Dubai: Amazon Web Services, Inc. (AWS), an Amazon.com, Inc. company (NASDAQ: AMZN), commissioned a new report quantifying the relationship between public cloud computing adoption, national productivity, and economic growth in the Middle East and North Africa (MENA) region. The report highlights the potential for the UAE to unlock USD $181 billion in additional economic value over the next decade (2023-2033), or 2.5% of the UAE's cumulative GDP by accelerating adoption of cloud.
The study, performed by Telecom Advisory Services LLC, and directed by Raul Katz, Director of Business Strategy Research at the Columbia Institute for Tele-information (Columbia Business School), provides a cutting-edge econometrical method for calculating the aggregate productivity gains realised by economies that adopt cloud computing. It extends previous economic research focused on firm-level productivity by establishing cloud adoption as a driver of national productivity and economic growth.
Unleashing the Economic Power of Cloud Computing in the UAE
In 2021, public cloud adoption made a significant impact on the UAE's economy. According to the report, it contributed 2.26% to the country’s GDP, generating an economic value of USD $9.5 billion, the largest public cloud contribution to GDP in the region. This "productivity" effect is in addition to the "construction" effect of building and operating cloud infrastructures in the UAE, which, in the case of AWS UAE Region, are projected to contribute $11.2 billion to the UAE economy by 2036 and support nearly 6,000 full-time equivalent jobs annually.
In the MENA, the UAE is where cloud adoption is driving the most economic growth in terms of spillovers. The report finds that a 1% increase in cloud adoption by UAE organisations will result in a 0.21% (USD 854.7 million) average GDP growth, which is three times the MENA average and the highest in the region. Over 91% of this impact, can be attributed to the national productivity gains or so-called “spillover effects” on the economy, while the remainder (9%) is driven by cloud spending from UAE public and private organizations. As an economic stimulant, cloud computing is 17% more effective in the UAE than mobile broadband.
Yasser Hassan, Managing Director, Commercial Sector, MENAT at AWS, said: "The findings of our report highlight the tremendous opportunity for the UAE to accelerate economic growth and position the country as an attractive and influential economic hub, in line with the government's “We the UAE 2031” vision launched by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai. As cloud computing continues to gain momentum, it is imperative for the UAE to continue to support cloud adoption and develop a skilled workforce to enhance the country's competitiveness on a global scale. With the support of AWS, the UAE can accelerate its digital transformation and unlock new opportunities for economic growth and social development."
The study demonstrates that the economic impact of cloud computing is guided by returns to scale, - greater adoption of cloud computing will lead to proportionally greater productivity gains and economic impact.
The UAE has ambitious plans to diversify its economies through digitization. In 2021, 43% of organizations in the UAE region adopted cloud computing, versus 49% in Western Europe and North America. With the government's focus on digital transformation, it is well-positioned to become a hub for cloud computing in the region.
“The widespread adoption of cloud has already led to increased efficiency, cost savings, and job creation in various industries. As more businesses and organizations continue to migrate to the cloud, the economic benefits are expected to grow even further,” added Yasser.
The report identifies four key advantages of cloud computing: First, it enhances business efficiency and effectiveness, streamlining processes and improving outcomes; second, it offers access to a wide range of services, enabling businesses to leverage advanced technologies; third, it boosts productivity by facilitating collaboration, mobility, and agility within the workforce; fourth, cloud computing promotes environmental sustainability by reducing carbon emissions per unit of data transmitted