Harnessing Collective Intelligence for Inclusive Growth in the Arab Financial Sector
Collective intelligence drives inclusive economic growth.
Redefine value creation for all stakeholders.
Ensure equitable rewards from innovation efforts.
In today’s rapidly evolving global economy, the concept of collective intelligence is gaining significant traction. It represents the culmination of efforts from diverse individuals and groups collaborating to tackle complex challenges, driving innovation and economic growth. However, as this notion becomes more widely accepted, it is imperative to critically examine who truly benefits from these collaborative efforts and how the rewards are distributed. This is particularly relevant for the financial and economic sectors in the Arab world, where the implications of collective intelligence are far-reaching.
For decades, economic activity has been structured in a way that socializes risks while privatizing gains. This approach, which has long been ingrained in policymaking, disproportionately favors shareholders at the expense of other stakeholders, including workers, taxpayers, and the communities in which businesses operate. As bankers, economists, and business leaders, it is crucial to recognize that this model is unsustainable. The Arab world, with its rich history of commerce and trade, must now reconsider the narratives surrounding value creation to ensure that innovation benefits all stakeholders, not just a select few.
Collective intelligence is often portrayed as the driving force behind the knowledge economy, where diverse minds come together to foster continuous experimentation and innovation. This romanticized view, however, obscures the true nature of collaboration. It begs the question: who is genuinely creating value, and how are the rewards of this value creation being shared? In many instances, those who contribute significantly to innovation, such as labor and the state, are overlooked or dismissed. The traditional framing of the private sector as the sole value creator, with the state relegated to a role of de-risker or impediment, is both misleading and detrimental.
In the Arab financial sector, this issue is particularly pertinent. The role of the state in driving innovation is often underestimated, despite its critical contributions. Consider, for example, the development of mRNA COVID-19 vaccines, which were significantly funded by public investment. This illustrates the need to reframe the narrative around value creation, recognizing that innovation is a collective effort that involves multiple stakeholders, including the state.
To ensure that innovation benefits all stakeholders, it is essential to move beyond mere rhetoric and implement tangible changes in how profits are distributed. One of the most pressing issues is the allocation of profits, which should be reinvested in the real economy rather than being funneled into share buybacks or tax havens. Between 2010 and 2019, share buybacks in the US alone totaled $6.3 trillion, diverting resources that could have been used to drive further innovation and economic growth. Additionally, tax havens collectively cost governments between $500 and $600 billion annually in lost corporate-tax revenue, depriving all stakeholders of the benefits of collective intelligence and collaboration.
In the context of the Arab world, where economic diversification is a key priority, it is vital to address these issues head-on. To do so, one must first understand how collective intelligence contributes to value creation. Collaboration thrives on knowledge sharing, yet the privatization of knowledge and research often hinders this process. While intellectual-property rights are necessary to incentivize investment and innovation, they can also be abused if they are too broad or too strong. This can lead to technologies becoming inaccessible, stifling discovery and innovation.
Patents, particularly in sectors such as medicine and technology, must be negotiated with a view toward promoting the common good. Rather than serving solely as a tool to address market failures, patents should be seen as part of a broader knowledge-governance system that facilitates innovation while ensuring that the rewards are distributed equitably. For the Arab financial sector, this approach could significantly enhance the region’s ability to compete on a global scale, fostering a more inclusive and sustainable model of economic growth.
A genuine collective-intelligence framework would ensure that the rewards of innovation are shared more broadly, reflecting the collective effort that went into creating them. This could take the form of profit-sharing or equity schemes, where the monetary rewards are distributed among all contributors. Alternatively, it could involve making knowledge more widely accessible or ensuring that the prices of final products reflect the collective investment that made them possible.
For instance, in the renewable energy sector, many companies benefit from generous tax incentives, which effectively means that the public is subsidizing their profit margins without sharing in the gains. In the digital domain, a common-good approach would ensure that new technologies, such as artificial intelligence, create opportunities for public value creation, rather than simply enriching a few private entities. The Arab world, with its growing interest in AI and digital transformation, should consider adopting such an approach to ensure that technological advancements benefit all stakeholders.
Voice and representation are also critical components of a successful collective-intelligence framework. In many cases, policy outcomes are distorted by those with the loudest voices, often those with the most resources to influence decision-making processes. This can lead to policies that serve narrow interests rather than the common good. In the Arab financial sector, where decisions often have far-reaching implications for the broader economy, it is essential to ensure that all stakeholders have a seat at the table.
As Arab banks and financial institutions pilot these challenges, there are several key recommendations they should consider. First and foremost, they must recognize the importance of collective intelligence in driving innovation and economic growth. This means moving beyond the traditional view of value creation and embracing a more inclusive model that benefits all stakeholders. Additionally, banks should advocate for policies that promote the reinvestment of profits into the real economy, rather than allowing them to be diverted into share buybacks or tax havens.
Furthermore, Arab banks should play a proactive role in shaping the governance of intellectual property and knowledge sharing. By advocating for a more balanced approach to patents and other forms of intellectual property, they can help ensure that innovation remains accessible and that its rewards are distributed equitably. Finally, banks should work to amplify the voices of all stakeholders, ensuring that decision-making processes reflect the diverse perspectives and interests of the communities they serve.
In conclusion, the financial sector in the Arab world has a unique opportunity to lead the way in embracing collective intelligence as a driver of innovation and economic growth. By adopting a common-good framework, Arab banks and financial institutions can help build a more inclusive and sustainable future for the region. The time for action is now, and the rewards of doing so will benefit not just shareholders, but all stakeholders in the Arab world and beyond.
