The past few years have witnessed growing interest in Artificial Intelligence (AI) technologies by several governments in the Middle East and North Africa. Enthusiasm about AI’s economic potential is especially high, with a recent study estimating that AI could potentially contribute $320 billion to the economies of the region by 2030.
However, such forecasts remain speculative and highly uncertain. Should AI technologies impact economic development as projected, the benefit is likely to be unevenly distributed. Countries such as the United Arab Emirates (UAE) and Saudi Arabia, which are currently investing heavily in such technologies, are poised to outpace others in the region. The countries lagging behind are likely to be those grappling with debt and socioeconomic crises, and those vulnerable to shifting regional labor market dynamics in the region.
Should AI become an important driver of economic growth and development in the future, regional inequality is likely to worsen, deepening existing regional imbalances and accelerating the geopolitical reconfiguration of the Middle East and North Africa in favor of the Gulf Cooperation Council (GCC) states. The latter, in particular the UAE and Saudi Arabia, have taken the lead in investing in AI technologies and cultivating the relevant infrastructure and ecosystems. These efforts are integral to their economic diversification strategies, which aim to reduce their dependence on oil and gas and vary their revenue streams. Beyond diversification, these countries’ goal is to emerge as global AI centers that influence norms, control data, and wield technological soft power.
In 2019, the UAE adopted its National Strategy for Artificial Intelligence 2031, with the key objective of positioning itself as a global leader in the field. The strategy aims to enhance the competitiveness of the Emirati AI industry, establish an innovation incubator, develop talent for future jobs, attract research and development capabilities, and strengthen governance, among other things. As part of its efforts to institutionalize AI and drive its integration across different governmental sectors, the UAE appointed its first-ever minister of state for AI, digital economy, and remote work applications in 2017. There followed the appointment, in 2024, of 22 chief AI officers to key government branches, such as the police, transport, and electricity.
The UAE has also been heavily investing in AI as part of its efforts to foster an innovation ecosystem and lead globally in tech innovation. In February 2024, the UAE unveiled a $500 million program to promote research and development in AI and other emerging technologies. In March 2024, it launched an AI investment firm, MGX, to advance investment in AI infrastructure, semiconductors, and related technology. The UAE’s proactive approach in developing a robust AI infrastructure and technology has made it an attractive destination for foreign direct investment. In April 2024, Microsoft announced a $1.5 billion investment in G42, a technology group established in Abu Dhabi, underscoring the UAE’s appeal as a trusted AI hub. Further cementing the UAE’s ambitions was the U.S.-Emirati agreement during President Donald Trump’s May 2025 Middle East visit to build the largest AI campus outside the United States, which will be located in Abu Dhabi.
Like the UAE, Saudi Arabia has been seeking to become a global player in tech innovation and AI. In 2019, it established the Saudi Data and Artificial Intelligence Authority to implement the AI-related goals of Vision 2030 (a national economic diversification plan) and promote public-private partnerships for the development of the technology. As part of Vision 2030 and its National Strategy for Data and AI, Saudi Arabia aims to deploy AI technology across the country, create an attractive AI ecosystem for international companies and startups, and train the local workforce in its use. The main sectors targeted for AI adoption and investment include healthcare, public administration, transportation, education, and energy.
To achieve these goals and assert itself as a prominent player in AI, Saudi Arabia announced $14.9 billion in AI investments at the LEAP Tech conference in 2025, with most funding directed toward infrastructure and startups. The Public Investment Fund also launched Humain, a state-owned AI company, which later entered into a strategic partnership with Amazon Web Services to build advanced data centers and develop Arabic-language AI tools. Humain was able to reach a deal with Nvidia to purchase 18,000 of its newest AI chips to power a planned megadata center in Saudi Arabia.
In contrast to Saudi Arabia and the UAE, lower-income states in the Middle East and North Africa, including Egypt, Jordan, Lebanon, Algeria, and Morocco, have lagged behind. Yet these countries acknowledge the importance of AI for the future, with some having made efforts to develop relevant strategies. For example, Egypt, which is seeking to become Africa’s main innovation hub, adopted a National AI Strategy in 2019 and established a National Council for AI in the same year, with a focus on training its workforce and using AI as a driver for the country’s future development. For its part, Jordan has developed an AI Strategy and Implementation Plan (2023–2027), and Jordanian banks have established a $388 million investment fund to invest in emerging firms in a wide range of sectors, including information technology and AI. Other countries, such as Algeria and Morocco, have been trying to integrate AI into their national education plans and are putting more emphasis on research to enhance their AI competencies.
