Mohieldin: AI Readiness, Not Just Being Clever, Will Shape Our Economic Future

Dr. Mahmoud Mohieldin believes that the global conversation about artificial intelligence has moved beyond just discussing its technical possibilities. Now, it's all about how well economies can adapt to the big changes this new technology is bringing to job markets, productivity, and competition. He stresses that the real challenge isn't just having AI tools, but whether countries and their institutions are truly ready to use them effectively. He warns that ignoring international indicators or downplaying their importance won't change the reality of the situation. In his article, Mohieldin highlights the main discussions from the annual conference of the Royal Economic Society in Newcastle, UK. AI was a top topic during the conference sessions, recognized as one of the most crucial global economic issues, both for its impact on the job market and its role in reshaping economies. The Future of Jobs Still Feels Uncertain The author points to what Nobel laureate economist Christopher Pissarides presented regarding AI's potential impact on the job market. He explains that current studies don't offer a definitive answer on the extent of this impact. There's a clear difference of opinion: some see AI as an unprecedented driver of growth and productivity, while others believe it could lead to a significant loss of jobs. He emphasizes that applied research remains the most accurate way to understand these changes, moving beyond overly optimistic or pessimistic predictions. Current findings show that workers are increasingly worried about their job futures and whether their skills match the needs of the new job market. Meanwhile, companies face the challenge of figuring out which AI applications truly add value to their operations. He adds that AI still plays a supporting role in most sectors. Deeper transformations are expected to emerge once we reach Artificial General Intelligence (AGI), which can transfer knowledge across different fields – a stage that hasn't been achieved yet. He also notes that studies on labor markets in the United States, China, and Europe indicate that job losses due to AI are still limited. However, some supporting professions, like accounting and legal services, have already started to see smart applications partially replacing certain tasks. Institutional Readiness Shapes a Nation's Place in the New Economy Mohieldin discusses the importance of indicators that measure AI readiness. He reviews a conversation he had with Professor Pissarides about how well the International Monetary Fund's (IMF) index aligns with the metric developed by Pissarides and his research team. He points out that both indicators rely on similar elements: human capital, labor market flexibility, digital infrastructure, investment in innovation, and governance. These are all considered essential for evaluating a country's ability to absorb technological transformation. He quotes Pissarides as confirming a strong alignment between the two indicators, with ongoing cooperation with the IMF to regularly develop and update these measurement tools. In this context, the author highlights that most Arab countries are still far from the leading positions in AI readiness indicators. This isn't just about technological infrastructure, but also concerns governance, data quality, regulatory frameworks, and rights protection. He believes that we need to approach these indicators realistically. If the results reflect reality, then the call to action is to speed up reforms and improve readiness components. However, if there are concerns about the measurement methodology or a lack of data, this should be openly declared and evidence provided, as some countries have done, instead of ignoring or downplaying the indicators. He stresses that being "clever" (or smart-alecky) or indifferent to international reports doesn't change the facts. In fact, it can weaken the trust of investors and international institutions in an economy. He affirms that addressing shortcomings begins with acknowledging them and then working to fix them. Will AI Widen the Development Gap? The author concludes his article by raising a question about the future of countries and regions that might be slow to adopt AI technologies. He wonders if the economic gap between them and more advanced economies will widen in the coming years. He presents several scenarios discussed in economic literature. These include redistributing income through taxes and social support, or exploring alternative economic models that leverage the comparative advantages of less technologically advanced countries. He cites the views of American economist Kenneth Rogoff on the future of European economies amidst competition from the US and China. Mohieldin concludes that the issue isn't about the technology itself. Instead, it's about a country's ability to spread its benefits, boost its economic efficiency, and develop its human capital. This way, AI can become a tool for fostering growth and economic justice, rather than a reason for the development gap between nations to grow wider.