INSEAD, Innovation & Policy Initiative 28 March 2012
Competitiveness and Innovation at Work in the UAE
STRICTLY CONFIDENTIAL
AGENDA
• About the Emirates Competitiveness Council & Competitiveness
• Innovation in the UAE
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Part 1: About the Emirates Competitiveness Council & Competitiveness
To ensure long-term prosperity of the nation, the UAE has
adopted competitiveness as a formal approach to its
development
3
4
The Emirates Competitiveness Council serves as a conduit between the public and private sectors to actively influence policy creation
ECC plays a role in actively informing policy creation and process development while advocating for more effective policies, procedures and legislation that advance the UAE’s national, regional and global competitiveness.
UAE Federal Government
Minister of State
Against a backdrop of growing international competition of firms and nations, in May 2009, the Emirates Competitiveness Council (ECC) was established as the organizational framework for the UAE government to direct the country’s competitiveness strategy. Competitiveness is important to the UAE in order to:
► Achieve social prosperity and improve the quality of life
► Ensure economic growth and sustainable development
► Foster a knowledge based economy through innovation in all sectors
► Develop sectors of high productivity, that would lead to greater prosperity and well-being
ECC’s Board Members
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Title Name
Minister of State, Chairperson ECC Board H.E. Reem Al Hashimy
Secretary General of the Executive Council, Abu Dhabi H.E. Mohammed Dr. Ahmed Mubarak Al Mazroui
Secretary General, The Executive Council, Dubai H.E. Abdulla Al Shaibani
Secretary General, the Executive Council, Sharjah H.E. Sultan Bin Buti
Secretary General, the Executive Council, Ajman H.E. Saeed Said Al Matroushi
Secretary General of the Executive Council , Umm al Quwain H.E. Hamid Jassim Ali Khalfan Al Ali
Director-General of Sheikh Saqr Program for Government Excellence, Ras Al Khaimah
H.E. Mohammad Abdullatif Khalifa
Director of Fujairah Rulers Court H.E. Mohammad Saif Al Denhani
National Bureau of Statistics HE Rashid Al Suwaidi
Ministry of Economy (representative) Majed Ali Omran
Ministry of Finance (representative) Lubna Al Qassim ECC’s Board Meeting January 2012
ECC Board Meeting, January 2012
ECC works across four themes for public and private sector engagement
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Promote Competitiveness
Develop
Expertise
Advocate for Change
Champion government programs and UAE based companies that enhance UAE competitiveness and realize the country’s potential
Advocate for improved procedures, processes and
policies that help UAE to become a more competitiveness-friendly
Be UAE’s competitiveness thought leader and use internal expertise
to inform, educate and drive competitiveness issues with public
and private sector
Raise awareness of competitiveness locally and promote UAE’s competitiveness internationally
Champion
Competitiveness
Programs
Competitiveness is an economic development framework increasingly being adopted by countries around the world to promote their sustainable growth and prosperity
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“Competitiveness is the ability to achieve long term
Prosperity with a balance between Productivity &
Quality of Life for the nation”
Nation
Productivity
Balance
Quality of Life
Inspired by the UAE’s Vision 2021 ECC derives its vision and the country’s competitiveness agenda
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ECC Vision
To enable the UAE to become one of
the most competitive countries in the
world
UAE 2021 Vision
We want to be among the best
countries in the world by 2021
ECC Mission
To enhance UAE’s long term prosperity
through sustainable development and a
high quality of life for the nation’s
people
In the journey to achieve UAE’s vision, the nation as a whole should continue to focus on the building blocks of competitiveness
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Community
Effective Services
Policy & Regulations
Infrastructure
UAE nationals
• Business environment
• Investments • Trade
• Transportation • Energy • ICT • Financial • Education • Health • Judicial
System
• Social • Economic • Governance • Environmental
Along these building blocks the UAE has set competitiveness objectives:
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UAE Competitiveness Objectives
► Build a world class education system
► Facilitate Emiratis’ integration into private sector employment
► Empower Emiratis in leading private sector activity
► Develop transparent business-related procedures that are efficiently executed across all emirates
► Promote an effective business-friendly regulatory framework
► Support the competitiveness drive of all Emirates
► Further encourage competition in the domestic market
► Ensure quality of life in the UAE is attractive to foreign talent
► Build on current sectors competencies
► Plant the seeds for new innovation-driven/high productivity sectors
ECC Objectives
► Advocate UAE national’s competitiveness
► Raise national awareness of competitiveness and promote UAE’s competitiveness locally and internationally
► Advocate for Social, Economic and Legislative reforms that enhance UAE competitiveness
► Help establish a level playing field across the emirates
► Become a thought leader & a center of excellence on competitiveness
► Engage with the private sector in collaboration with UAE stakeholders to become a channel through which their competitiveness needs are identified and communicated
► Engage global ranking agencies and local entities to improve UAE’s ranking
The ECC closely monitors UAE’s ranking in 11 reports 3 of which specifically track innovation and report back to the leadership on “to-do-list”
24 Indicators
Doing Business
► Annual- Sept.
