Saudi Arabia at the threshold of an AI-driven renaissance –

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Since ChatGPT pushed artificial intelligence to the forefront of the global conversation in late 2022, AI awareness and adoption have surged. By 2030, AI is expected to contribute $320 billion to the Middle East economy – with Saudi Arabia alone accounting for $135 billion.

More than any digital revolution to date, AI has the potential to reshape nearly every sector, including government services and operations.

The applications of AI are nearly limitless and could empower the Kingdom’s public sector leaders with the tools and data to reimagine how they serve constituents, craft policies, and foster innovation.

Saudi Arabia at the threshold of an AI-driven renaissance

The benefits are clear – as are the opportunities that will emerge following careful orchestration of the country’s burgeoning AI ecosystem. Three essential AI opportunities stand out.

First, AI algorithms can assist in creating high-impact public policy, analyzing vast datasets to identify patterns and helping the government predict and proactively address societal needs, from healthcare and urban planning to economic diversification and tourism.

These capabilities would be especially welcome in Saudi Arabia. The Kingdom is currently ranked 58th in the Regulatory Quality Index, which measures a government’s proficiency in implementing robust policies and regulations to promote development within the private sector.

Second, AI could usher in an era of next-generation public services. Rather than entangling residents in bureaucracy, government agencies could harness AI-powered tools to handle a wide variety of routine enquiries, streamline processes, and offer guidance. Meanwhile, greater personalization and targeted communications could improve engagement and foster trust with constituents.

Last, it can help governments achieve dramatic productivity gains – a priority for Saudi Arabia, given steady declines in productivity over the past two decades.

By 2040, AI could free up the equivalent of 300,000 positions in the Kingdom’s public sector, and these workers can be upskilled in fields such as data science, data engineering, and broader AI-related disciplines. And given the intricacy of government operations, AI could be a catalyst for innovation and internal productivity, from automating mundane administrative duties to gleaning insights from data troves.

Creating an ecosystem

A robust AI ecosystem would be needed to ensure Saudi Arabia realizes the full promise of these technologies.

Incentives for AI investment
The center of government needs to develop a comprehensive AI policy and strategy and spearhead an AI capability-building program. It could support these efforts by deploying incentives to boost investments. These incentives could include tax breaks for AI-related businesses, research and development investments, grants or low-interest loans for AI research projects, and government-backed venture capital funds.

Startups could focus on core areas where the Kingdom already has an advantage and where localized products are critical to success.

Cloud opportunities
AI adoption at scale requires a substantial amount of high-quality data, ready access to advanced technology infrastructure, and scalable computing power. Since most cutting-edge AI platforms and services today are cloud-based, strategic partnerships with hyper-scale cloud providers are imperative for the Kingdom to ensure its AI ecosystem has sufficient access to best-in-class technology at affordable prices.

Microsoft intends to inaugurate a data center in the Kingdom, and Google recently announced the launch of Google Cloud Platform in the Kingdom. Saudi Arabia still has an opportunity to develop national champions in the computation space, particularly for data center solutions in sensitive sectors such as defense.

Partnerships with chipmakers
The chip design and manufacturing market is highly competitive and dominated by a few players. These industry leaders have extensive R&D capabilities and benefit from economies of scale, which create significant barriers to entry for newcomers. The Kingdom’s sovereign wealth fund could explore investment opportunities with these established leaders. Such partnerships would bolster its financial assets and ensure the Kingdom can shape the direction of the AI computing sector.

A renaissance

Saudi Arabia stands at the threshold of an AI-driven renaissance in government — one defined by more efficient processes, greater responsiveness, and data-driven policymaking. A centralized initiative to nurture an AI ecosystem can promote economic diversification, attract foreign investment, generate a vast array of new job opportunities, and spur innovation.

With these capabilities, Saudi Arabia can be better equipped to address critical challenges and identify opportunities in emerging sectors.

By making strategic investments in AI technologies and nurturing innovation, the Kingdom has the potential to accelerate its growth and development more broadly. Embracing AI now could help the Kingdom outpace potential regional and global competitors. There is no time to waste.

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