Saudi Arabia and Egypt are among the lowest ranked five countries in the world in terms of human capital.
The Middle East is losing out in the war for talent with Saudi Arabia and Egypt among the lowest ranked five countries in the world, according to a global survey by leading search company Heidrick & Struggles and the Economist Intelligence Unit (EIU).
Saudi Arabia and Egypt rank in the bottom five of the Global Talent Index, a new 30-country survey, worse still, their position in the table is forecast to remain static over the next five years, the research found.
Ayman Haddad, managing partner for MENA at Heidrick & Struggles, one of the world's top five global search firms, said: "Regional economies have enjoyed significant GDP growth in recent years but this latest global research shows there is no room for complacency.
"The Middle East is losing out in the battle for talent and a strategic approach is required to ensure the region develops, attracts and retains the best people to maintain progress."
Haddad added: "The survey confirms that talent follows where money leads, but the good news for the region is that emerging markets are hot on the heels of developed nations."
According to the Index, the US will retain its position as the world's biggest talent hotspot in 2012, but it is facing increasing pressure from China, expected to move to sixth position in the next five years.
India will rank 10th, the same spot it occupies today, thanks to its rapid demographic growth, the mobility of its workforce and its healthy labour market flexibility.
It found that the situation in the Middle East is slowly improving. Egypt and Saudi Arabia will both move up one place over the next five years in the overall rankings; Egypt will overtake Brazil and Turkey.
Saudi Arabia will rank ninth in 2012 for the quality of its universities and business schools. The Kingdom's relatively high disposable incomes are also a plus, and will help its score for attractiveness to talent rise from 23rd place to 20th over the next five years.
Egypt is seeing improved FDI and will move from 11th to seventh position based on this specific rating between 2007 and 2012.
The Global Talent Index is the first survey of its kind. Countries were chosen based on a representative geographic spread and the quality of available comparative data. Egypt, Saudi Arabia and Iran were selected from the region.
Seven separate measures were used to assess each country: demographics, quality of compulsory education, quality of universities and business schools, quality of the environment to nurture talent, mobility and relative openness of the labour market, trends in foreign direct investment, and propensity to attract talent.