► 100%*
Statistics
► 0%* Surveys
► 70 Interviews
Human Development Index
► Annual – Oct.
► 100% Statistics
► 0% Surveys
► No Interviews
4 Indicators
The Global Travel and Tourism
Competitiveness
► Annual- March
► 63% Statistics
► 37% Surveys
► 120 Interviews
73 Indicators
Global Information Technology
► Annual- March
► 45% Statistics
► 55% Surveys
► 120 Interviews
71 Indicators
Financial Development
► Annual- Oct.
► 80% Statistics
► 20% Surveys
► 120 Interviews
119 Indicators
Global Competitiveness
► Annual – Sept.
► 30% Statistics
► 70% Surveys
► 120 Interviews
111 Indicators
Global Innovation Index
► Annual- Sept.
► 68% Statistics
► 32% Surveys
► WEF Data
60 Indicators
The Competitiveness
Year Book ► Annual- May
► 68% Statistics
► 32% Surveys
► 50 Interviews
248 Indicators
Prosperity Index
► Annual- Oct.
► 52% Statistics
► 48% Surveys
► 100 Interviews
89 Indicators
Global Enabling Trade
► Annual-May
► 50% Statistics
► 50% Surveys
► 120 Interviews
54 Indicators
Global Gender Gap Report
► Annual-Oct.
► 0% Statistics
► 100% Surveys
14 Indicators
*All Doing Business Indicators are objective however they all have a degree of subjectivity because there is an analyst assessing
public information as well survey data 12
The UAE Ranks # 1 in the Arab World in 6 out of the 11 reports we monitor
2010-2012 UAE Qatar KSA Best Performer
Human Development Report 30/169 1st in Arab World 37/169 56/169 Norway
The Legatum Prosperity Index 27/110 1st in Arab World
_ 49/110 Norway
Global Enabling Trade Report 16/125 1st in Arab World
34/125 40/125 Singapore
Travel & Tourism Competitiveness 30/139 1st in Arab World 42/139 62/139 Switzerland
Global Information Technology Report 24/138 1st in Arab World
25/138 33/138 Sweden
Global Gender Gap Report 103/134 1st in Arab World
117/134 129/134 Iceland
Global Innovation Index 34/125 2nd in Arab World
31/125 44/125 Singapore
Doing Business Report 33/183 2nd in Arab World
36/183 12/183 Singapore
World Competitiveness Yearbook 28/59 2nd in Arab World 8/59 _ USA
Global Competitiveness Report 27/142 3rd in Arab World 14/142 17/142 Switzerland
Global Financial Report 25/60 3rd in Arab World _ 23/60 Hong Kong
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14
Indicator Rank
Corporate tax rate on profit 1
Consumption tax rate 1
Collected total tax revenues (%)
1
Effective personal income tax rate
1
Employee's social security contribution rate
1
Employer's social security contribution rate
1
Government subsidies (%) 1
Mobile telephone subscribers
1
Exchange rate stability 2
Dependency ratio 2
Mobile telephone costs 4
Consumer price inflation 5
Exports of goods (%) 5
Working hours 5
Indicator Rank
Mobile telephone
subscriptions
1
Gov’t procurement of
advanced tech
products
3
Business costs of
crime and violence
4
