There are a few catchphrases that officials in the region say whenever anyone is listening: they call for a diversified economy, more corporate governance, sustainable development, and the creation of a knowledge-based economy (KBE). Most of us understand these issues, yet few have a grasp of what a KBE is and how to get to one - but we all know that the region needs it.
The magnitude of the knowledge deficit is on everyone's minds. Samson Samasoni, a senior advisor to the General Secretariat for Development Planning in Qatar, quotes the bleak conclusions of the 2003 UNDP (Arab Human Development Report): "Knowledge in Arab countries today appears to be on the retreat ... Based on their present performance, Arabs would remain in a marginal position in this next phase of human history."
Here you have the opposite of a crisis — you have all that money coming in. The only crisis you have in this area of the world is the wealth curse.
In no way was this surprising to Arab leaders. Qatar has been on the forefront of transforming itself into a KBE, and its ruler is an outspoken champion of sweeping change. HH Sheikh Hamad Bin Khalifa Al Thani, Emir of Qatar, brought this up at the GCC Summit last week, and said that "the field of scientific research in particular remains in need of further attention and care. Real progress requires that we become a source of knowledge in its various aspects and being capable of developing it and not mere consumers of it."
This sentiment is echoed by many others in the region, and indeed the world. The World Bank is taking a deep interest in this issue and is spearheading programmes all over the world to assist governments in overcoming this seemingly insurmountable obstacle. The Arab Human Development Report described a scenario where a knowledge society could transform Arab states "to change the course of Arab history and afford the Arab people the decent lives to which they aspire and to which they are entitled".
This kind of language is powerful, but it needs powerful action to follow. Many countries have begun on the path to KBE by paying lip service to its lofty ideals - Qatar is actively implementing a strategic programme that, at the moment, looks very promising. A former vice president at the World Bank, Jean-Francois Rischard recently made a trip to Qatar and Dubai to share his experience in guiding and monitoring the KBE initiatives in Ireland, South Korea, and Estonia. He sees a difference between the triggers of transformation in those economies and those in the Middle East. "The other economies started their efforts after a crisis. There was a macroeconomic crisis in Ireland, another one in Finland, Korea started after the Asian crisis of 1997, and Estonia started after the fall of the Soviet Union. Here you have the opposite of a crisis - you have all that money coming in. The only crisis you have in this area of the world is the wealth curse", he tells Arabian Business at a conference at the Dubai School of Government.
With the wealth curse in full swing, Rischard applauds the diversification efforts of governments in the region, but doesn't believe that industrialisation, other than the odd aluminium smelter and desalination clusters, will happen on a scale that will markedly alter the economy. "I don't see any way out other than through KBE", Rischard says.
The World Bank uses its Knowledge Assessment Methodology (KAM) indicators to calculate where a country lies on the KBE scale. The assessment is based on key pillars that include the business environment, education system, innovation, and the information infrastructure. In the graph above Qatar and the UAE are plotted on several criteria along with Estonia and Finland, two of the top rated KBEs. The deficits are apparent; bridging the gap will require the formation of an ambitious knowledge economy vision to mobilise the country and foster both the existing and nascent initiatives.
This is where Qatar is shining. Rischard applauds the effort and notes that "they are bringing in medical units and foreign universities and they have done more than others in the Gulf by revamping the school system, essentially by creating a bypass system." (The bypass system is a government initiative that works around rigid bureaucracies to push through with transformational reforms).
One of the big wins for Qatar over the past decade is its success in attracting top universities to the Gulf. Mike Vertigans, director of public affairs at Weill Cornell Medical College in Qatar, attributes this to the chairperson of Qatar Foundation, Her Highness Sheikha Mozah Bint Nasser Al-Missned, the Consort of His Highness the Emir of Qatar, Sheikh Hamad Bin Khalifa Al-Thani. Her foundation was able to bring in five branch campuses of prestigious American universities which all offer different course of study - a medical degree from Cornell, engineering from Texas A&M, foreign service from Georgetown, and computer science and business from Carnegie Mellon, graphic design and fashion from Virginia Commonwealth. In late 2008, Northwestern University will bring its school of journalism to Qatar, which is also home to the Middle East's top-rated news network, Al Jazeera.
Weill Cornell Medical College first opened its doors in Qatar in 2002, and the first doctors to be trained in Qatar will start to emerge from May 2008 with the same degree that is awarded in New York. The university is as diverse as its main branch in New York, where 33 countries are represented. The largest single nationality is Qatari at 20% of the student body, and there are currently 205 budding physicians at the Doha campus. Vertigans has been in the region long enough to witness massive changes, yet he still see this development as a major breakthrough. "Remember this is only the start - the Qatar Foundation was only established on paper 10 years ago. Education takes time to clamp down - you are looking at long return. The pace has changed now and it is much faster than it ever has been. Every year [from 2008] we will see doctors graduating from Qatar." And the plan for Cornell is not just to produce doctors that need to be trained abroad. A biomedical research centre is in the works and a clinic care programme will be implemented in the coming years.
You can literally walk in as a two-man company with a business plan, and we can basically provide everything else.
A short ride away from the education cluster is the Qatar Science and Technology Park (QSTP). Ben Figgis, a manager at QSTP, explains that Qatar's strategy is to build a number of pieces of infrastructure simultaneously which will relate to KBE. With education on the way and a research fund available to scholars, the final piece of the cycle is the science park, where the "goal is to lead the commercialisation of that research." He continues: "What we do are two things, we provide an attractive place for companies to do their research, and we also provide a business incubator to encourage entrepreneurs to start their own technology-based companies."
This type of incentives are exactly what the World Bank proscribes, and what Rischard encourages. He believes that KBE needs to have a fifth pillar (which he dubs ‘the missing pillar') which entails government acting as role model and cheerleader, and for it to be open and change-friendly.
The governments in Qatar, and across many countries in the Middle East, have taken the lead, and the QSTP is one of the better examples. The simplicity of the process and the open doors policies encourages innovators to take the plunge. "You can literally walk in as a two-man company with a business plan, and we can basically provide everything else," Figgins says.
In the red-hot real estate markets in the GCC and the lack of suitable commercial spaces, subsidised rent and key office space attracts both entrepreneurs and investors alike. Companies such as EADS, Shell, Total, ExxonMobil, and GE, are all on their way to QSTP to set up technology development centres, conduct training and optimise and develop their technology - a drastic change from the usual marketing and sales offices that pepper the developing world. Qatar's science park is making waves with its entrepreneurship training courses and the venture capital fund it is setting up for startup companies. The overall investment (infrastructure and venture capital fund) will exceed US$500m, but that is the price of the KBE seeds.
While it is far too early to predict success or failure for the KBE initiatives in the GCC, it remains the only viable model for progress in the region. Qatar is taking the lead for now, but Saudi Arabia and the UAE are right behind.
The beauty of the KBE is that it is not a zero-sum proposition. Innovation in one country will spawn the technological advances in the neighbour's - if all goes to plan the UNDP report on the Arab world may serve as a template for development for those who are less fortunate. Qatar's role as a cheerleader will not be forgotten.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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