According to a report by a leading figure in the data center industry, data centers could attract large amounts of Foreign Direct Investment (FDI). Government investment will be crucial for this development. A new white paper by Khazna, a company based in Dubai, highlights that investing in data centers could significantly boost the UK economy.
Khazna designs, builds, and operates 16 data centers between Abu Dhabi and Dubai. The report notes that GenAI revenues could contribute as much as $1.3 trillion to the global economy by 2032. However, to support this growth, data center infrastructure must be rapidly expanded.
Staff requirements in the sector are forecast to grow from 2 million to 2.3 million between 2019 and 2025, suggesting even larger potential future expansion. This surge in data center demand could also lead to significant economic benefits globally. In the United States, constructing a typical data center involves a capital expenditure of $215.5 million, employing 1,688 local workers and generating an average output of $243.5 million.
These centers also have the potential to attract massive FDI, particularly in Europe.
Data centers as investment catalysts
In 2022, over $20 billion of the $44.8 billion in FDI invested in data centers went to Europe.
Germany and the UK, with more than 500 data centers each, are currently reaping the most benefits from this investment. Philippe Nahas remarked, “Investing in robust data center infrastructure is not just about technological advancement; it’s a strategic catalyst for economic prosperity and job creation. Data centers play a crucial role in the ICT sector by hosting cloud services, supporting digital content distribution, and enabling data analytics, among other things.
However, there are key issues to consider before governments ramp up investment.
Sustainability is a significant concern, as data centers require substantial power. While many businesses set ambitious sustainability targets, they often struggle to meet existing goals that do not involve the exponential energy demands of extensive data infrastructure. Moreover, there is skepticism regarding whether the AI sector will deliver meaningful economic growth.
With whispers that the AI bubble might burst and many governments facing financial constraints, the commitment to funding data centers remains uncertain. If the goal is to stimulate economic growth and create jobs, some argue that funds could be better allocated to accelerate the transition to renewable energy. While data centers present a significant opportunity for economic growth and job creation, careful consideration of sustainability and long-term economic viability is essential for governments and investors alike.
