How can Artificial Intelligence help Pakistan to rebuild its economy?

How can Artificial Intelligence help Pakistan to rebuild its economy? by Shabnam Usman

The following article, “How can Artificial Intelligence help Pakistan to rebuild its economy?”, is written by Shabnam Usman, a student of Sir Syed Kazim Ali. Moreover, the article is written on the same pattern, taught by Sir to his students, scoring the highest marks in compulsory subjects for years. Sir Kazim has uploaded his students’ solved past paper questions so other thousands of aspirants can understand how to crack a topic or question, how to write relevantly, what coherence is, and how to include and connect ideas, opinions, and suggestions to score the maximum.

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Outline

1- Introduction 

2- Elaborating the term “Artificial Intelligence” and its features

  • ✓It enables the machines to illustrate human-like learned behaviour by assembling advanced technologies.
  • ✓It imitates human cognitive skills.

3-Interlink between AI and the Economy 

  • ✓”AI will contribute more than $ 15 trillion to the global economy by 2030.” (The Bank of America Research Institute)

4- Overviewing the current state of Pakistan’s economy and IT sector

  • ✓”The actual gross domestic product (GDP) growth remained 0.29% whereas the industrial sector demonstrated a negative growth of 2.94 %.” (Economic Survey of Pakistan) 
  • ✓”The IT sector of the state has declined about 1.3% in 2022.” (Forbes)

5- How AI can help Pakistan to rebuild its economy. 

  • ✓It can advance the taxation system.
    • Case in Point: “In 2021, about 140 countries have agreed on a significant global tax reform system.” (OECD research report)
  • ✓It can aid in the digitalization of assets.
    • Case in Point: “Digital financial services can serve 1.7 billion people around the globe without formal bank accounts.” (IMF)
  • ✓It can improve economic infrastructure.
    • Case in Point: “IOT has the potential to boost the global economy from $ 3.9 trillion to $ 11.1 trillion per year by 2025.” (McKinsey Global Institute report)
  • ✓It can boost hi-tech technology exports and attract FDI.
    • Case in Point: “Pakistan possesses 35% youth population and every year, a large cohort of IT experts is added to the IT sector.” (MOIT, Pakistan)
  • ✓It can develop human capital (labour market) and promote inclusiveness.
    • Case in Point: “Digital tools augment human capacities and amplify human effectiveness.” (American Research Institute)
  • ✓It can give innovative market analysis.
    • Case in Point: “Artificial intelligence is a promising tool to enhance market research capabilities radically, and its thoughtful applications can unlock transformative intelligence at speeds and scales impossible.” (Forbes)
  • ✓It can reform the governance mechanism.
    • Case in Point: “AI empowers democracy as it makes people more independent, informed, and responsible.” (IMF)

6- Implications for Pakistan to use AI as an economy-booster

  • ✓It can compromise people’s privacy and ethical norms.
    • Case in Point: “Generative AI is poised to unleash a wave of creativity and productivity but poses questions for humanity.” (IMF)
  • ✓It can foster unemployment.
    • Case in Point: “The displacement caused by AI creates significant challenges for affected individuals, leading to unemployment and income insecurity.” (Forbes)
  • ✓It can widen existing socio-economic inequality.
    • Case in Point: “The resource distribution imbalance exacerbates the divide between high-skilled and low-skilled workers, contributing to income inequality.” (Forbes)

7- Ways to counter AI-related threats for positive economic development in Pakistan

  • ✓To properly regulate AI implementation
    • Case in Point: Technical solutions: Applying encryption, validating configurations, using anonymization techniques
  • ✓To focus on a skill development approach
    • Case in Point: Failure of humanoid robots in Henn Na Hotel in China
  • ✓To promote inclusiveness
    • Case in Point: IT Progress of India

