Socioeconomic Prospects and Challenges in the AI-Powered Automation Boom

Firas Abi Mosleh

September 2023

Introduction

The evolution of digital technologies, especially machine “deep learning” that is fueled by big data, gave rise to Artificial Intelligence (AI), the most prominent phenomenon of the boom in cutting-edge technologies. Among the latter are the latest generations of sensors, robots, the Internet of Things, and 3D printing, the rapid development of which drove the present revolution in automation, affecting generally all economic sectors and almost the entirety of human activities, transforming in the process not only socioeconomic structures and dynamics, but perhaps also human nature itself… This is the “Fourth Industrial Revolution” that opens before mankind seemingly boundless horizons, and at the same time poses existential challenges that may well be historically unprecedented.

Amidst the torrent of information and opinions on the subject, bombarding people through advertisement channels and various types of media, we notice that extreme stances are most prominent: on the scientific and technical aspect of the issue, the accelerated pace of significant developments in the field is dizzying, even for specialists and experts. Some of the latter seem euphoric, laying out utopian projections, while others voice existential unrest and visions of the end of human civilization. The same is true among those who specialize in the socioeconomic aspect of the subject matter. Some promise prosperity for all, even if following a rough “period” of adjustment, by virtue of the “decreasing costs” of the latest technological applications in all sectors, while others are haunted by “armies of the unemployed,” even in the long run, and by the widening gap in income and wealth between social strata in all countries, such that the world would be engulfed in waves of social turmoil and various forms of conflict.

It is therefore necessary to initiate a wide-scope, purposeful, cool-headed, and methodological discussion of the issue, from the perspective of where we stand here in Iraq, in the Arab World, or, in a broader context, in the developing world. The purpose of this discussion is, firstly, to identify those feasible technological applications that would transform our economic sectors, and secondly, to outline the socioeconomic public policy mix necessary to manage the transition to the age of pervasive automation, driven by AI and “sister” technologies, that will destroy millions of jobs across all sectors and create lesser numbers of jobs in specific sectors and in highly specialized fields. Dealing with the seemingly inevitable  great wave of unemployment must definitely be a top priority for policy makers, and so must be meeting the age-old fundamental challenge of development and modernization that has become even more pressing in the age of the Fourth Industrial Revolution.

In this spirit, we have had lengthy conversations with Dhiya Al-Jumeily, Professor of Artificial Intelligence at John Moores University, UK, also the Scientific and Academic Advisor to H.E. the Prime Minister of Iraq, and with Mohammad Hamade, Professor of Economics at the American University of Iraq-Baghdad, in the hope to further develop this discussion and attain results that may qualify as policy proposals.

AI Transforms the Education Sector

“I expect that in the next 50 years, or (at least) until the year 2050, there will be 10 main jobs, with AI as their backbone,” says Prof Al-Jumeily, emphasizing that Education is the most important of the aforementioned: “I expect education to completely change by virtue of the advent of AI in all fields and into the lives of all individuals. Everybody will change, from farmers to doctors.”

How can artificial intelligence, then, transform the education sector? “Education will become personalized for each student, meaning that all students in a classroom will not receive the same education. Instead, different subjects will be taught differently to each student, focusing on the subjects in which the student excels, with efforts made to bring the student to an acceptable level in subjects they lag behind in,” or that won’t be their areas of specialization in the future, explains Prof. Al-Jumeily, adding that “different methods will emerge in education, the indicators of which had appeared with COVID-19,” such as remote learning, including through non-traditional means like YouTube, especially for learning technology and practical skills.

Prof. Al-Jumeily believes that this transformation in the education sector will bring about “wealth distribution,” as “it will be possible to study the same thing anywhere in the world, thanks to technology.” However, does this mean that we assume education will become uniform across the world in terms of quality, cost, price, and access? “Yes, because education will no longer be traditional; lecturers will only serve as guides, especially in higher education,” Prof. Al-Jumeily responds, adding, regarding cost: “The degree will not be the means to get a job, but skills. We will study to gain skills, not university degrees, and the latter will no longer be tied to the country where the student is. Prof. Al-Jumeily explains his premise as follows: “The Fourth Industrial Revolution will look at the cream of the crop,” those who “have problem-solving skills and (an element of) innovation, not just training… University fees will decrease, with the proliferation of universities, and many other relevant costs will also decrease,” such as training costs. To illustrate this idea, Prof. Al-Jumeily recalls seeing “a 13-year-old child in Iraq, who won an award for building robots in a competition in Qatar, training Arab children online to build robots. This would not have been possible without the spread of technology and increased access to it.”

