The Economy 4.0 has emerged and is here to stay. It captures the imagination of many, and is a key theme of several conferences such as the World Economic Forum, the Islamic Development Bank’s Private Sector Forum, and the Dubai-based Annual Investment Meeting.
Big data, artificial intelligence (AI), robotics and blockchain have arrived and are here to stay. There is a race between countries and companies to provide platforms and create ecosystems to benefit from this innovation. These new technologies are disruptive and will change every aspect of our lives.
Facial recognition, for example, will be used for law enforcement, but also misused for sinister purposes. Algorithms already control our lives, be it on Facebook, Google, Amazon or eBay. Business has been quick to harness these new technologies, which have seen a real positive effect on their bottom line.
But there have been losers: The retail landscape has changed, and will probably be unrecognizable in the next decade or so.
What may be even more significant is how AI and algorithms shape business decisions. Automated trading systems are already vital in the commodities and currency space. The algorithms react to events and execute trades. Algorithmic trading of oil and other commodities is especially relevant in the US. It goes largely unnoticed under normal circumstances, but it can cause severe distortions when trading is thin and senior managers are out, like over the recent Easter break. When the price of Brent oil fell last Christmas, it was in part due to algorithms reacting to negative macro-economic news, thin trading and the holidays of senior staff who would have been authorized to override computer decisions. The slump had very little to do with the fundamentals in the oil market. But the kids were on watch and the algorithms in control.
We have seen similar incidents in the currency markets. The time window to watch there is in the wee hours of the morning, when markets in Europe and the US are still closed and only East Asia is open for business.
There is no stopping new technologies, be it in the trading room, in factories, on the high street or in government.
The Made in China 2025 strategy is designed for the country to become a leader in all things Economy 4.0 by that year.
Some countries are way ahead. The Made in China 2025 strategy is designed for the country to become a leader in all things Economy 4.0 by that year. One could argue that it is already there, given the advances in 5G and facial-recognition technology. The US-China trade dispute must in part be seen in the context fighting for who controls the technology of the future. We should, however, not discount the US quite yet. Its free-market economy has always been a catalyst for innovation.
How about the rest of the world? Arab Gulf states have been quick to understand the power of technological advances. Bahrain was one of the world’s first countries to create its own form of e-government.
The UAE is well advanced and launched a National Innovation Strategy in 2014. Its aim is to create an ecosystem that will allow the public and private sector to work together to foster innovation and economic progress.
Saudi Arabia’s Vision 2030 reform plan also pays tribute to these developments. Nowhere is Economy 4.0 more integrated into the planning of a future city than in the NEOM and Qiddiya developments.
There will be winners and losers in this global competition for technology, where today is basically already yesterday. Countries and companies will have to cooperate to create and apply these technologies. It will be up to the stronger economies and multilateral development institutions to ensure developing countries do not fall behind.
Employment will be an issue. Jobs will change, for sure, but the new economy will on balance create more jobs and opportunities than will be lost. However, it is up to governments and the private sector to ensure that the workforce of the future gets the education it needs to seize these opportunities. And it is upon regulators to ensure the technology is kept in check.
Cornelia Meyer is a business consultant, macro-economist and energy expert. Twitter: @MeyerResources
Disclaimer: Views expressed by writers in this section are their own and do not necessarily reflect Arab News’ point-of-view