GCC REGIONAL SUPERSECTION 2014 | INNOVATION
Attempts to drive innovation in the Gulf are still at an early stage. But as countries increase R&D spending, the results could have a huge impact on non-oil growth.
Wealthy but underdeveloped, Gulf Cooperation Council (GCC) countries are speeding up investment in research and development (R&D) to build up their knowledge economies, improve key demographics and help diversify away from oil. Another key development a number of Gulf countries are promoting is specialized cities—such as Qatar’s Education City or Abu Dhabi’s Masdar City that house outposts of world-famous universities along with think tanks—to drive cutting-edge intellectual discourse. The overarching goal is to prepare for a future in which oil may bring in less revenue and play a less dominant role in their economies. But the strategy is still immature, with a relatively low number of patents coming out of the GCC and few local universities recognized on a global scale.
“The paradox is that they are very wealthy and at the same time they are developing countries; we still do not have a modern road system or speedy Internet,” says Alan Weber, a professor at Weill Cornell Medical College, in Education City in Qatar. Built outside Doha and financed by the Qatar Foundation, Education City hosts six US academic institutions, two British and one French.
The State of Qatar, by far the richest among the six members of the GCC, is the top spender for R&D. It devotes 2.8% of GDP to R&D, a level similar to that of the US or Germany. According to data compiled for the “2014 Global R&D Funding Forecast” report by US research group Battelle, Qatar’s share, although impressive among its peers, is still well below the 4.3% of Israel. Saudi Arabia, by contrast, comes in at just 0.3% of GDP.
“In Qatar the government is putting billions of dollars into infrastructure development, and part of that is devoted to creating a knowledge society,” says Weber—stressing the importance of preparing for a time when energy prices decline.
With the shale gas revolution, for example, the price of natural gas has been falling. In December 2005 the spot price of natural gas quoted on the NYMEX commodity exchange peaked at $14.3 per million British thermal units. In June 2014 the price was just above $4, after a low of $1.9 in 2012.
“Cheap and abundant fossil [-fuel] resources have been our original competitive advantage,” said Mohamed Al-Mady, CEO of Saudi Basic Industries Corp, the world’s largest petrochemicals firm, at a speech in March. “Recent history [has] proved that entrenched competitive advantages can fade and that there is little mercy for those who do not get new ones. Innovation has therefore become a must to deliver advantage,” said Al-Mady.
Weber says the results of current spending are hard to measure. “We are entering the phase where there will be more accountability and more investigation on how the money spent has been used or abused. I think that will be the next stage,” he notes.
As to the number of patents, Qatar’s showing thus far is poor. In a May study entitled “Arab Knowledge Economy,” Madar Research and Development, a think tank based in Dubai, said that “since its inception, a total of only 1,818 patents were granted by the United States Patent and Trademark Oce to residents of Arab countries. To put this number into context, the number of patents granted by the USPTO in 2013 alone reached 277,835 patents.” Qatar’s total was a bare 18.
“Saudi Arabia, the largest economy in the Arab world, succeeded to register the largest number of patents” says Abdul Kader Al Kamli, Madar’s CEO and the author of the study. In 2013 it registered 237 patents, up a hefty 40% from the 170 of 2012.
However, when the size of the country is factored in, Kuwait rises to first place, with 21.2 patents per million residents. Saudi Arabia is second, with 7.8, and UAE is third, with 1.9 million. Syria, Algeria, Iraq, Sudan, Libya and Yemen have none.
Al Kamli says that Saudi Arabia plans to expand investment in R&D to 2% of its GDP. “We have heard about it from very high-level decision-makers,” he tells Global Finance.
|
Utility Patents by Country and Year |
|||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Country |
Pre ‘03 |
‘03 |
‘04 |
‘05 |
‘06 |
‘07 |
‘08 |
‘09 |
‘10 |
‘11 |
‘12 |
‘13 |
All Years |
|
Saudi Arabia |
189 |
19 |
15 |
18 |
19 |
20 |
30 |
22 |
58 |
61 |
170 |
237 |
858 |
|
Kuwait |
61 |
7 |
4 |
3 |
7 |
6 |
15 |
15 |
14 |
24 |
32 |
84 |
272 |
|
UAE |
30 |
2 |
2 |
3 |
8 |
2 |
9 |
9 |
7 |
10 |
20 |
18 |
120 |
|
Qatar |
1 |
0 |
0 |
0 |
2 |
0 |
1 |
2 |
0 |
1 |
4 |
7 |
18 |
|
Oman |
1 |
0 |
0 |
1 |
0 |
0 |
5 |
1 |
1 |
3 |
3 |
3 |
18 |
|
Bahrain |
4 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
1 |
0 |
1 |
2 |
8 |
|
Source: Source: USPTO, Arab Knowledge Economy Report 2014 |
|||||||||||||
OTHER SECTIONS
