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Will gains as a result of AI benefit only the few? History offers few


If medieval advances in the plough didn’t lift Europe’s peasants out of poverty, it was largely because their rulers took the wealth generated by the new gains in output and used it to build cathedrals instead.
Economists say something similar could happen with artificial intelligence (AI) if it enters our lives in such a way that the touted benefits are enjoyed by the few rather than the many.

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“AI has got a lot of potential — but potential to go either way,” argues Simon Johnson, professor of global economics and management at MIT Sloan School of Management.
“We are at a fork in the road.”
Backers of AI predict a productivity leap that will generate wealth and improve living standards. Consultancy McKinsey in June es-timated it could add between $14 trillion and $22 trillion of value annually — that upper figure being roughly the current size of the US economy.
Some techno-optimists go further, suggesting that, along with robots, AI is the technology that will finally free humanity from humdrum tasks and launch us into lives of more creativity and leisure.

Yet worries abound about its impact on livelihoods, including its potential to destroy jobs in all kinds of sectors — witness the strike in July by Hollywood actors who fear being made redundant by their AI-generated doubles.

What productivity gain?

Such concerns are not unfounded. History shows the economic impact of technological advances is generally uncertain, unequal and sometimes outright malign.
A book published this year by Johnson and fellow MIT economist Daron Acemoglu surveyed a thousand years of technology — from the plough through to automated self-checkout kiosks — in terms of their success in creating jobs and spreading wealth.
While the spinning jenny was key to 18th century automation of the textiles industry, they found it led to longer working hours in harsher conditions. Mechanical cotton gins facilitated the 19th century expansion of slavery in the American South.
The track record of the Internet is complex: it has created many new job roles even as much of the wealth generated has gone to a handful of billionaires. The productivity gains it was once lauded for have slowed across many economies.
A June research note by French bank Natixis suggested that was because even a technology as pervasive as the Internet left many sectors untouched, while many of the jobs it created were low-skilled — think of the delivery chain for online purchases.
“Conclusion: We should be cautious when estimating the effects of artificial intelligence on labor productivity,” Natixis warned.
In a globalized economy, there are other reasons to doubt wheth-er the potential gains of AI will be felt evenly.
On the one hand, there is the risk of a “race to the bottom” as gov-ernments compete for AI investment with increasingly lax regula-tion. On the other, the barriers to luring that investment might be so high as to leave many poorer countries behind.
“You have to have the right infrastructure — huge computing ca-pacity,” said Stefano Scarpetta, Director of Employment, Labour and Social Affairs at the Paris-based Organisation for Economic Cooperation and Development (OECD).
“We have the G7 Hiroshima Process, we need to go further to the G20 and UN,” he said, advocating the expansion of an accord at a May summit of Group of Seven (G7) powers to jointly seek to understand the opportunities and challenges of generative AI.

Worker power

Innovation, it turns out, is the easy bit. Harder is making it work for everyone –which is where politics comes in.
For MIT’s Johnson, the arrival of railways in 19th century England at a moment of rapid democratic reform allowed those advances to be enjoyed by wider society, be it through faster transport of fresh food or a first taste of leisure travel.
Similar democratic gains elsewhere helped millions enjoy the fruits of technological advance well into the 20th century. But Johnson contends that this started changing with the aggressive shareholder capitalism that has marked the last four decades.
The automated self-checkout, he argues, is a case in point. Groceries do not become cheaper, shoppers’ lives are not
transformed and no new task is created — just the profit gainm from the reduction of labor costs.
Worker groups, which have lost much of the clout they had before the 1980s, identify AI as a potential threat to workers’ rights as well as employment, for example if there is no human control on AI-steered hiring and firing decisions.
Mary Towers, employment rights policy officer at Britain’s Trades Union Congress, cited the importance of unions “having statutory consultation rights, having the ability to collectively bargain around technology at work”.
That is just one of several factors that will help determine how AI shapes our economic lives — from antitrust policies that ensure healthy competition among AI suppliers through to re-training of workforces.