8- Conclusion

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Answer to the Question

1-Introduction

Artificial Intelligence (AI), the heart of modern technology, is changing the world dramatically. Its unique features have transformed every dimension of life from individual to global. Explaining AI as an artificial thinking mechanism modelled on human intelligence, it is a remarkable tool for decision-making and analysis processes, aiding humans to achieve precision and accuracy in day-to-day tasks. Accordingly, it is mainly applied in the economy because economic approaches need cautious estimations to discover opportunities, minimize risks, and maximize profits. Studies show that AI-related patents are on the rise worldwide, with a 6% annual growth rate between 2010 and 2015, especially in the developed states. Consequently, developing nations are also embracing AI for economic boom. Likewise, Pakistan is tailoring its low-yielding financial means using AI models for growth and untapping its digital potential for socio-economic development. Meanwhile, AI can help the government to improve its taxation system to generate considerable revenue. Similarly, Pakistan can reform its labour market and industry by using advanced analytic approaches of AI; demand-supply balance and quality production are some additional advantages AI can serve through its pattern recognition and integration approaches. Equally, AI can boost Pakistan’s economy by producing state-of-the-art jobs in both physical and virtual contexts; thus ensuring the inclusiveness of the workforce, AI can lead to sustainable development. Nevertheless, the positive aspects of technology have some implications. For example, AI may compromise people’s privacy and cultural norms, foster cybercrimes, and instigate socio-economic inequities. However, proper regulation, entirety, and skill-based approaches can help counter AI’s negative impacts by applying for economic growth in Pakistan. This article discusses some of the effective measures through which AI can help Pakistan reinvigorate its economy, a few implications of the approach, and the ways to counter them for effective implementation. 

2-Elaborating the term “Artificial Intelligence” and its features

Starting by debunking the term, as the name implies, Artificial Intelligence (AI) is a non-natural act of intelligence demonstrated by computer systems. It enables the machines to illustrate human-like learned behaviour by assembling advanced technologies of neural networks and machine learning algorithms – sets of instructions that tell the system what to do. Such technologies establish expert systems in computers by developing knowledge bases – the pools of data and processed information retained by the machines to assume real-world concepts. Further, AI simulates human cognitive abilities: learning, memorizing, thinking, predicting, and interacting. Its prominent features include capturing intricate details of phenomena, analyzing complex concepts, performing precise calculations, extracting existing patterns, integrating data elements, and making accurate decisions. Such features allow AI to have a number of applications in multiple fields, like the economy, healthcare system and medicine, education, military, surveillance, business, etc.        

3-Interlink between AI and the Economy

Discussing particularly the economic applications of AI, both concepts are deeply interlinked. By dissecting the intricate relationship, it can be illustrated that AI encircles every unit of the economy; it describes the technical infrastructure of businesses in terms of algorithms, defines production as the processing of raw data, analyses market strategies as a pattern recognition mechanism, views product distribution as classification phenomena, and capitalizes opportunities as predicted artefacts. These overlapping attributes make AI a powerful tool to revolutionize production and consumption patterns. Subsequently, a Bank of America Research Institute study predicts that AI will contribute more than $ 15 trillion to the global economy by 2030. Furthermore, growing digitalization (Industry 4.0) is anticipated to double AI’s contribution to the global economy by 2035. Summing up, AI has the potential to transform the economy in a number of ways, comprising productivity growth, labour market, and industrial concentration.    

4-Overviewing the current state of Pakistan’s economy and IT sector

Reflecting the current state of Pakistan’s economy and technology sector, the statistics are dismal. According to the Economic Survey of Pakistan, 2022-23, the gross domestic product (GDP) growth remained 0.29% whereas the industrial sector demonstrated a negative growth of 2.94 %. On the other hand, there is no speak of AI in Pakistan, where information technology (IT) is in its embryonic stage; the IT sector of the state declined by about 1.3% in 2022; furthermore, “The country is battling with poor IT infrastructure, unresolved security issues, and people lagging technology adoption – some of the significant evils essentially hindering IT growth”, to Forbes. Adding fuel to the fire, the government and the people are still blinded to the importance of IT and AI for economic reforms. The farmers are reluctant to adopt modern AI-based tools for agricultural yield; the industrialists insist on using outdated production techniques; similarly, the government is unwilling to switch to technology-oriented approaches. As a result, Pakistan is facing food insecurity and industrial decline, leading to a weak economy. Concluding, Pakistan’s commercial means are not aligned with state-of-the-art technology; therefore, the country needs to embrace AI tools for economic progress. 