“If the necessary infrastructure exists,” such as internet and computers, “we can find this cream (of society). Anyone can work on programs from anywhere on earth with a company like Microsoft, for example, and this will distribute wealth,” says Prof. Al-Jumeily, giving an example: “We now have people in Bangladesh and India developing programs for us in Britain; they have high attention to detail and high programming skills, and their wages are low. This makes these people settle in their countries and give up migration.” Many economists would disagree with describing the above as distribution of wealth. The spending of fortunes on part of households and governments of the developing world on educating their young, only to have them employed by industrial countries’ firms and institutions as cheap labor, is a classic example of relationships of “dependency and exploitation,” as per countless pieces of literature. Besides, what about the vast majority of people who are not of “the cream”? What will become of the majority of people who “will not be looked at” in the era of the Fourth Industrial Revolution? We will revisit this issue in the second part of this article, focused on the socioeconomic aspect of the matter, and go back for now to Prof. Al-Jumeily’s elaboration on his theory of education in the new era:

“Higher education will become the same worldwide; the problem lies in primary education, and the Fourth Industrial Revolution requires a strong foundation (in the latter). If artificial intelligence starts building programs that help children program and solve problems, there will be a leveling (of differences in the quality of education available to people in different countries and from different social strata). We expect educational games to be available in every poor household, thanks to programs like those of the United Nations. Due to the affordability of technology, every child in the world will be computer-literate… We expect education to be available to everyone,” says Prof. Al-Jumeily, who believes that “the poor, by virtue of their determination, intelligence, and skill development, will be able to excel, thanks to technology.”

Technological Solutions for Managing the Tigris and the Euphrates

“90% of the water coming into Iraq goes to traditional-style agriculture, i.e., irrigation through canals, a practice that has been prevalent for thousands of years… of utmost importance is to shift the irrigation method to drip irrigation, tailored to the specific needs of each tree. Artificial intelligence tells the irrigation system when each tree needs water and in what quantity, through stationary cameras or drones that capture and process images to assess the watering needs of each tree,” Prof. Al-Jumeily explains.

“In our major cities such as Baghdad, water recycling is crucial, but the key is to preserve the Tigris and Euphrates by using AI-powered barrages and regulators along the two rivers… (These facilities) have gates that open and close depending on the water level… Thus, the same water level is maintained throughout the year,” and as a result, “the two rivers turn from flowing rivers into flowing lakes,” says Prof. Al-Jumeily, emphasizing the importance of installing such a system as well at the mouth of Shatt al-Arab, to prevent saltwater intrusion during high tide and thereby preserve cultivated areas.

Prof. Al-Jumeily points out that maintaining the water levels in the Tigris and Euphrates throughout the year allows for the revival of river transport, making it possible to “travel from Basra to Mosul via the river,” thanks to “lock systems” or river gates between different water levels. These gates are crossed by boats that “operate on clean energy” provided by “solar panels floating on the river, which also reduce evaporation, so we save 90% of the water that would typically evaporate.”

In the same context, Prof. Al-Jumeily emphasizes the importance of establishing artificial groundwater recharge stations, where smart barrages monitor the water levels (after turning the rivers into “flowing lakes”), allowing AI to determine the timing of groundwater replenishment when the river levels rise, with the goal of replenishing wells and building the country’s strategic water reservoirs.

Transforming the Healthcare and Other Service Sectors

Doctors diagnose diseases based on their learned knowledge of linking symptoms to their causes, says Prof. Al-Jumeily, explaining that building centralized databases for diseases and associated symptoms, such as at country levels, allows AI systems to support doctors in diagnosis, “such that a newly graduated doctor, working in a rural area, has the same database available to a practicing doctor in a major city.” AI also helps in “personalizing healthcare,” assisting doctors or pharmacists in determining the optimal drug dosage, which varies from person to another,” for example, according to Prof. Al-Jumeily.

