Artificial intelligence (AI) is no longer merely an emerging technology. It is gradually becoming part of the economic and political architecture of the Middle East and North Africa (MENA). Across the region, governments are investing heavily in digital infrastructure, smart governance and AI-driven economic transformation.

Yet beyond the optimistic narratives surrounding innovation and efficiency lies a more important question: who will control the emerging algorithmic economy in the Middle East?

For decades, the political economy of the region has been shaped largely by oil and gas revenues. Energy wealth enabled states to build economic influence, maintain political authority and shape regional power dynamics. Today, however, the global economy is entering a new phase in which data, algorithms and computational capacity are becoming strategic assets comparable to natural resources.

In this new environment, algorithms are not simply technical tools. They increasingly influence financial markets, labour systems, public services, security policies and digital commerce. As a result, control over data infrastructure and AI systems may become one of the defining sources of power in the coming decades.

According to the International Monetary Fund (2025), AI is expected to have significant impact in reshaping labour markets, governance systems and productivity structures worldwide, with developing economies facing both substantial opportunities and serious risks.

For the MENA region, this transformation carries particular significance because many economies are simultaneously attempting to diversify away from hydrocarbons while facing demographic pressures, unemployment and institutional fragility.

In recent years, Gulf countries have emerged as some of the region’s most ambitious investors in AI. Saudi Arabia and the United Arab Emirates (UAE), in particular, are attempting to position themselves as regional hubs for digital infrastructure, smart cities and AI innovation. These investments are closely linked to broader economic diversification agendas, such as Saudi Vision 2030 and the UAE’s long-term digital economy strategy.

But the rise of AI in the region is not simply an economic story. It is also transforming the relationship between states, markets and society.

Governments increasingly rely on algorithmic systems to manage transport, policing, public administration, digital identity systems and urban planning. Supporters argue that such technologies improve efficiency and state capacity. Yet critics warn that algorithmic governance may also increase surveillance, centralise authority and weaken transparency if it is not accompanied by appropriate institutional safeguards.

This issue is particularly relevant in the MENA region, where institutional accountability mechanisms often remain underdeveloped. Without clear regulatory frameworks, algorithmic governance could deepen existing governance challenges rather than resolve them.

Another major concern is the emergence of a new form of digital inequality across the region. While wealthy Gulf economies can invest billions of dollars in AI infrastructure, cloud computing and advanced digital systems, lower-income and conflict-affected states may struggle to keep pace. The result could be a widening technological gap within the region itself.

The World Bank (2023) has already highlighted that digital inequality remains one of the central development challenges facing MENA economies. Access to digital infrastructure, technological education and innovation ecosystems remains highly uneven across the region. In the AI era, these disparities may become even more politically and economically significant.

At the same time, the concentration of data and computational power in the hands of a limited number of governments and global technology firms raises important geopolitical questions. Just as energy dependency shaped international relations in previous decades, dependence on foreign AI systems and digital platforms may shape future economic and political alignments.

This emerging reality also creates new forms of strategic vulnerability. Cybersecurity risks, algorithmic manipulation and dependence on external cloud infrastructure could expose states to economic disruption and political pressure. The World Economic Forum’s Global Risks Report 2024 identifies cyber insecurity and misinformation driven by AI systems among the most significant global risks of the coming years.

The challenge for MENA policy-makers, therefore, is not simply how to adopt AI technologies, but how to govern them effectively.

Successful adaptation to the algorithmic economy requires more than importing advanced technologies. It depends on investment in education, digital skills, institutional reform, cybersecurity and transparent governance structures. Without these foundations, AI may reinforce inequality and dependency rather than promote inclusive development.

There is also an urgent need for regional cooperation. Many countries in the region currently approach AI primarily through national competitiveness frameworks. Yet issues such as digital regulation, data governance and cybersecurity increasingly transcend national borders. Regional coordination mechanisms may become necessary to manage the long-term implications of algorithmic governance.

The Stanford AI Index Report 2024 shows that global investment in AI continues to accelerate rapidly, while competition among states for technological leadership is intensifying. In this environment, countries that fail to develop domestic technological capacity risk becoming dependent consumers in the global digital economy.

The Middle East is therefore entering a new political-economic era – one in which algorithms, data and AI may become as strategically important as oil once was.

The central question is no longer whether AI will transform the region. That transformation is already underway. The real question is who will shape the rules, institutions and power structures of the Middle East’s emerging algorithmic order.

Further reading

International Monetary Fund (2024) Gen-AI: Artificial Intelligence and the Future of Work.

Stanford University (2024) AI Index Report 2024.

World Bank (2023) MENA Economic Update: Harnessing Digital Transformation for Inclusive Growth.

World Economic Forum (2024) Global Risks Report 2024.