Quality of air
transport
infrastructure
4
Total tax rate 4
Extent and effect of
taxation
5
Firm-level technology
absorption
5
Burden of customs
procedures
5
Indicator Rank
Ease of hiring foreign labor 1
Access to improved drinking water
1
Mobile telephone subscribers 1
Effectiveness of marketing and branding
1
Sustainability of T&T industry development
3
Business costs of crime and violence
4
Quality of air transport infrastructure
4
International air transport network
4
Extent and effect of taxation 5
Travel & Tourism Competitiveness Report 2011 (T&T), UAE Ranked 30
Globally
IMD Report 2011, UAE Ranked 28 Globally
The GCR 2011-2012, UAE Ranked 27 Globally
Indicator Rank
Trading Across Borders
5
Registering Property
6
Paying Taxes 7
Getting Electricity
10
Doing Business Report 2012 UAE Ranked 33 Globally
Highlights of UAE's good performance include: (1/2)
Indicator Rank
Wastefulness of
government spending
5
Business costs of
crime and violence
3
Quality of air transport
infrastructure
4
Inflation, annual %
change
1
Business impact of
malaria
1
Malaria
cases/100,000 pop
1
Tuberculosis
incidence/100,000
pop
1
Extent and effect of
taxation
3
Total tax rate, %
profits
5
Flexibility of wage
determination
5
Gov’t procurement of
advanced tech
products
5
15
Indicator Rank
Financial stability 5
Taxes 3
Banking system stability 3
Retail access 12
Indicator Rank
Burden of customs procedures, 1–7 (best)
3
Cost to import, US$ per container 4
Documents to export, number 6
Cost to export, US$ per container 5
Paved roads, % of total 1
Quality of air transport infrastructure 3
Quality of roads 7
Quality of port infrastructure 7
Mobile telephone subscriptions per 100 population
1
Ethics and corruption 10
Government efficiency 7
Domestic competition 5
Openness to foreign participation 9
Ease of hiring foreign labor 1
Restriction on international capital flows
9
Reliability of police services 6
Business costs of crime and violence 7
The Global Enabling Trade Report 2010, UAE ranked 16 Globally
Financial Development Report 2011, UAE Ranked 25 Globally
The Global Information Technology Report 2010-2011, UAE Ranked 24 Globally
Highlights of UAE's good performance include:(2/2)
Indicator Rank
Burden of government regulation 10
Extent & effect of taxation 5
Total tax rate, % profits 5
Mobile network coverage, % pop. covered
1
Electricity production, kWh/capita 5
Mobile cellular tariffs (PPP $) 5
Gov’t prioritization of ICT 6
Gov’t procurement of advanced tech 3
Importance of ICT to gov’t vision 3
Mobile phone subscriptions/100 pop 1
Impact of ICT on access to basic services
5
Firm-level technology absorption 5
Gov’t success in ICT promotion 2
ICT use & gov’t efficiency 4
The UAE has also some challenges that we must address to remain competitive, things like….