However, despite such efforts to promote AI development, lower-income Middle Eastern and North African countries remain severely restricted by their debt crises, budgetary constraints, inflationary pressures, electricity and energy limitations, structural economic weaknesses, and largely unstable political environments. This makes it much more difficult for them to build the necessary innovation ecosystems and regulatory environments, which require a robust infrastructure, a skilled workforce, and heavy investments. These countries also face challenges from the growing migration of their tech talent and emerging start-ups to countries such as Saudi Arabia and the UAE, to which they are lured by financial incentives, well-established innovation ecosystems, stability, and more robust regulatory environments.
The significant disparity in AI adoption and investment between GCC countries on the one hand and low- and middle-income Middle Eastern and North African countries on the other could potentially affect economic dynamics in the region. Although the long-term economic impact of AI remains uncertain, if it proves transformative, existing economic gaps in the region are likely to widen. This would have implications for regional power balances.
The economic disparity between GCC countries and other Middle Eastern and North African countries is likely to widen through two key channels, although the dynamics are complex and not exclusively negative for lower-income countries. The first channel of widening disparity is through the movement of capital and the likelihood that GCC countries, especially Saudi Arabia and the UAE, will attract more investments to finance capital and tech accumulation, given that they have well-established AI technologies and infrastructure. In fact, although these countries face skills gaps and regulatory hurdles, their vast financial resources and digital infrastructure still give them a decisive edge over their lower-income neighbors in attracting capital.
The concentration of capital and AI technologies in GCC states, coupled with increased investment flows into their midst, could lead to more geography-specific AI growth. This would further widen the economic gap between GCC countries and other Middle Eastern and North African states. Meanwhile, while lower-income countries in the region may manage to improve government services, healthcare delivery, and agricultural productivity through the adoption of foreign-developed AI systems, the scale of economic transformation is likely to be modest compared to the GCC countries’ potential gains. This is especially the case given lower-income countries’ limited access to investment capital, their poor regulatory frameworks, and severe budgetary constraints that significantly restrict their ability to secure the required resources to invest in robust AI infrastructure.
The second channel through which regional inequality may worsen is labor displacement, as AI and automation technologies increasingly replace human workers in various sectors. Almost half of labor activities are at risk of automation in Egypt (48.7 percent), as well as high-income countries such as the UAE (47 percent), with AI potentially displacing routine jobs performed by both low-skilled and middle-skilled workers. The impact of this technological disruption is likely to vary across the region, depending on countries’ capacity to manage the transition. Wealthier nations, such as those of the GCC, have the financial resources to train people and build a higher-value-added, more knowledge-intensive workforce.
The UAE and Saudi Arabia have already launched ambitious initiatives in this direction. For example, the UAE has increasingly been investing in AI education to develop local talent. In May 2024, it unveiled the largest training program for AI prompt engineers in the world. Saudi Arabia has also been providing AI training programs to young Saudis. Even if these initiatives achieve only partial success, the GCC countries’ financial resources are likely to give them more policy options for managing labor market disruptions compared to their neighbors.
In contrast, lower-income Middle Eastern and North African countries have much fewer resources to retrain their labor force, especially in the context of severe debt and financial crises. This places them at a much higher risk of experiencing job losses and higher unemployment rates. To be sure, AI can create jobs for lower-income Middle Eastern and North African countries as part of the AI value chain, such as in data-cleaning, labeling, and content moderation. However, these activities risk trapping them in low-value activities that do not contribute to long-term economic transformation or technological capacity-building.
Lower-income countries from which migrant workers have traditionally flocked to the GCC are also likely to be negatively affected by the disruption of the Gulf countries’ labor markets, especially the reduced demand for low-wage and mid-level jobs. The replacement of these jobs by robots might lead to lower remittances to these countries and higher unemployment rates, especially in the absence of policy support to retrain their workforce. This, in addition to the fact that more talent and start-ups from lower-income Middle Eastern and North African countries may migrate to the GCC, would further widen the digital divide and developmental inequalities, while making it much harder for these states to catch up.
Lower-income Middle Eastern and North African states thus risk finding themselves trapped in a vicious cycle, one in which they become increasingly dependent on AI technologies and innovations that are imported from the GCC. This dependency, compounded by their existing reliance on the GCC for aid, could further undermine their political and foreign policy autonomy. Emirati and Saudi dominance in AI would also mean their having more developed intelligence, surveillance, and military capabilities. At the same time, Middle Eastern and North African countries with weak AI infrastructures would become even more dependent on Saudi Arabia and the UAE to protect them from cyberattacks. This would risk further accelerating the current process of regional marginalization of lower-income countries, decreasing their relevance in the evolving regional and global order.
The author wishes to thank interns Peter Chouayfati and Zoe Coutlakis, who helped with research for this article.