An OECD survey of some 5,300 workers published in July suggested that AI could benefit job satisfaction, health, and wages but was also seen posing risks around privacy, reinforcing workplace biases and pushing people to overwork.
“The question is: will AI exacerbate existing inequalities or could it actually help us get back to something much fairer?” said Johnson.

Read more:

United Kingdom to host first global summit on artificial intelligence safety

A look at how Europe is building artificial intelligence guardrails

White House guidelines for Artificial Intelligence aim to mitigate harm

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Abu Dhabi Overtakes Oslo for Sovereign Wealth Fund Capital in Global SWF’s First City Ranking

Today, industry specialist Global SWF published a special report announcing a new global ranking of cities according to the capital managed by their Sovereign Wealth Funds (SWFs). The findings show that Abu Dhabi is the leading city that manages the most SWF capital globally, thanks to the US$ 1.7 trillion in assets managed by its various SWFs headquartered in the capital of the UAE. These include the Abu Dhabi Investment Authority (ADIA), Mubadala Investment Company (MIC), Abu Dhabi Developmental
Holding Company (ADQ), and the Emirates Investment Authority (EIA). Abu Dhabi now ranks slightly above Oslo, home to the world’s largest SWF, the Government Pension Fund (GPF), which manages over US$ 1.6 trillion in assets. Abu Dhabi and Oslo are followed by Beijing (headquarters of the China Investment Corporation), Singapore (with GIC Private and Temasek Holdings), Riyadh (home to the
Public Investment Fund), and Hong Kong (where China’s second SWF, SAFE
Investment Corporation, operates from). Together, these six cities represent two thirds
of the capital managed by SWFs globally, i.e., US$ 12.5 trillion as of October 1, 2024.
For the past few decades, Abu Dhabi has grown an impressive portfolio of institutional
investors, which are among the world’s largest and most active dealmakers. In addition
to its SWFs, the emirate is home to several other asset owners, including central banks,
pension funds, and family offices linked to member of the Royal Family. Altogether, Abu
Dhabi’s public capital is estimated at US$ 2.3 trillion and is projected to reach US$ 3.4
trillion by 2030, according to Global SWF estimates.
Abu Dhabi, often referred to as the “Capital of Capital,” also leads when it comes to
human capital i.e., the number of personnel employed by SWFs of that jurisdiction, with
3,107 staff working for funds based in the city.
Diego López, Founder and Managing Director of Global SWF, said: “The world ranking
confirms the concentration of Sovereign Wealth Funds in a select number of cities,
underscoring the significance of these financial hubs on the global stage. This report
offers valuable insights into the landscape of SWF-managed capital and shows how it is
shifting and expanding in certain cities in the world.”

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AM Best Briefing in Dubai to Explore State of MENA Insurance Markets; Panel to Feature CEOs From Leading UAE Insurance Companies

AM Best will host a briefing focused on the insurance markets of the Middle East and North Africa (MENA) on 20 November 2024, at Kempinski Central Avenue in Dubai.
At this annual regional market event, senior AM Best analysts and leading executives
from the (re)insurance industry will discuss recent developments in the MENA region’s
markets and anticipate their implications in the short-to-medium term. Included in the
programme will be a panel of chief executive officers at key insurance companies in the
United Arab Emirates: Abdellatif Abuqurah of Dubai Insurance; Jason Light of Emirates
Insurance; Charalampos Mylonas (Haris) of Abu Dhabi National Insurance Company
(ADNIC); and Dr. Ali Abdul Zahra of National General Insurance (NGI).
Shivash Bhagaloo, managing partner of Lux Actuaries & Consultants, will his present
his observations in an additional session regarding implementation of IFRS 17 in the
region. The event also will highlight the state of the global and MENA region
reinsurance sectors, as well as a talk on insurance ramifications stemming from the
major United Arab Emirates floods of April 2024. The programme will be followed by a
networking lunch.
Registration for the market briefing, which will take place in the Diamond Ballroom at the
Kempinski hotel, begins at 9:00 a.m. GST with introductory comments at 9:30 a.m.
Please visit www.ambest.com/conference/IMBMENA2024 for more information or to
register.
AM Best is a global credit rating agency, news publisher and data analytics
provider specialising in the insurance industry. Headquartered in the United
States, the company does business in over 100 countries with regional offices in
London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

