By: Prof. Khalid Wasif Al-Wazani
Jordan Daily – Since very early days, economics has recognized three main factors of production: land, labor, and capital. With the beginning of the 20th century, a fourth factor was added, organization or entrepreneurship, through the contributions of Frank Knight and Joseph Schumpeter.
Today, however, the global economy is witnessing profound technological transformations that justify the addition of a new factor of production: Artificial Intelligence (AI). Just as the inclusion of organization reflected the importance of managing and coordinating resources, handling risks, and fostering innovation, AI now plays a similar enabling role, boosting the productivity and performance of all the previous factors of production.
According to international institutions, AI is expected to add nearly 15 trillion USD to the global economy by 2030, an amount equivalent to the output of a major economy the size of the European Union.
Studies indicate that AI has already increased total productivity in several industries by up to 60%. This represents a structural transformation in the production process across industrial, agricultural, and service sectors, where AI has become a vital partner in decision-making, process simplification, supply chain management, and market forecasting.
However, the integration of AI into production raises two major concerns: ethics and labor market disruption. In ethics, many advanced economies have already begun introducing legislation to ensure fair and transparent AI use. In 2024, the Council of Europe adopted a framework convention requiring AI applications to respect fundamental freedoms and the rule of law. The European Union also passed the AI Act, which classifies AI applications by risk level and imposes obligations of transparency and accountability. Meanwhile, Italy has passed a comprehensive national law to regulate AI in a safe and transparent manner.
As for the labor market, AI technologies are displacing many traditional jobs across sectors. Yet, new jobs are also emerging, requiring advanced skills in data analysis, algorithm programming, and smart solutions development. Emerging fields such as data engineering, prompt engineering (designing and refining AI inputs and instructions), and technical input engineering are increasingly shaping the future of work. This shift challenges public policy, not only to create new opportunities but to re-skill the existing workforce and reorient education systems at all levels, schools, vocational training, and universities, towards the needs of the future.
For Arab economies, the critical question remains: will they remain passive consumers of AI technologies, or will they evolve into active producers and exporters of AI solutions? While the UAE, Saudi Arabia, and Qatar have taken significant steps by adopting national AI strategies, the larger challenge is to build local human capital capable of innovation, not merely operation. Integrating AI into the Arab production system can enhance economic diversification and open pathways for globally competitive knowledge industries.
To achieve this, governments must intensify investments in quality education, allocate real budgets for research and development, and empower startups in this domain. AI is no longer a luxury or an optional tool, it has become a fundamental enabler of all factors of production. Those who fail to invest in it today may find themselves on the margins of tomorrow’s global economy.
The Arab world, endowed with youth potential and a rich knowledge base, is well, positioned to benefit. But it must decide: will it continue to be a brain drainer, losing brightest minds abroad, or a brain gainer, attracting, and benefiting from them at home?
Khalid Al Wazani is Professor of Economics & Public policy at Mohammed Bin Rashid School of Government (MBRSG), he holds over 33 years of active participation in academic, public service, government, and private sector positions. He can be reach at khwazani@gmail.com .
