The Era of AI

Dr. Jarmo Kotilaine is a seasoned development economist with 30 years’ experience across academia, consultancy, banking and government.

Today, the AI hype is everywhere as the Fourth Industrial Revolution reshapes the global economy – and society – at an accelerating pace. Like most hype, it comes with much excitement, exaggeration, speculation and questioning. Opinions range from “end-of-history” scenarios of AI liberating the human worker to enjoy a life of leisure to doomsday prophecies of uncontrollable machines leading humankind to destruction.

What is clear is that the rise of AI has now assumed a life of its own. Microsoft recently found that it is the fastest-spreading technology in human history, with more than 1.2bn people using AI tools in less than three years. The amount of capital pouring into AI infrastructure and research is unprecedented. Stanford’s 2025 AI Index Report put the global total in 2013 – 2024 at $1.6trn. Solutions such as ChatGPT are transforming the way people study, write, conduct research and much more. Other technologies, such as internet search engines, now incorporate AI, effectively exposing virtually every user of digital devices to it.

Now that this new economic force has been unleashed, it is impossible to put the proverbial genie back into the bottle. We have seen recurrent attempts to regulate aspects of AI use and impact, but these emerging guardrails, at least for now, appear incomplete, uneven and highly variable across countries and geographies. Debates over privacy and labour rights are certain to continue for years.

From the end-consumer perspective, AI is unlike any previous technological transformation. The new technology is easily accessible to mobile phone owners or internet surfers at next to no cost, even if this reality tends to disproportionately advantage the “rich world” with modern infrastructure. And, of course, most of us today are “AI consumers” rather than proactive users of the technology in a systematic manner.

While AI still comes with limitations and shortcomings – clumsy writing, factual inaccuracies, incorrect inferences, etc. – it is just as obvious that it has already dramatically catalysed many basic tasks. AI is allowing us to do more – and faster – than ever before. It has not eliminated the need for human scrutiny, but it seems reasonable to assume that the dramatic forward strides of innovation will in time deliver ever more reliable and versatile AI tools.

This points to the true gift of AI: it is already emerging as a powerful driver of productivity, much like the previous three industrial revolutions from mechanised manufacturing to electricity and the personal computer. And productivity is what ultimately determines living standards. We are all better off when we can generate more value out of productive resources.

It is important to bear in mind this fact when we consider the widespread concern over the disruptive effect AI is having on labour and jobs. Alarmist portrayals of the tension between AI and the human worker, as well as fears over job security itself, are a classic case of history repeating itself. The Luddites were 19th-century English textile workers focused on trying to stop the first Industrial Revolution by raiding factories and breaking machinery.

Echoes of the Luddites’ arguments are colouring policy debates and social media discourse today as AI-driven disruptions increase in number. Companies like UPS, Amazon and Block have in recent months cut tens of thousands of jobs due to AI. Many view the rise of autonomous vehicles, chatbots and humanoid robots with anxiety.

What the Luddites failed to foresee is the extraordinary productivity dividend delivered by the factory revolution. Global GDP per capita roughly doubled during the 19th century. With innovation accelerating, an estimated 10-fold gain was recorded by the end of the 20th century. Many of the economic sectors that we today take for granted were made possible by the wealth generated by technological progress. Tourism and entertainment are but a few examples, but virtually every sector has evolved and diversified due to these forces. 

Half of employment growth between 1980 and 2007 took place in occupations with new job titles.

The reality today is no less stark than two centuries ago: by resisting this new technology, we risk attempting the impossible as innovation and computing capacity accelerate while AI dissemination gathers pace. Any attempt to avoid this change can at best lose time that could be better spent on preparing for the “new economy”. These choices will set apart the haves and have-nots of the AI era, between countries and within economies. There will be numerous, significant losers and disruptions even if long-term benefits are likely to far outweigh the short-term pain.

The constructive approach to AI is proactive engagement: seeking to understand it and make use of it. This is all the more important, since AI is not a magic bullet but a tool that we need to learn to use to our benefit. Relevant skills now command a growing premium in the labour market as they turn individuals into artisans of this new economy. The same is true for companies that can only unleash the potential of AI by investing in use cases that deliver value, a growing opportunity amid today’s abundance of data. 

However, doing this takes more than pressing a button. It often requires an ongoing process of trial and error along with internal capacity building. One recent estimate suggested that over 40% of corporate AI agent projects will be cancelled by the end of 2027 because of escalating costs, unclear business value or inadequate risk controls. Moreover, technological processes are seldom foolproof or fully customisable, which necessitates continued human involvement.

In short, the choice is stark and simple: embrace AI or risk being left in the dust as others move ahead. This underscores the importance of appropriate skills development as well as capital deployment in the corporate sector. Inaction is no longer an option, since those failing to seize the opportunity will be the ones disrupted by it while others zoom ahead, leveraging innovation to create more value for themselves and others.

Digital Edition

Bahrain This Month

July 2026

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