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National Data
Systems
Foreign Ownership of
Companies
Social Cohesion
Women in the
Workforce
Entrepreneurship and
Access to Credit
Part 2: Innovation in the UAE ECC is open to feedback from international ranking institutions,
but reaching the country’s ambitious knowledge-economy goals
requires a strong collaborative approach between public and
private sectors
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ECC seeks to build on UAE’s success and foster a culture of innovation towards reaching its Vision 2021
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“To be amongst the best countries
in the world by 2021”
Theme 1: United in Ambition and Responsibility
Theme 4: United in Prosperity
Theme 3: United in Knowledge A Competitive economy driven by
knowledgeable and innovative Emiratis
Theme 2: United in Destiny
National Human Capital
Sustainable and Diversified Economy
Knowledge Based and Highly Productive Economy
► The UAE Vision 2021 is t working towards a
knowledge-based economy – driven by innovation
and a talented human capital
► The task requires exceptional co-ordination and
efforts from policy-makers, opinion leaders,
businesses and the public
► We have to promote a culture of competitiveness
across the country and also to benchmark our
competitiveness internationally
The link between innovation and the nation’s prosperity is a strong one
► Prosperity is the goal of economic development efforts
► To create more value, workers and their firms cannot deliver the same
old goods and services through the same old methods and processes
► They must do something new and better
► They must innovate
► For wages and profits to grow, workers and their firms must
create more value year after year
► To do so, they must boost productivity, or competitiveness
Productivity
“Competitiveness”
Prosperity
Innovation
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Innovations are new products, production or services methods that prove to be commercially or socially useful
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► “ .. the network of institutions in the public and private sectors whose activities and interactions initiate, import, modify and diffuse new technologies.” (Freeman, 1987)
► “.. that set of distinct institutions which jointly and individually contribute to the development and diffusion of new technologies and which provides the framework within which governments form and implement policies to influence the innovation process.” (Metcalfe, 1995)
► “An innovation is the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organizational method in business practices, workplace organization or external relations.”
http://stats.oecd.org/glossary/index.htm
OECD Definition for Innovation
► OECD recognizes 4 types of innovation: Product, Process, Marketing, Organizational ► Innovation can occur without advanced technology; and investments in technology can occur without much innovation ► Innovation does not necessarily mean invention, and it includes successful adaptation
Types of Innovation Recognized by OECD
National Innovation Systems – OECD definitions
The World Economic Forum’s Global Competitiveness Index classifies the UAE as an innovation-driven economy
Stage 3: Innovation Driven
Economies
Transition from 2 to 3
Stage 2:
Efficiency Driven Economies
Transition from 1 to 2
Stage 1: Factor Driven
Economies
Algeria (87) Egypt (94) Philippines (75) Qatar (14) Saudi Arabia (17) Sri Lanka (52) Syria (98) Ukraine (82)
Argentina (85) Brazil (53) Mexico (58) Oman (32) Russian (66) Turkey (59)
Switzerland (1) Singapore (2) Sweden (3) Finland (4 United States (5) Germany (6) Netherlands (7) Denmark (8) Japan (9) UK (10) UAE (27) Bahrain (37)
Economies at Stage of Development
Bangladesh (108) Cameroon (116) Ethiopia (106) Ghana (114) India (56) Pakistan (118) Yemen (138)
Bulgaria (74) China (26) Colombia (97) Indonesia (46) Jordan (71) Morocco (73)
The UAE is classified as ‘innovation driven’ based on its high per capita income levels as well as a certain level of economic diversification | 21
Innovation manifests in many forms and requires an innovation ecosystem
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R&D, Innovation and Entrepreneurship Activities
Human Capital (Scientists, Engineers, Inventors,
Designers)
Financial Capital & Infrastructures (Labs, Centers, Universities)
Innovation Outcomes
Innovation Inputs
Culture & Values (entrepreneurial spirit, innovation orientation, collaboration)
Source: Schumpeter, 1934; ECC team analysis
Marketing Innovation
Process Innovation
Product Innovation
Organizational Innovation
National Innovation Systems are institutional networks between entities that foster synergies to connect people, ideas and resources
| 23 Source: OECD, the Oslo manual, ADL, ECC team analysis
Market
VC’s & Financial Systems
Standards and Norms
Clusters Physical
Infrastructures
Infrastructure
Government:
Innovation Policies
Regulations Governance
Education
and Public or Private
Research Center
Private Sector:
Corporations and
SME’s
Best practice government policies are required to drive the innovation process and the private sector has a critical role to play
Source: Innovation Associates, “Accelerating Economic Development Through University Technology Transfer”, February 2005; Danish Ministry of Economic and Business Affairs, U.S. Congress, Office of Technology Assessment, “Technology, Innovation, and Regional Economic Development”, July 1984
A strong and focused university research base
feeds the pipeline for commercialization
Federal R&D funding provides a critical base for
technology transfer and commercialization efforts
Individual champions catalyze most successful
technology-based economic development
Early-stage capital is a critical ingredient in
launching university start-ups
Innovation centers can provide a focal point for
technology-based activities
The entrepreneurial culture of a university is
key to its technology transfer success
Successful technology transfer mechanisms are long term investments and can take decades to
accomplish
Private corporations can play a major role in
stimulating science and technology research
Technology development is more successful when it forms part of a broader regional development
strategy
Science & Technology Innovation Model
Commercial Application-Driven Innovation Model
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UAE is continuously upgrading its capabilities to be an enabler of innovation in various roles:
| 25 Source: Arthur D Little ECC team analysis
Innovation Policy
Lawmaker
Governance Framework
Educator
Researcher
Funder
Facilitator
► UAE has lowest software piracy rates in the Gulf and MENA, and improving protection for IP rights to support diversification into knowledge-based industries.
