capital of the digital economy and recently launched the ambitious Dubai Economic Agenda (D33) plan. The strategy aims to catapult the city into the world’s top cities by economic strength in the next 10 years and envisages a programme to support 30 private companies to achieve unicorn status, worth more than $1 billion (about €0.933 or Dh3.67 billion).
The D33 plan also unveiled Sandbox Dubai, a ringfenced area in which to harness the testing and commercialisation of new technologies and promote Dubai as a market-leading innovation hub, BCG said. “In a rapidly transforming world, new agile governance structures are required to prioritise considerations around how digital ecosystems can help various sectors grow,” Faisal Hamady, managing director and partner at BCG and co-author of the report, said.
“The digital sector’s multi-trillion-dollar expansion leaves leaders and decision-makers with only two options: adapt to its accelerating pace or be left behind. By considering how systems can change at the same pace as technology, governments can recalibrate the regulatory framework for a digital-first world.” This approach can help lead to the right investments in infrastructure, specifically in emerging value pools, to spur innovation and economic opportunity, said Hamady.
Policies must encourage investments in digital infrastructure and research and development into frontier technologies, such as AI and robotics. It’s vital that they create an environment for innovation that trains or attracts highly skilled and specialised talent, the report said. Collaborating with other public entities will align strategic priorities on digital inclusion, social prosperity and questions over digital ethics.
“For governments, the digital economy is not an elective. It marks a profound departure from the way that economies have historically been organised and regulated,” Hamady said, “tackling this brave new world head-on will prove essential to remaining competitive and relevant on the global scene.”