5-How can AI help Pakistan to rebuild its economy?

Considering Pakistan’s fragile and outmoded economic system and comparing it with the global economic models, the government needs to rebuild its economic infrastructure with modern technology and AI tools. Some of such measures are discussed below.

It can advance the taxation system.

First, AI can modernize Pakistan’s taxation system, aiding colossal revenue generation. The USA taxation model is a glaring example in this regard. AI can help detect fraud and illegal financial activities using recognition pattern techniques. Furthermore, AI linked to the National Database and Registration Authority (NADRA) aids in fair tax calculation. Besides, like in Dubai, all payments made by the people should switch to innovative card payment methods; the approach will be helpful in tracking the financial activities of the users, thus facilitating the tax authorities to root out tax evasion. Owing to the robustness of AI-based tax systems, developed and developing economies aim to develop AI-modelled tax systems. In 2021, about 140 countries agreed on a significant global tax reform system, as per the Organization for Economic Co-operation and Development (OECD). In summary, Pakistan can strengthen its economy by collecting much revenue through an improved AI-generated tax mechanism. 

It can aid in the digitalization of assets.

Moving further, besides an improved tax system, Pakistan can pave its way for economic growth by investing in digital assets – anything that exists in digital form has a unique identity and can be converted into real value. Cryptocurrency and non-fungible tokens (NFT) are examples of digital assets. Cryptocurrency is virtual currency based on block chain technology; likewise, NFTs are AI-generated objects like drawings, paintings, music, games, etc. In addition, digital money and phone-based transactions are also digital forms of money. According to the International Monetary Fund (IMF) report, “Digital financial services can serve 1.7 billion people around the globe without formal bank accounts.” Consequently, it is a tremendous economic opportunity for developing countries like Pakistan. Furthermore, digital assets are a transnational economic perspective, which can assist Pakistan in making good use of emerging globalization trends. Therefore, with a growing pool of tech talent, Pakistan’s government should focus on investing in digital assets for positive economic gains. 

It can improve economic infrastructure. 

Furthermore, the third important initiative Pakistan can take while incorporating AI for economic development is the concept of smart cities. The idea comprises modern AI techniques, including the Internet of Things (IoT), advanced analytics, cloud computing, robotics, additive manufacturing (like 3D printers), etc. According to a McKinsey Global Institute report, “IoT has the potential to boost the global economy from $ 3.9 trillion to $ 11.1 trillion per year by 2025.” Such economic increase is because of many advantages provided by this AI-based tool: it improves the efficiency and accuracy of industrial processes, expands customer experience, enhances security, introduces new business opportunities, and provides multiple environmental benefits. All such advantages can fulfil Pakistan’s dream of achieving the goal of sustainable economic growth. In short, AI can effectively enhance the economic development of the country.  

It can boost hi-tech technology exports and attract FDI.

Exploring further prospects, AI can assist Pakistan to untap its full technology-based economic potential because of two optimistic aspects that Pakistan possesses 35% youth population, and every year, a large cohort of IT experts is added to its IT sector according to the report of the Ministry of Information Technology (MoIT), Pakistan. Therefore, Pakistan can make groundbreaking progress in the technology segment by intensely focusing on AI skills. Thus, considering the current pace of technological advancement, a country like Australia will quickly become an active tech giant. It will produce and consume hi-tech products and export them soon. Moreover, advanced technology is an attractive force for foreign investors and multinational companies. Therefore, AI can increase Foreign Direct Investment (FDI) in Pakistan. Altogether, all pragmatic means – designed by embracing AI – can bring gist to Pakistan’s economic mill.  

It can develop human capital (labour market) and promote inclusiveness.

