Integration of economy and technology

In line with the technological changes affecting the global economy and reshaping it, governments and businesses must revise their plans by adapting to the modern tools in order to be able to develop various sectors and ensure business success and sustainability. Economy and technology are connected fields based on the use of modern technologies in the economy, and these technologies have become something imperative to deal with. The role of the modern economy has emerged in the process of making the right decisions and setting priorities. Economic policymaking has become essential in achieving development across various fields.

Integrating economics into technology, known as "digital economy or digital transformation," is one of the most significant global changes. Digital transformation and artificial intelligence are the main drivers of growth and development in the digital economy, and they are heavily relied upon to achieve the desired results. Digital transformation is defined as the process of transforming business from traditional forms to digital forms using digital technologies. Digital transformation is the integration of digital technologies in all aspects of a company or society, leading to a fundamental change in working patterns and creating innovative opportunities. The digital economy improves efficiency, performance, productivity, expands markets, innovation, and changes work models. Digital transformation is expected to continue shaping the future of the global economy with increasing reliance on technology across all sectors, contributing to enhanced competitiveness and sustainable growth. Its aim is to improve performance, achieve accomplishments, and increase growth rates. According to a report by the S&P 500 index, the impact of artificial intelligence on the economy could grow by 9 per cent by end of 2025, while a report published by "Business Insider" on the performance of technology companies on Wall Street indicated that the surge in these companies' stocks will support the global economy and increase economic growth rates by 2 to 2.5 per cent by 2035.

The integration of digital technology into economic operations will change how companies operate and provide services. Digital transformation includes digitizing data, converting information into digital formats using software and systems to automate traditional processes and reduce human intervention. Cultural transformation is necessary to change organizational culture to be more open to innovation and technology. 

Digital transformation contributes to improving efficiency, performance, accelerating economic growth, increasing production, reducing costs, and improving strategic planning. According to a report issued in 2022 by Goldman Sachs, digital transformation and artificial intelligence are expected to contribute to increasing global GDP by 2 to 2,5 per cent over the next decade by stimulating trade, investment, and international cooperation. According to the World Economic Forum, digital transformation and artificial intelligence will add $18 trillion to the global economy by 2030. Studies indicate that banking services, global technology, and life sciences will be among the most benefited sectors from this development. In the banking sector, digital transformation and artificial intelligence can add value to the economy by approximately $500-600 billion annually. In the retail sector, the impact could range from $650-750 billion. Regarding global labor markets, labor productivity is expected to grow by 0.1 to 0.6 per cent annually till 2040. An analysis by IMF on the impact of digital transformation on global labor market found that about 40 per cent of the global workforce is exposed to artificial intelligence in some way. Digital transformation and artificial intelligence are expected to lead to the loss of 90 million jobs while providing 100 million new jobs by the end of 2027.

Digital transformation offers numerous benefits. The most significant aspects of technological support for the economy lie in the development of digital financial services such as electronic payments, blockchain, digital currencies, and the Internet of Things. On the other hand, while the technological economy offers these benefits that contribute to maximizing growth, there are challenges that require international cooperation, strategic planning, and effective responses from governments, companies, and societies. Governments must develop well-thought-out strategies to overcome these challenges and enhance the potential benefits of integrating economics with technology. The private sector must also take brave initiatives to move forward with digital transformation processes and support government efforts. Furthermore, resistance to change due to fear of job loss, increased risks associated with data and technology, unclear strategies, cybersecurity threats, and the growing risk of security breaches of individuals, their personal data, are among the biggest challenges facing digital transformation. Legal compliance and adapting to diverse data and privacy laws in different countries is also a core challenge. Finally, the environmental impacts of increased production and use of technological devices will contribute to rising electronic waste, excessive use of energy and increase omission, causing a significant environmental challenge.

Locally, Jordan has made significant progress in its readiness to benefit from digital transformation and artificial intelligence to enhance the digital economy by developing and protecting infrastructure. A national strategy has been established to promote artificial intelligence and digital transformation to support the economy. Recently, the Future Technology Council was formed under the direct supervision of HRH the Crown Prince as a clear indication of royal interest in developing the digital economy in Jordan and positioning it at the forefront. The country is being prepared to effectively accommodate the requirements of digital transformation to support the foundations of the economic modernization plan. It is essential that all stakeholders collaborate to take advantage of the opportunities offered by digital transformation and artificial intelligence, working to overcome challenges that may impede progress toward a future driven by technological advancement, economic growth, and digital inclusion. Successful adaptation to these changes will define our position in the new financial system. Digital transformation is not an option but a necessity in the era of the fourth industrial revolution and its success requires a balance between technology and investment in human capital.

In conclusion, we foresee a bright future for businesses where digital transformation offers opportunities for growth. However, the challenges we face require increasing cooperation between tech companies and policymakers to develop systems that ensure the effective use of new technologies. Efforts should focus on reducing the knowledge and technical gap among different segments of society to ensure a smooth transition to the digital economy. Developing economies should prioritize building strong foundations for their technological transformation by investing in digital infrastructure and ensuring the availability of skilled labor. Several countries have successfully integrated economics with technology, such as Estonia, Singapore, South Korea, the United States, the Netherlands, the UAE, Finland, and China. The results of this integration have been positive for their economies, contributing to improved services, enhanced economic efficiency, and higher growth rates.

Haider Al-Majali is an economic and financial expert. [email protected]