4 innovation hotspots in the Arab world

Gutteres UN News

UN News. Secretary-General António Guterres addresses the Summit of the League of Arab States in Jordan.

This article is brought to you thanks to the strategic cooperation of The European Sting with the World Economic Forum.

Author:  Attilio Di BattistaEconomist, World Economic Forum & Mirek Dusek Head of Middle East and North Africa, Member of the Executive Committee, World Economic Forum

The world has deeply changed over the past decade. The global economy has been through one of the most turbulent times in recent history with a financial meltdown in key advanced economies, followed by a sharp decline in global trade, extremely lax monetary policies and stalling productivity growth. Poverty levels have never been so low in the world, but inequality has grown within most countries, increasing discontent especially in more mature economies. Globalization and technology have disrupted entire industries, and this trend is set to accelerate with the pace of technological advancement. This is pushing many countries to rethink their economic model and prepare for a world of greater uncertainty.

The Arab world has not been immune to these trends. Fluctuations in commodity prices have increased the urgency of reform, highlighting once more the limitations of a model centered on the use of public administration and state-owned enterprises to create secure jobs, generous subsidies to energy-intensive sectors and a marginal role for private initiative. Countries that had pursued more consistent diversification strategies and supported the development of a thriving private sector have better weathered the storm of the economic crisis and minimized social tensions.

Image: Arab World Competitiveness Report 2018

On average, improvement in the region has been particularly strong in terms of technology and infrastructure. In the latter case, the Arab world has almost halved its distance from OECD countries in just 10 years, particularly thanks to improvements in port connectivity – Morocco, Egypt and Jordan have all made significant investments – but also in railway systems, with Morocco piloting the first high-speed train connection of the African continent. Oil-exporting countries have pushed investments in infrastructure and technology even further: in 2017, in spite of the decrease in oil revenues, it has been estimated that the total value of projects either in the planning stage or in the delivery stage across the Gulf Cooperation Council amounted to $2.7 trillion, higher than France’s GDP.

Efforts have not been limited to investments in hard infrastructure. Several countries have complemented them with broad reform agendas targeting problematic aspects of their labour and product markets, aiming to boost innovation and provide a robust digital ecosystem.

1. Algeria

A combination of investments and improved regulatory frameworks has allowed Algeria’s telecommunication sector to thrive over the past decade and reduce the gap with more advanced economies. Mobile telephony was deeply liberalized in the early 2000s, and penetration of mobile subscriptions grew tenfold in 10 years to 117 per 100 population in 2016 (i.e. on average, there is slightly one more than active SIM card per person). Mobile internet adoption was also accelerated after the launch of the 3G connectivity in 2012, driving up the percentage of Algerians using the internet from 15 to 43% in just four years. Further improvements can be expected in terms of fixed internet adoption, as the country has announced this year the end of the monopoly held by the incumbent operator, Algérie Télécom.

Image: Arab World Competitiveness Report 2018

2. Morocco

In addition to investments in transport connectivity, Morocco has pursued deeper international integration through its trade and industrial policy, decreasing the average import tariff from 18.9% to 10.5% in 10 years and attracting foreign companies in the automotive, textile and aerospace sectors that have moved parts of their international value chains here. For example, production of cars grew more than tenfold between 2005 and 2017. Increased international openness has contributed to improving the overall efficiency of Morocco’s goods market and has spurred competition, resulting in an advancement of 10 ranks since 2007 (58th today) in this dimension of the Global Competitiveness Index.

3. Bahrain

Bahrain has launched an unprecedented policy in the region to improve the efficiency of its labor market and move beyond the sponsorship system – or kafala – for foreign workers. The kafala system created a labour market that was easy for a migrant to enter, but difficult to move within. This meant that businesses were not able to address a sudden need, avail themselves of a market opportunity, or satisfy a short-term contract without going through the administrative process of applying for a permit, sourcing the workers and flying them in. This was true even if the necessary skills were already available in the labor market thanks to foreigners working in the country, but who were not allowed to move from one employer to another or, worse, had to leave if their previous employer withdrew their sponsorship. Under the new scheme, called Flexi Permit, a foreign worker has a status of “self-employed” with a permit and residency that allows him or her to work in any occupation and at any skill level, with any employer or number of concurrent employers, on a short- or long-term basis, full or part-time. This permit is issued for two years and renewable indefinitely, and includes medical insurance coverage.