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Future of Automotive Mobility 2024: UAE Leads the Charge in Embracing Digital Car Purchases and Alternative Drivetrains

-UAE scores show highest percentage among the region in willingness to purchase a car
completely online
– Openness to fully autonomous cars has grown to 60% vs previous 32%.
– More than half of UAE respondents in the survey intend to move to hybrid cars during
next car purchase, while less than 15% intend to move to fully electric car.
– UAE sees strong use of new mobility services such as ride-hailing (Uber, Careem, Hala
Taxi)
– The perceived future importance of having a car is not only increasing in UAE but is
higher than any other major region globally, even China

Arthur D. Little (ADL) has released the fourth edition of its influential Future of Automotive Mobility (FOAM) report, presenting a detailed analysis of current and future trends in the automotive industry. This year’s study, with insights from over 16,000 respondents across 25 countries, includes a comprehensive focus on the United Arab Emirates (UAE). The report examines car ownership, electric vehicles,
autonomous driving, and new mobility services within the UAE.

“The UAE is at the forefront of automotive innovation and consumer readiness for new mobility
solutions,” said Alan Martinovich, Partner and Head of Automotive Practice in the Middle East
and India at Arthur D. Little. “Our findings highlight the UAE’s significant interest in
transitioning to electric vehicles, favorable attitudes towards autonomous driving technologies,
and a strong inclination towards digital transactions in car purchases. These insights are critical
for automotive manufacturers and policymakers navigating the evolving landscape of the UAE
automotive market.”
Key Findings for the UAE:
1. Car Ownership:
o Over half of UAE respondents perceive that the importance of owning a car is
increasing, with the study showing the increase higher than any other major
region, including China.
o Approximately 80% of UAE respondents expressed interest in buying new (as
opposed to used) cars, above Europe and the USA which have mature used
vehicle markets

2. Shift to Electric and Hybrid Vehicles:
o While a high number of UAE respondents currently own internal combustion
engine (ICE) vehicles, more than half intend that their next vehicle have an
alternative powertrain, with significant interest in electric and plug-in hybrid
(PHEV) options. Less than 15% plan to opt for pure battery electric vehicles
(BEVs).

3. Emerging Mobility Trends:

o Ride-hailing services are the most popular new mobility option among UAE
residents, with higher usage rates than traditional car sharing and ride sharing.
The study indicates a strong openness to switching to alternative transport modes
given the quality and service levels available today.

4. Autonomous Vehicles:
o UAE consumers are among the most open globally to adopting autonomous
vehicles, with a significant increase in favorable attitudes from 32% in previous
years to 60% this year versus approximately 30% in mature markets. Safety
concerns, both human and machine-related, remain the primary obstacles to
broader adoption.

5. Car Purchasing Behavior and Sustainability:
o The internet has become a dominant channel for UAE residents throughout the car
buying process, from finding the right vehicle to arranging test drives and closing
deals. UAE car buyers visit dealerships an average of 3.9 times before making a
purchase, higher than any other region in the world, emphasizing the need for
efficient integration of online and offline experiences.
o Upwards of 53% of respondents from the region would prefer to ‘close the deal’
and complete the purchase of their car online, which is the highest for any region
in the world.
o Sustainability is a key factor cited by UAE consumers as influencing car choice.
The UAE scored among the top half of regions, highlighting the importance of
environmental considerations.

“Our study confirms the promising market opportunities for car manufacturers (OEMs) and
distributors in the UAE” commented Philipp Seidel, Principal at Arthur D. Little and co-Author
of the Global Study. “Consumers in the Emirates show a great and increasing appetite for cars
while being among the most demanding globally when it comes to latest vehicle technologies
and a seamless purchase and service experience.”
The comprehensive report, “The Future of Automotive Mobility 2024” by Richard Parkin and
Philipp Seidel, delves into global automotive trends and their impact on various regions,
including the UAE. This study is an invaluable tool for industry stakeholders seeking to navigate
and leverage the dynamic changes driving the future of mobility.

 

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