In addition to devising hi-tech tools, AI aims to develop human capital in Pakistan. As it is an advanced level of technology, AI usage needs skillful labour and educated people. Digital tools augment human capacities and amplify human effectiveness, to the American Research Institute. Undoubtedly, the workforce of developed countries with modern technology is far more competitive than that of developing nations. Such a situation exists because AI reforms the socio-economic status of people in developed economies. Furthermore, effective AI employment in those nations requires people to update their knowledge and learn advanced skills. Accordingly, Pakistan has to work on human capital development. For this purpose, the government should invest more in education and vocational training concerning modern technology trends. The developed human capital, thus produced, will take Pakistan’s economy to new heights, not only in technology but also in other productive fields. Simultaneously, AI-based economic models tend to have many jobs in physical and virtual contexts. Therefore, it demands inclusiveness, which can add much to the country’s economy. Consequently, Pakistan can enforce an “inclusive” economic approach while deploying AI in its economic infrastructure to accelerate its economy. 

It can give innovative market analysis.

Furthermore, advanced analytics, logistics, and predictions are the heart of AI. All such features make AI a remarkable market analyst; thus, it can help Pakistan’s economy capitalize on business opportunities efficiently, target consumer markets, and improve distribution strategies. According to Forbes, “Artificial intelligence is a promising tool to enhance market research capabilities radically. Its thoughtful applications can unlock transformative intelligence at impossible speeds and scales.” The fact indicates that AI enhances entrepreneurship and helps business people understand low-cost quality production patterns, compete in a healthy business environment, and produce commodities according to demand-supply curves. Conclusively, Pakistan can drastically transform its industry by using AI market strategies; in addition, the risk estimation aspect of AI can encourage small businesses to flourish. Furthermore, AI-based tax systems provide local and foreign investors with ease-to-do business facilities. Summing up, AI is a panacea for all economic vows of Pakistan.

It can reform the governance mechanism. 

Besides reforming business patterns, AI is a robust tool to improve governance mechanisms. According to the International Monetary Fund (IMF) report, “AI empowers democracy by making people more independent, informed, and responsible.” Apparently, advanced information and communication technology (ICT) and expanding social media platforms are strong supports of this fact. Pakistan must embed AI in its governance system to overcome the plethora of issues impeding the state’s economic growth. AI can assist in settling many such problems in several ways: it can reform the judicial system, integrate modern fraud detection techniques, introduce a machine-based healthcare system, promote a skill-oriented education system, and induce a flawless technology-based accountability process. Such advancements in Pakistan can combat corruption, law and order crises, human development dilemmas, and a swift justice system that altogether promotes democratic values and an effective model of governance, leading Pakistan towards prosperity and economic sustainability.      

6-Implications for Pakistan to Use AI as an economy-booster

Reflecting the other side of the picture, AI may pose many grave threats to the Pakistani community, making it a severe concern for effective implementation. Some of the significant implications are discussed below.

It can compromise people’s privacy and ethical norms.

Among many such issues, the most devastating one is that AI compromises people’s privacy and ethical values. According to the International Monetary Fund (IMF), “Generative AI- a new feature of AI, is poised to unleash a wave of creativity and productivity but poses questions for humanity.” The arguments advocating the fact are that AI is merely based on fed data; therefore, its efficiency is solely based on the quality and kind of information provided to the system. Thus, the outcomes may violate cultural norms and ignore people’s privacy concerns. However, the data thus generated is merely a human fault rather than a machine’s malpractice. Consequently, breaching cultural norms has become frequent because of the evolving globalization phenomenon, as most people are unaware of transcultural customs. So, ethical values are also at stake because of the ease of access to worldwide content and the automation feature of AI fixed at self-suggesting mode; many times, the users, especially children, can unintentionally be exposed to discreditable data.    

It can foster unemployment.

Besides the display of creditable content, the second most grave concern related to the application of technology – especially AI – is that it is assumed that it may replace humans in the near future, thus leaving the world in the lurch of robotics. Likewise, for Pakistan, another peril related to AI’s future is that AI’s automation feature can replace humans for accuracy and precision, thus fostering unemployment and economic slope. According to Forbes, “The displacement caused by AI creates significant challenges for affected individuals, leading to unemployment and income insecurity.” This is a real threat to a fragile economy like Pakistan, which already has a large cohort of unemployed workers. In addition, employing humanoid robots is advantageous for industrialists because it will only be a single investment rather than regular payments in terms of salary to the workers, where quality production is an additional gain. However, simultaneously, it can cause sluggishness as increasing unemployment will cut people’s purchasing power. Therefore, employing technology can be dreadful for Pakistan’s economy.

