When it comes to building the knowledge economy, the GCC is one of the most ambitious regions in the world. As part of their diversification strategies, GCC countries are investing heavily in the infrastructure necessary to create knowledge economies driven by innovation rather than hydrocarbon exports. Most GCC countries have impressive future-oriented national economic strategies that aim at building innovation clusters, enabling finance and venture capital, building R&D capacity and attract highly skilled foreign experts.
Innovation is a top priority in the GCC national strategies
Realizing the importance of diversifying away from oil, several GCC countries during the 2000s introduced dramatic policy reforms with a special focus on developing human capital and knowledge economy infrastructure. The objective was to transform their economies into global powerhouses competing with the United States and Singapore. In achieving this goal, almost all GCC countries followed the top-down “Silicon Valley innovation cluster” strategy, which aims at building a critical mass of research labs, talented entrepreneurs, venture capital and innovators who would interact and build knowledge products.
Saudi Arabia with its five-year plans, increased spending on education on all levels and opened one of the largest universities in the world, King Abdullah University of Science and Technology (KAUST) in 2009 with an endowment at 20 billion US dollars. The ambition with KAUST was to become a world-class scientific research institution.
Qatar also aims at diversifying its economy through innovation and entrepreneurship and has built a massive Education City with supporting infrastructure for R&D and private sector hi-tech firms through the Qatar Foundation (QF consists of 80 centers that are dedicated to education, research and innovation).
Likewise, the UAE, with major projects like Dubai TechnoPark and Masdar City project, is also building a knowledge economy from the top down. In October 2014, the UAE announced a National Innovation Strategy that aims at turning the country into a global innovation leader with a focus on seven sectors (renewable energy, transport, education, health technology, water and space).
Unlike its neighbours Bahrain has opted for a mix between top down and bottom up approaches with its recent National Research Strategy from 2014. The strategy was formulated with input from the private sector and key stakeholders and will focus on three priority service sectors that build upon Bahrain’s relevant human capital strengths: the finance sector, ICT sector and health services.
Evaluating Progress: Innovation Performance of GCC countries in rankings
Global ranking indicators position GCC countries in the top 30 percent of the global standings. Compared with other MENA countries, GCC countries outpace their Arab neighbours.
The table below provides an overview of selected indicators.
|World Economic Forum Global Competitiveness Index (GCI) ||World Bank Doing Business Index ||Global Innovation Index ||Global Entrepreneurship and Development Index (GEDI) |
The indicators vary widely in scope and focus. The World Bank’s Doing Business Index focuses on regulatory conditions, while the WEF’s Global Competitiveness Index ranks countries along 12 pillars that include among other things infrastructure, education, macroeconomic environment and technological readiness sub-indices. The Global Innovation Index and GEDI both attempt at measuring the knowledge economy directly.
UAE, Qatar and Saudi Arabia perform best under the GCI, which takes into account the massive physical infrastructure and public investments in education. Under GCI Kuwait and Oman, receive high marks for economic stability and institutions, but score low on innovative activity. On the other hand, while Bahrain has a low overall score it scores high on innovation related indicators such as the quality and reach of its skills-training programs.
The innovation focused GII that was published in September 2015, gives Saudi Arabia, UAE and Qatar strong marks noting that the countries have begun to diversify their economies and that they have introduced innovation in new sectors.
While GCC countries have achieved impressive results in their innovation strategies, they still face the challenge of sustaining and expanding their successes. The successes depend on translating the visionary strategies into effective policies that can create self-sustaining innovation ecosystems.
History has shown that the world’s most successful innovation hubs in Silicon Valley and Singapore took decades to build and long-term commitment is key to build knowledge economies.
Likewise, grand ambition and billions in investment capital are insufficient by themselves and building utopian green field projects from scratch is more difficult in practice. Both Saudi Arabia’s KAUST project and the UAE’s Masdar City are encountering these challenges.
Roundtable Focus – The agenda
The EU-GCC Trade and Business Cooperation Facility, in partnership with the BCCI, is organizing a roundtable on November 2 2015.
This roundtable will focus on how GCC countries can strengthen innovation linkages between the different stakeholders such as universities, private-sector institutions, multinational corporations, and the public sector.
The roundtable will include presentations by representatives from GCC governmental bodies and EU/GCC academia, who will shed light on innovation policy and development of GCC national talent. Likewise, the programme will include business cases from EU and GCC private sector bodies that engage in innovation.
Roundtable Results – Expected Recommendations
The roundtable will seek to select issues to be further developed by a joint Policy Advocacy task force in the following areas:
- How can GCC countries translate a culture of innovation into long-term business benefits?
- How can the private sector accelerate development of innovation?
- How can GCC countries promote research careers domestically in order to support local talents?
- How can Bahrain achieve its unique selling point in industrial innovation? Should it focus on “strengthening the strengths” approach or to “differentiate from others”?
 The term “knowledge economy” is defined as a society where wealth is created by production, distribution and use of knowledge and information as opposed being based on to primarily natural resources, physical capital and low skill labour.
 Arabian Business, “UAE launches plan to be ‘among the most innovative nations in the world’ within 7yrs” October 19, 2014 http://www.arabianbusiness.com/uae-launches-plan-be-among-most-innovative-nations-in-world-within-7yrs-568451.html#.VhOwJ_ntlBc
 WEF The Global Competitiveness Report 2014–2015 http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2014-15.pdf
 WB Doing Business 2015: Going Beyond Efficiency http://www.doingbusiness.org/reports/global-reports/doing-business-2015
 The Global Innovation Index 2015, Cornell University, INSEAD, and the World Intellectual Property Organization (WIPO). https://www.globalinnovationindex.org/content/page/gii-full-report-2015/
 The Global Entrepreneurship and Development Institute http://thegedi.org/2015-global-entrepreneurship-index/