We observe that the principles of prediction, personalization or individualization, and optimization are at the core of most AI applications and other emergent technologies that drive the Fourth Industrial Revolution across various sectors. Hence, we can envision various technological applications in the education, healthcare, transportation, entertainment, and other service sectors, all based on these three aforementioned principles.

Cutting-Edge Technology Applications in Productive Sectors

“The year 2030 marks the beginning of the end of the global oil dependency era. We are trying to propel Iraq towards a water-based industrial-agricultural economy and using AI in agriculture and modern irrigation,” says Prof. Al-Jumeily. What then are the requirements for this transformation? What is the “Entry Cost” into the new production pattern that employs the latest technologies, and what kind of investments does this transformation require? Where does Iraq stand, in this context? We address these questions to Prof. Al-Jumeily, holding that the claim of a low “Entry Cost” into the emergent production patterns in the era of the Fourth Industrial Revolution applies to industrialized countries that already possess the relevant infrastructure and capital goods, and certainly not to developing countries that lack the aforementioned. Furthermore, the imbalance in the structure of investments in AI and related technologies, in favor of the financial sector and non-production-related service sectors, as indicated by published statistics, further exacerbates the structural imbalances that generally characterize developing economies and especially Arab economies.

Prof. Al-Jumeily addresses the issue above through the lens of Iraq, in particular, where relevant efforts “are already under way” in various directions: “We need two types of infrastructure: technical knowledge and will on part of the government and the people, and secondly, hardware, or capital goods,” says Prof. Al-Jumeily, explaining that the government of Iraq has shifted from supporting farmers by providing subsidized inputs like seeds and fertilizers to supporting only those farmers who use modern irrigation methods by providing modern irrigation equipment and purchasing the produced crops at subsidized prices (as a way to combat manipulation and abuse of subsidies). The state also protects local production by banning the import of certain crops during seasons when those crops are produced locally. In industry, Prof. Al-Jumeily advocates for reverse engineering of all foreign technologies, and announces an agreement with the Ministry of Industry on a project to provide a device for farmers in arid areas, especially, which is a solar-powered groundwater pump and a mini-desalination station that draws water from underground wells, tests it, and if it is saline and unsuitable for irrigation, the device desalinates the water and sends it through a drip irrigation network. Prof. Al-Jumeily reveals that the Ministry of Industry has a small-scale model of the device, which he seeks to turn into a production model.

“Not a Magic Wand”

It thus becomes evident, based upon the above, that the core concept of the applications of emergent technologies is to qualitatively improve efficiency or optimize the operation of existing infrastructure and equipment, or hardware, especially in the energy, water, and commodity-producing sectors. Therefore, the shift in Iraq and in developing countries in general towards the production patterns of the era of the Fourth Industrial Revolution, with AI applications at the forefront, involves investing in infrastructure and capital goods, as well as supporting and protecting the real sectors. The emergent technologies are thus not a “magic wand” that can simply transform the reality of our economies, which are mostly based on rent and services unrelated to real production, into “knowledge economies” or “post-industrial economies,” as many now clamor. At any rate, the latter two overlapping concepts have emerged to describe developed economies_ which are industrial economies, all the same_ in what some portray as the “post-industrial” age, knowing that the latter concept is a subject of major, deep, and heated dispute among economists. The author of these lines is among those who consider the aforementioned concept one that is greatly deceptive, with an aim to obscure the reality of the prevalent “division of labor” between some developed economies on the one hand and other developing and emerging economies on the other. However, let us not dwell further on this issue so as not to deviate from the subject matter of this article.

A Yawning Production Gap Amidst Wars for Technology Monopolization

We seek Prof. Al-Jumeily’s insight on whether AI applications would serve to bridge or alternatively widen the gap in production between industrialized countries on one hand and countries of developing and emerging economies on the other hand, in terms of producing knowledge and technology, and thus commodities. This issue gains even more relevance and importance amidst the ongoing “electronic chip wars” and the international race for dominance over emergent technologies between the US and its allies on one hand, and China and Russia on the other hand. It is interesting to note here that the repercussions of this war have reached Arab countries, namely the United Arab Emirates and Saudi Arabia, as the US government has recently embargoed the sale of advanced NVIDIA chips to the mentioned states.

Prof. Al-Jumeily expects that an international body similar to the International Atomic Energy Agency (IAEA) would be established, with the purpose of controlling the proliferation of AI technology and regulating its use, saying that this expectation has spurred him to advocate that Arab countries take significant steps to catch up in technology production, or else “we would (further) fall behind.”