4. UAE

The United Arab Emirates has consolidated its leadership in the region as the main tech and innovation hub. In 2017, its entrepreneurship and start-up ecosystem attracted global attention with the acquisition of Souq.com, a local e-commerce platform, by Amazon, for an estimated value of $650-700 million. This is set not to remain an isolated case as the country dramatically ramped up equity investments in technology firms from $100 million in 2014 to $1.7 billion in 2016.

Other countries are also taking action to spur entrepreneurship, increase diversification and improve the competitiveness of their economies. This is the only sustainable way to continue their transition away from reliance on natural resources and a distortive use of public money. Creating employment opportunities in line with the expectations of the large youth population that is entering the labor market in the next few years will require addressing these challenges and preparing the region for the changes and opportunities brought by the increased pace of technological advancement.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Grexit no longer a threat but how to manage a “tutti frutti” government if not with fear?

European Confederation of Junior Enterprises hosts in Geneva the Junior Enterprise World Conference

UN underscores the need to celebrate indigenous peoples, not confine them

Drought in Europe: Commission presents additional measures to support farmers

Global Leaders Take The Stage At MWC Shanghai 2019, in association with The European Sting

EFSF/ESM boss tells half truths about Troika’s doings

Here’s how data could make our cities safer

Barriers to trade: as protectionism rises, EU continues opening up export markets for European firms

Why city residents should have a say in what their cities look like

Everything you need to know about water

Khashoggi trial in Saudi Arabia falls short of independent, international probe needed: UN rights chief

Where is Egypt leading the Middle East and the Mediterranean economy?

These countries are ranked highest – and lowest – for human development

Erdogan’s electoral win on a ‘me or chaos’ dilemma means trouble for everybody

Paris, Washington, IMF against Berlin and ECB on money and interest

Lack of access to clean water, toilets puts children’s education at risk, says UN

On our way to China

Security Council should ‘nurture’ Colombian consensus against return to violence, top UN official urges

Climate change is destroying a barrier that protects the US from hurricanes

The 27 EU leaders did nothing to help May unlock the Brexit talks

Commission tries to solidify the EU statistical system

Parliament sets up plan to fight the 3,600 criminal rings of EU

Scotland wants to create an ethical stock exchange (Post Brexit)

European Development Days 2013

Merkel refuses to consider the North-South schism of Eurozone

On Google antitrust case: “Let’s face it, some companies want to hurt Google and it goes as simple as that”

ZTE @ MWC14: ZTE excels in all areas at this year’s Mobile World Congress

‘Nothing left to go back for’: UN News hears extraordinary stories of loss, and survival as Mozambique rebuilds from deadly cyclones

Mainland Europe adopts Germanic cartel business patterns

What will the US look like under Trump? Was his election campaign a big scam?

State aid: Commission approves €431 million public support for cleaner transport in German cities

Google prepares to final EU judgement over Android antitrust case

MEPs want robust EU cyber defence and closer ties with NATO

The creation and maintenance of smoke-free public spaces in the UK

Davos participants call for digital trade deal

Greening the Belt and Road is essential to our climate’s future

The opportunity of studying Medicine abroad

New York City has a plan to fight fast fashion waste. Here’s how it works

Digital Single Market: New EU rules for online subscription services

UN food relief agency airlifts aid to DR Congo province hit by Ebola outbreak

Colombia: ‘Terrible trend’ of rights defenders killed, harassed; UN calls for ‘significant effort’ to tackle impunity

Kellen Europe Hosts EuroConference 2016

AI-assisted recruitment is biased. Here’s how to make it more fair

How civil society must adapt to survive its greatest challenges

European Parliament marks EU accession prospects for Serbia and Kosovo

Ensure safety of responders UN Security Council urges, amid worsening DR Congo Ebola outbreak

Resolving banks with depositors’ money?

UN postal agency ‘regrets’ US withdrawal

Some Prevailing Arguments and Perceptions over the South China Sea Issue Are Simply Wrong

‘End the ongoing atrocities’ against people with albinism in Malawi, say UN rights experts

Manufacturers Get Smarter for Industry 4.0

Zeid calls for ICC probe into Myanmar Rohingya crisis

New York and London mayors call on cities to divest from fossil fuels

The COP24 Agreement: Yes, it happened at last

MEPs take stock of the EU’s foreign, security and defence policy priorities

OECD joins with Argentina to fight financial crime

European Commission: Does Apple, Starbucks and Fiat really pay their taxes?

How fungi could save the world

The economic cost of anti-vaccination movements in Italy

MWC 2016 LIVE: Xiaomi looks to revive growth with flagships

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s