► UAE’s university system increasingly become a research driven. (e.g. Masdar Institute, UAE University, Khalifah University, Zayed University, Abu Dhabi University, NYU, etc)
► Government led research is slowly taking root (e.g. National Research Foundation, Center for Biosaline Agriculture, Masdar Institute, Imperial College London Diabetes Center)
► Funding process e.g. through awards (e.g. Young Emirati Innovator’s Prize, Patent Filing Award, Zayed Future Energy Award Fund -$4M- and several more)
► The Federal Government’s role as diffusion of innovation--Creating programs and forums for strategic innovation (e.g programs on innovation and entrepreneurship, Khalifa Fund, Mohammed Bin Rashid Establishment for Young Business Leaders)
The private Sector is our strategic partners in competitiveness and innovation
In addition to benchmarking through international reports, the ECC considers the voice of the private sector critical in improving its competitiveness performance
► The private sector is critical to UAE’s competitiveness and diversification of economy given its capacity to innovate, and its large pool of expertise and talent in the UAE
► ECC has heard valuable inputs and insights from our outreach to the private sector to inform our policy-making and growth strategies
► Based on private sector input we know the importance you place on innovation for sustainability and growth—and are working towards improving our performance in all these areas
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Some leading innovators include: (1/2)
| 27 Source: ECC team analysis
ICTs
High Technology
Biotechnology
Clean Technology
► Etisalat
► Du
► ICT Fund
► Biosaline Institute,
► Central Veterinary Research (Camel research)
► Imperial College Diabetes
► Julphar
► Masdar
► Masdar Institute
► Mubadala
► ATIC
► Mercator, Emirates Airlines
► Across all industries, across the whole value chain from supply chain to design, production and customer relationship management
► Agriculture (new crops)
► Medical (new drug development)
► Bioengineerin
► Pharmaceuticals
► In all industries
► Energy also concerns individuals and households
► Semiconductors, Computer science
► New materials
► Aviation related programming and software
Leaders Include Industry Applications include
| 28 Source: ECC team analysis
Leaders Include
Heavy industries, aeronautics
Clusters
Public-Private Partnerships
Industry-Academia Partnerships
► Abu Dhabi Aircraft Technologies (ADAT)
► STRATA & SANAD
► DUBAL
► Dubai Trade
► DP World
► Tejari
► Masdar Institute-MIT, NYU
► Semiconductor Foundry-ATIC
► Wamda-Abraaj Capital
► Dubai Media City
► Twofour54
► DIFC
► Aerospace technology
► Aluminum smeltering (proprietary technology)
► Logistics
► Trade
► Services
► Various
► Content creation
► Entertainment
► Marketing
► Finance
Industry Applications include
Some leading innovators include: (2/2)
Call to Action—we want your stories of innovation
ECC would like to hear about your story of innovation:
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Tell us your story:
► Please send us 3 paragraphs on your innovation –can be in Product, Process, Marketing, Organization or Services
► Small or Large companies or public sector entities
► R&D projects and expenditure
► Engagements of Training Institute-Industry Collaboration
► Public-private partnerships resulting in innovation
► Please send to: [email protected]