While hardware production represents only 5% of the production process for emergent technologies, software production constitutes the remaining 95%, says Prof. Al-Jumeily, maintaining that “we cannot have control over the production of (relevant) hardware, because great (powers) are struggling over it,” suggesting that Arab states can alternatively focus on developing skills in “programming, data analysis, and communication.” Prof. Al-Jumeily admits here that “control” is the prerogative of those who have developed the technologies to build hardware such as cutting-edge electronic chips and sensors, at the same time expressing his optimism in that the day would come when Arab states would engage in reverse engineering, thanks to the abundance of capable Arab scientists working abroad, and the possibility that those would share knowledge and expertise with their home countries.

“Strategic Solutions” in Real Sectors

From what was said above, it thus becomes obvious that Prof. Al-Jumeily believes that much can be achieved, in the realm of technical advancement and socioeconomic development, within “the rules of the game” touched upon above, i.e., under the conditions where major industrialized states retain exclusive control over the production of hardware that gives rise to the emergent technologies, such as the cutting-edge electronic chips that are the basis for AI applications. Withing this framework, Prof. Al-Jumeily speaks of his contribution to a number of initiatives that present “strategic rather than patchwork solutions” that aim at developing the real sectors of the Iraqi economy, based on building the necessary qualified human cadre, out of Iraq’s own sons and daughters, rather than “importing (qualified cadre) and then localizing them.” Prof. Al-Jumeily stresses, in this context, the necessity of controlling the output of the education sector, so that it satisfies the various economic sectors’ needs, especially the real sectors’. Of those initiatives to which Prof. Al-Jumeily contributed is one in collaboration with the Ministry of Higher Education and Scientific Research, aiming to establish colleges specializing in AI applications at six government and private universities, with the purpose of “preparing a new generation equipped to apply AI in the sectors discussed,” Furthermore, the initiative envisages transforming agricultural engineering colleges into “smart agricultural engineering colleges,” encouraging the younger generation to become agricultural engineers rather than conventional farmers, thus taking a big step towards a qualitative shift in the pattern of agricultural production in Iraq, according to Prof. Al-Jumeily who elaborates on various proposals to employ the prospective graduates of those future colleges, or support them in founding cooperative enterprises among groups of them, in cooperation with the Iraqi government and businessmen.

Growth in Absolute Terms, and Relative Underdevelopment

For his part, Prof. Hamade sees that AI applications can bring about economic growth “in absolute terms”, measured by an increase in the Gross Domestic Product (GDP). He explains that “advanced (industrialized) countries will progress in all sectors, and their cost of production will be relatively lower, due to the presence of suitable infrastructure, trained workforces, abundant intermediate goods, and distribution channels.” These countries will thus benefit the most from emergent technologies, and become even more advanced, further widening the gap in production that separates them from developing and emerging countries. This means that AI applications in developing countries “may induce economic development, to a certain extent, and in absolute value;” however, “in relative terms,” these countries will lag further behind their industrialized counterparts, “even if (the aforementioned applications) helped some sectors (develop),” namely the non-productive sectors.

“Armies of the Unemployed” and Exacerbated Inequality

Perhaps the 2016 edition of the “World Economic Forum” was the one that first introduced the term “Fourth Industrial Revolution” into public parlance and mainstream media, given the event’s global significance, both from the perspective of its proponents and its critics (such as the “World Social Forum”). The “World Economic Forum”, as is well known, is by no means a “leftist” platform, but is rather often seen as representing the global elite or the “one percent” of the world’s population who control more than half of the world’s wealth. Nevertheless, the most prominent question at the forum that year, articulated by the Forum’s chief media officer, was, how will emergent technologies be applied “in ways that contribute to inclusive growth, rather than exacerbating unemployment and income inequality?” The Forum’s founder himself, Mr. Klaus Schwab, drawing from the results of a survey covering 15 advanced and emerging economies, encompassing approximately 1.9 billion workers or 65% of the global workforce, announced that the Fourth Industrial Revolution was expected to eliminate around 7 million jobs in these economies and create only 2 million new jobs, particularly in fields like mathematics, programming, and engineering[1].

