Saudi Arabia and UAE up in World Competitiveness Ranking

Dubai Tourism

• UAE up to 7th place
• Saudi Arabia ranks 16th
• AI ‘like a honey pot to economies’

Saudi Arabia and the UAE have improved their rankings in the annual IMD World Competitiveness Ranking this year, as both Gulf states embrace artificial intelligence (AI) to make their economies more productive.

The list, which is compiled by the International Institute for Management Development (IMD) in Switzerland, saw the UAE rise three places to seventh, up from 10th in 2023 and 12th in 2022. 

On a global level, the UAE ranked second for employment and third for international trade.

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Dubai was last month labelled the world’s top location for “greenfield” foreign direct investment for the third consecutive year, according data from fDi Markets.

A total of 1,070 greenfield foreign direct investment projects, where a company sets up in a foreign country, building its facilities from the ground up, were reported in Dubai in 2023.

This was more than double the figure for second-placed Singapore, which the fDi Markets research said had 442 projects. London was third with 431 projects.

Saudi Arabia had 359 projects, a year-on-year increase of 65 percent. The kingdom was ranked 16th on the IMD list of 67 countries, up from 17th in 2023 and 32nd in 2021.

The new rankings come at a time when Saudi Arabia’s economy has contracted by 1.7 percent year on year in the first quarter of 2024 due to ongoing oil production cuts.

The IMD said one of the key factors among economies on the list was AI, which it described as “like a honey pot to economies seeking productivity boosts”. 

“At the micro level, the recent surge in AI-based technologies could boost efficiency and productivity significantly,” said José Caballero, senior economist at the World Competitiveness Center.

Caballero also warned that the key challenge to AI was improving efficiency without disrupting business activities. 

“Furthermore, there is a cost-related challenge given that initial investments in AI technology can be substantial, while the ongoing costs of maintenance and upgrades to the systems can be significant,” he said.

• UAE dominates Saudi imports
• Saudi Arabia GDP contracts but non-oil growth rises
• IBM to help Saudi Arabia train AI models in Arabic

Investment in AI

Both Gulf states have invested heavily in AI in a bid to boost productivity and gain a competitive edge on their international peers.

Saudi Aramco’s venture capital fund Prosperity7 last month joined a $400 million investment round for Chinese generative AI startup Zhipu AI. This marks the first instance of foreign investment in China’s quest to establish a homegrown rival to OpenAI.

The US tech giant Microsoft announced in April that it will invest $1.5 billion in the Abu Dhabi-based AI company G42 to help accelerate its global expansion strategy.

In May the UAE and France signed an agreement to increase their collaboration in AI. The partnership will cover investments in infrastructure for computing, including quantum computers, the cloud, AI training, development and production of ultra-performance semiconductors, startup investments, research and talent development.