Innovation and entrepreneurship critical to Middle East economies

DUBAI — In the face of growing competition between countries, organisations and individuals a new of thinking is required if all are to achieve economic success. To date, many of the Middle East countries have been fortunate.

By Lucia Dore (Senior Correspondent)

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Published: Fri 17 Mar 2006, 10:24 AM

Last updated: Sat 4 Apr 2015, 3:35 PM

They are oil-rich states, although reserves are dwindling, and have been able to use oil revenues to develop projects to diversify their economies. The grand plan for most of these economies is that they will become knowledge-based which means that the services sector will become more important. Consequently, the need for governments to educate and nurture local talent will become paramount and they will need to encourage people to think differently.

The aim of developing a knowledge-based economy is to create value-driven relationships and value-added products and services. And one of the ways to do this is encourage innovation and entrepreneurship.

The key to innovation lies in creative thinking and the generation of value creating opportunities. The people who have the know-how and foresight to interpret, analyse and share information - to turn it into knowledge - are those who really make the difference. These people are called knowledge workers and form the backbone of the new economy - or what should really be called the "knowledge economy".

To encourage innovation and entrepreneurship within the Middle East, the first World Summit on Innovation and Entrepreneurship will be held in Muscat, in the Sultanate of Oman, from 1-3 April. "I want the summit to awake entrepreneurship in the Arab World," said the summit's organiser, Sam Hamden speaking to Khaleej Times. The focus will be on how the private sector can "unleash the role of the entrepreneur," he said. "The United Nations Development Program (UNDP) has highlighted the need to make innovation and entrepreneurship a way of growing developing countries", explained Hamden, and "now we want to take this strategy from the macro to the micro level."

He explained that the summit provides an opportunity for the public and private sectors to discuss the issues of innovation and entrepreneurship - "to find ways of awaking the innovation and creativity of entrepreneurs to help create 90 million jobs in the Middle East by 2020." He added: "We think the summit is a great opportunity to highlight the need of governments to set up the infrastructure to allow entrepreneurs to grow and flourish."

The creation of a knowledge economy, of which entrepreneurship is a key component, is hugely important to the economic growth of the Middle East, said Hamden. But it is vital that knowledge is transferred to and shared by locals, rather than residing only with expatriates who are likely to take that knowledge outside the country. He asked: "What happens if the knowledge is not transferred to nationals?" he asked.

Using Dubai as an example, Hamden said that what the emirate has accomplished so far in terms of its economic diversification - tourism, the growth of the services sector generally as well as the establishment of industry clusters - stands as a model for other countries in the region. There is a downside, however. "Unfortunately, in the case of Dubai there are not a lot of locals involved. As Dubai continues to evolve it is important to develop the level of leadership and an army of people to deliver on the nitty-gritty."

He said: "Dubai has been very successful in creating an entrepreneurial mass. Now the model has to be sustained. If Dubai is run by internationals how do you create sustainability?" The government's vision for Dubai must be cascaded down to every layer of society.

While Dubai has some of the core ingredients required for a knowledge economy - strong government support and a well-developed physical infrastructure, such as industry clusters- the emirate has yet to put in place the legal infrastructure to protect intellectual property. Without well-defined rules and regulations multinationals will be discouraged from innovating. He also said: "The industry clusters are more like business parks and are not innovation clusters." And, perhaps more importantly, like many countries within the Middle East, the UAE does not have a proper educated workforce, said Hamden.

He believes that if governments developed the necessary "social infrastructure" - educational institutes and environments that foster innovation - the Middle East region could become one of the most competitive in the world. "We could have the most competitive workers in the world," said Hamden, but the social infrastructure must be developed by governments. "People must be given a platform from which to innovate", he said.

There are other issues too, especially in terms of social structure and cultural values, which he believes need to be addressed. For the knowledge economy to flourish, especially small-to-medium sized enterprises (SMEs) and micro-enterprises, you need a middle class, he said. "But this," he said, "is not the case in the Arab world."

Although there are many family-owned businesses throughout the Middle East, these businesses still need to foster entrepreneurship and innovation. He said: "They need to look for opportunities at the local level as well as with international corporations".

If innovation is to flourish, and the knowledge economy thrive, people and organisations must also be prepared to take more risk. "Risk taking is not encouraged in the Middle East," said Hamden and this needs to be addressed. "We need to encourage risk taking, provide access to financing, have good governance and an educated workforce." All this, he said, is critical to the development of the knowledge economy.



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