It can widen existing socio-economic inequality.

Moving further, another peril the AI could pose in Pakistani culture is to instigate social-economic inequalities. The fact is supported by Forbes, which depicts that the resource distribution imbalance exacerbates the divide between high-skilled and low-skilled workers, contributing to income inequality. Considering that Pakistani society is already a hub of diverse groups divided on multiple grounds, economic status in particular, the deployment of technology may widen the existing gaps to an irreconcilable stage. Besides skill and economic criteria, access to technology – owning to fragile ICT infrastructure – is another grim factor that can further deepen the trenches of the inequality crisis in Pakistan. Furthermore, the conservatism of the masses is also a reluctant element that can add fuel to the fire. Summing up, the menace of AI to prompt inequalities in the system can tarnish the positive potential of this cutting-edge technology for economic development in the country. 

7-Ways to counter AI related threats for positive economic development in Pakistan

Despite gloomy anticipations, AI can be applied competently to overcome its negative impacts. Many such pragmatic approaches are discussed in the following paragraphs. 

To properly regulate AI implementation

First, to overcome the data privacy issue of AI, Pakistan needs a proper regulation mechanism so that the technology cannot be used for criminal acts. For this purpose, the government should devise practical policies and ensure their imposition. Furthermore, cybercrimes (technology-based crimes) must be handled with iron hands to nip the evil in the buds; observing and examining AI systems and verifying their compliance with privacy policies and regulations can work effectively in this regard. Additionally, people should be informed about data privacy threats and encouraged to learn the “safety” rule. The most common technology-based solutions to the problem include encryption (an encoding method to prevent the stealing of data), using security systems, and adopting anonymization techniques. 

To focus on the skill development approach

Second, to counter the displacement issue while implementing AI, the state’s administration should focus on a skill development approach, i.e., to develop its human capital as experts and professionals can never be replaced by machines. For instance, China deployed humanoid robots in its Henn Na Hotel, failing because the robots could not handle the customers appropriately. Furthermore, mechanical systems always need maintenance that humans can only do. Besides, human expertise is required to create expert systems (information units of computer systems to infer results). Accordingly, Pakistan must work on its human resources to produce hi-tech experts who can efficiently use AI systems for economic development. 

To promote inclusiveness  

Furthermore, India’s growing IT industry motivates Pakistan to switch to AI without any threat of social or economic division. Despite sharing cultural diversity, India, unlike Pakistan, is ready to embrace AI means for development purposes. Hence, Pakistan can follow suit by promoting inclusiveness and investing in its labour force, as both approaches do not leave behind any marginalized social group. Furthermore, integrating the two concepts will not only prevent AI’s dividing element but also work remarkably for the economic betterment of the state. In addition, Pakistan’s IT sector needs state-of-the-art reforms; in fact, the entire framework must be renovated because structural improvements allow societal collaboration; thus, the scheme can bridge all socio-economic gaps of the society that could emerge due to AI incorporation into an economic stratum of the state.  

8-Conclusion

Summarizing the whole scenario, AI can positively rebuild Pakistan’s economy. It is undeniable that AI is humankind’s future; it is a necessity to exist in today’s globalized world. The nations’ lagging technology in this era of globalization will decline in all socio-economic dimensions. Therefore, it is high time for Pakistan to switch to modern technology for its survival, as several features of AI can aid the state in overcoming its economic stagnation. It may lead Pakistan to keep pace with the ever-evolving global economic patterns. Furthermore, AI can resolve multiple domestic issues in Pakistan, hindering its economic progress. Therefore, a technology-based taxation system, e-governance, IT-based inclusive economic approach, skilled labour force, digitalized assets, and modernized market analysis are some of the pragmatic measures needed to employ by the Pakistani government in assistance with artificial intelligence to stabilize Pakistan’s economy and pave the country’s way for sustainable development and prosperity. 

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