Fast forward about seven years from that forum, we now witness the replacement of human labor with AI-powered machines in various sectors and at different skill levels, including high-skilled jobs such as engineers, doctors, pilots, and even lawyers. This raises the following question: if we have not already entered the era of “Non-Governmental Governments,” as Dr. Adel Samara puts it, and if there are still governments that regard the creation and provision of sufficient jobs as a fundamental responsibility or even a basic condition for their legitimacy, may we begin to discern a general framework of a public policy mix that would save millions of workers from unemployment, and thus avoid even more extremism, violence, and protracted conflicts and wars?

“We are discussing the loss of skilled and unskilled jobs in all sectors. The problem goes beyond widening the (development) gap between us and other countries; the more alarming issue is the widening gap within countries, in the Arab World and elsewhere… (Many) professions will disappear, and the talk about retraining and redirecting the workforce toward new jobs is easy (though this requires massive investments, all the same_ editor’s note), but not everyone can adapt professionally, and speaking of this is much easier than actually taking action,” Prof. Hamade responds, wondering, “does the solution lie in investing in labor-intensive sectors? And what sectors are those that AI-powered automation will not proliferate in?… New technology has become pervasive in agriculture and industry, which are labor-intensive,” Prof. Hamade continues, saying, “I see armies of unemployed people, and we are rapidly heading towards that… (Although it is true that) the duty of governments is to create jobs (to compensate for those destroyed by automation), but will they be actually capable of that, when AI is replacing jobs even in the security and military forces?”

The Dubai Model and the Feasibility of “Replication”

It is expected that the application of emergent technologies in the city of Dubai will contribute most, in relative terms, to the United Arab Emirates’ GDP, compared to all Arab states that have implemented similar technology programs or strategies. By way of brainstorming possible solutions for the upcoming global wave of unemployment, which is expected to be historically unprecedented, we ask Prof. Hamade about the possibility of “replicating” the model of the city of Dubai, which is primarily based on services (financial, logistics, tourism, etc.), on part of Arab countries such as Iraq, Syria, Egypt, and Saudi Arabia, as examples.

“No, absolutely not… Even Dubai has proven to have a fragile economy; during the global financial crisis (2007-2009), it was on the verge of bankruptcy,” Prof. Hamade responds, adding, “In general, economies based solely on services and tourism… are the most vulnerable, while industrial ones are robust… Iraq is a vast country with great human and natural resources, so it is not required in the first place that most of its economy be services-based.” Prof. Hamade explains that banking and insurance services first emerged to serve productive sectors, mainly the industrial and also the agricultural. He emphasizes that services-based economies are “extremely fragile,” and that the calls to “replicate the Dubai model in our countries are not serious, not feasible, or fundamentally impossible.”

Conclusion

Even after these broad discussions that gave a bird’s-eye view of the subject matter, it feels as if we are back at square one, where uncertainty and the unknown are overarching. It is challenging to imagine the scope of the profound changes that will inevitably impact our reality in all aspects, opening up horizons that seem more than promising, while simultaneously posing formidable challenges for humanity. This is our view of the dawn of the new age, that of the Fourth Industrial Revolution.

In the Arab World, which faces existential threats from every direction – in terms of water and food security, climate change, identity crises, various forms of social divisions, both horizontal and vertical, and the age-old challenge of development and generally keeping up with the times, not to mention multiple occupations and dependency relationships – we are in dire need of a dose of )scientific( optimism: We had asked Prof. Al-Jumeily, at the conclusion of our lengthy conversation, about the feasibility of bridging the gap that separates us in the Arab World and the developing world in general from advanced countries, in terms of producing knowledge, technology, goods, and services, while preserving our environment and resources for the generations to come – even within the “rules of the game” where major industrial nations monopolize the production of fundamental and highly sensitive hardware such as the most advanced electronic chips and sensors. His answer was as follows:

“Yes, (I am optimistic) because the Arab people have determination, born out of suffering. Einstein said that imagination is more important than knowledge, and we have a beautiful imagination. Dhiya Al-Jumeily adds that determination makes possible turning imagination into reality. I believe wholeheartedly that the Arab nations, which have created great civilizations and contributed significantly to the world, will be able to make a comeback in the era of the Fourth Industrial Revolution. This revolution depends on determination and problem-solving… and ‘the game,’ as you called it, depends on intellect and determination, and we possess both intellect and determination!”