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Research Report

BRAINSTORMING THE GULF: Innovation and the Knowledge Economy in the GCC

Peter Engelke
Copyright Date: Mar. 1, 2015
Published by: Atlantic Council
Pages: 24
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Table of Contents

  1. (pp. 1-2)

    When it comes to building the knowledge economy, the Gulf is one of the most ambitious regions in the world. Recognizing that their countries’ fossil-fuel-driven wealth will come to an end at some unknown point in the future, leaders of the six Gulf Cooperation Council (GCC) countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates) are investing heavily in the infrastructure necessary to create economies driven more by innovation than by energy exports. They have created ambitious national strategies to build research-and-development capacity, enable venture capital, attract highly skilled foreign workers, and create innovation clusters. Several countries...

  2. (pp. 2-4)

    A decade ago, the consensus view from outside the region was that Middle Eastern countries, including those in the Gulf, were in a poor position to build knowledge economies. In 2003, the United Nations Development Program released a controversial report claiming that the Arab world in general was a long way from developing “knowledge societies.”⁵ This report argued that the Arab world lacked a commitment to science and technology, had underperforming educational systems, and generally discouraged innovation and creative expression.⁶ The report painted in broad brushstrokes, and discussed the Arab world as a whole. It did occasionally highlight examples of...

  3. (pp. 4-8)

    Creating innovation “hubs” or “clusters”—specific places that facilitate and encourage innovation—is a common strategy for building the knowledge economy. Successful clusters concentrate firms, research institutions, specialized suppliers, entrepreneurs, and supporting institutions in one place. These initiatives either take advantage of existing cultural milieus that value creativity and innovation, or attempt to create them. The point is to build a critical mass of talented entrepreneurs, researchers, and innovators, whose interactions result in commercially viable knowledge products. Aware of the gains to be made, governments around the world have been racing to build clusters for quite some time. In 2006,...

  4. (pp. 8-10)

    Bottom-up trends also are shaking up the economies of the region. As outlined by the journalist Christopher Schroeder in his 2013 book Startup Rising: The Entrepreneurial Revolution Remaking the Middle East, there are emerging grassroots in the Middle East and the Gulf that embrace innovation and entrepreneurialism.23 Different groups—especially the region’s youth and women—are building upon their high levels of education and access to global information flows to become entrepreneurial leaders. In general terms, the groups that are driving entrepreneurialism are more expressive, less patient with existing socioeconomic structures, and more willing to pursue their aspirations on their...

  5. (pp. 10-12)

    Global economic rankings position GCC countries in the top half of global standings, and often in the top third (table 2). Compared with the broader Middle East and North Africa (MENA) region, only Israel consistently outpaces Arab Gulf countries, and Turkey is the only other country roughly on par with GCC economies. Globally, Arab Gulf countries compare favorably with economic powerhouses such as China—at least in some metrics—but not as well with the recognized global innovation leaders, including Singapore and the United States.

    These indices vary widely in scope and emphasis. The World Bank’s Doing Business index is...

  6. (pp. 12-16)

    The challenge for Arab Gulf countries going forward will be sustaining and expanding the successes they have enjoyed to date, and here there are no guarantees. The world’s most successful innovation hubs took decades to build, whether created from scratch like Silicon Valley, or through refashioning existing places as in Singapore. Either way, long-term commitment to the knowledge economy is key. To date, all signs point to the staying power of Arab Gulf leadership in this regard. However, the length of the gestation process inevitably requires close and sustained attention, at the highest levels of governance, to signs of progress...