What's Next: Navigating Global Challenges with the Innovation Generation

Innovating to Leapfrog into the Future

Leapfrog Innovation in the Middle East: An Op-Ed from the Editor in Chief of the UAE’s The National.

The Middle East has gone through many years of turmoil, most recently during the Arab Spring uprisings. Part of the cause of the recent rebellions was the repressiveness of regimes in Tunisia, Libya, Egypt and Syria. But a significant reason that brought people out into the street was the lack of economic opportunity for young people -- indeed, the utter lack of any possibility of optimism for their future. But though the landscape may seem bleak when viewed from afar (or within the cauldron of revolution itself), closer afield there are bright spots that invite the shedding of bleak pessimism. The UAE is one of those shining points, and its history can provide important lessons for how Arab Spring nations and the rest of the region might construct hope for their moment in the 21st century.

So how did the UAE develop? It could have looked at the example of Asia and attempted to replicate that model in its entirety. East Asian countries went through an almost miraculous transformation that allowed their economies to grow robustly over decades, raise living standards and offer their people the opportunity to work and prosper. Education was an important factor in this transformation, as well as the political commitment towards stability.

But whether it was South Korea or Japan, Malaysia or Taiwan, there were two key differences between the Far East and the Middle East. Whereas most of the East Asian Tiger economies had large populations, the UAE is minuscule by comparison. And where they were heavily dependent on foreign direct investment -- at least initially -- the UAE could from the outset translate its rich store of hydrocarbons into a surfeit of capital.  

So while the UAE adopted the Asian model of encouraging education, it has not needed to replicate the building of labor-intensive industries to soak up unemployment. Meanwhile, the ready availability of domestic capital allowed the nation to pick and choose the industries for its future. The upshot is that rather than depend on the evolution of industry and human resources, the UAE was able to leapfrog industrial models of development to place its young men and women into high-paying jobs on the horizon of the future.

If the rest of the Middle East, much of it mired in an economy based on exacting rent, wants to define its future it needs to rethink economic policy. Yesterday’s model will not fit today’s circumstances, and copying other models wholesale is not be the best way forward. New thinking is required if these countries want to push ahead and leave behind the dependency and poverty of the Third World. For to do otherwise, is to plan for tomorrow an economic model from yesterday. They need to leapfrog.

The job of finding that essential model is a consequence of innovation. But it is impossible to prescribe what to innovate in. Abu Dhabi, for example, found one of its niches and its future advantages in renewable energy, as exemplified by Masdar City and the industries based there that are seeking to further the reduction in carbon emissions from energy generation and use. Abu Dhabi is also staking a claim on the electronic intelligence of the future, through its investment in microchip manufacturing. GlobalFoundries today is one of the biggest chipmakers in the world, with Emiratis at the heart of its operations.

For Tunisia or Egypt, it could be, and likely is, something different. Determining just what that niche is, and finding that flair, is a case of discovery. And it is something that has to be helped along by the right environment. Indeed, this is the essence of an innovation hub: an environment amenable to serendipity.

Take Dubai, which has built a raft of free-trade zones that are gestating new companies in areas as diverse as information technology, healthcare and finance. Free of many restrictive rules, the zones give free rein to commercial experimentation and offer a discount to risk. The result is a blossoming of small companies that fill the interstices of the economy. They make Dubai and the UAE’s economy more organic and more sustainable.

So that is the challenge. But how can a country rise to it? Let us, for now, take Tunisia and Egypt – Libya has substantial deficits in the stability of its present moment to address before it can turn to the future; meanwhile, Syria recedes further and further into the past.

The first thing to do is to remove the tax on opportunity that comes from corruption. Strong laws and the will to enforce them are of course necessary. But better yet is to erode, as much as is possible, the chances of taking a little cut here and a larger cut there. Technology can serve a purpose in this regard. By removing human agency as much as possible in the filing of papers or in the application for licenses, for example, the opportunity for graft is steadily excised out of the system. As a bonus, bureaucracy is speeded up. So, though some might depict rollouts of electronic government services as gimmickry, in fact they can be an important instrument in the service of fighting corruption.

Next, both Tunisia and Egypt have well-educated youths. In the absence of adequate employment, their ambitions could be channeled towards entrepreneurship. In tandem with the removal of corruption, what they need is an environment where commercial serendipity can occur. Precisely what that is is difficult, if not impossible, to speculate. It requires experimentation, to see what works and what doesn’t. But at a minimum, it means changing from a culture of “no” – sadly, the typical response in the region to anything novel – to one of “have a go.” It means removing excessive laws, regulations and redundant rules that tire out business aspirants. It means creating a sense of possibility.

And if you marry these elements as they evolve to a government willingness to not just avoid hindering but also to help and ease the journey of emerging business, you might very well begin to discern those new paradigms that allow you to leapfrog forward your economy. While innovation is often seen as technology driven, it is more often a marriage between science and opportunity. How they meet and prosper requires the intermediacy of virtuous policy.

While the UAE cannot tell the region what it must do to succeed – and it would not want to presume in doing so – it can show what has worked for it so that others might use it as a template for their own experiment with the future. By its very nature, innovation, the key to our future, means learning from the past to take advantage of evolving opportunities.

Al Otaiba will interview Boeing Chairman and CEO Jim McNerney, edraak Director Nafez Dakkak, and DataWind CEO Suneet Singh Tuli on November 5 at The Atlantic’s inaugural international summit on innovation, taking place in Abu Dhabi.