From Microprocessors To AI: How 50 Years Of Digital Innovation Are Shaping FDI Trends?

(MENAFN- The Peninsula) The Peninsula

DOHA: The foundation of today's digital Economy was laid over 50 years ago, with the invention of the microprocessor in 1971-a revolutionary breakthrough that placed the power of computing onto a single chip. This innovation paved the way for the development of personal computers, the internet, smartphones and cloud computing, each milestone contributing to the technological landscape evolution. While modern advancements, like Artificial Intelligence (AI) and the Internet of Things (IoT), are often credited with driving today's transformation, the reality is that this evolution has been steadily unfolding for decades, continuously reshaping our social and economic development.

From a foreign direct investment (FDI) perspective, the rise of the digital economy has been nothing short of transformative. Nations worldwide are investing heavily in the digital economy, now accounting for 15% of global GDP, according to the World Bank and totalling $15.2 trillion in 2022 .

According to Hamad Rashid Al Naimi, Strategy Manager, Investment Promotion Agency QatarThis significant surge, expanding 2.5 times faster than the broader economy , has driven FDI flows into digital sectors from $520bn in 2010 to $653bn in 2022, according to an Invest Qatar report on digital FDI. Forrester projects the global digital economy to grow from $11.8 trillion in 2023 to $16.5 trillion in 2028, driven largely by sectors like online retail and travel and spearheaded by major markets such as the US and China .

Al Naimi said As digital technologies, particularly AI and cloud computing, continue to gain widespread adoption, key questions arise: how are the technologies redefining FDI flows and how are nations positioning themselves to stand out in this increasingly competitive landscape?

AI: A catalyst for digital FDI growth

The launch of OpenAI's ChatGPT in late 2022 sparked widespread excitement, quickly making generative AI a central focus for investors, policymakers and the public. While the concept of AI dates back to the 1950s, its significant advancements in recent years have been driven by the availability of vast data, improved algorithms and more powerful computing hardware.

Today, AI stands as one of the most prominent technology investment trends, with no signs of losing momentum. According to GlobalData, the AI market is estimated to reach $909bn by 2030, with generative AI being a key growth area, he said.

This surge is evidenced by a recent Crunchbase report, which indicates that investments in AI startups soared to $24bn in Q2 2024, more than doubling from the previous quarter.

Al Naimi mentioned that it also reflects the growing appetite for AI as a transformative technology across various sectors. Notable examples include AI-powered applications in healthcare, where AI is enhancing diagnostics and treatment plans and in manufacturing, where it
is optimising production processes and supply chain management.

Bringing opportunities, yet widening economic gap, he remarked.

As opportunities in AI continue to grow and accelerate the digital economy boom, a widening gap is emerging between countries, driven by varying strategies and responses to AI adoption. Leaders in AI-primarily developed nations-are poised to extend their lead over developing countries, which are lacking the infrastructure or skilled workforces needed to harness AI's benefits.

Al Naimi stressed that this trend is underscored by the dominance of the U.S., Denmark and Singapore, which top the IMF's AI Preparedness Index , a benchmark that tracks 174 economies based on their readiness across four areas: digital infrastructure, human capital and labour market policies, innovation and economic integration, and regulation.

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