Competitiveness and Innovation at Work in the UAE INSEAD, Innovation & Policy Initiative 28 March 2012
AGENDA About the Emirates Competitiveness Council & Competitiveness Innovation in the UAE STRICTLY CONFIDENTIAL 2
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
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. 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 UAE Federal Government Minister of State 4
ECC s Board Members ECC Board Meeting, January 2012 Title Minister of State, Chairperson ECC Board Secretary General of the Executive Council, Abu Dhabi Secretary General, The Executive Council, Dubai Secretary General, the Executive Council, Sharjah Secretary General, the Executive Council, Ajman Secretary General of the Executive Council, Umm al Quwain Director-General of Sheikh Saqr Program for Government Excellence, Ras Al Khaimah Director of Fujairah Rulers Court National Bureau of Statistics Ministry of Economy (representative) Ministry of Finance (representative) ECC s Board Meeting January 2012 Name H.E. Reem Al Hashimy H.E. Mohammed Dr. Ahmed Mubarak Al Mazroui H.E. Abdulla Al Shaibani H.E. Sultan Bin Buti H.E. Saeed Said Al Matroushi H.E. Hamid Jassim Ali Khalfan Al Ali H.E. Mohammad Abdullatif Khalifa H.E. Mohammad Saif Al Denhani HE Rashid Al Suwaidi Majed Ali Omran Lubna Al Qassim 5
ECC works across four themes for public and private sector engagement Raise awareness of competitiveness locally and promote UAE s competitiveness internationally Promote Competitiveness Advocate for improved procedures, processes and policies that help UAE to become a more competitiveness-friendly Advocate for Change Develop Expertise Be UAE s competitiveness thought leader and use internal expertise to inform, educate and drive competitiveness issues with public and private sector Champion Competitiveness Programs Champion government programs and UAE based companies that enhance UAE competitiveness and realize the country s potential 6
Competitiveness is an economic development framework increasingly being adopted by countries around the world to promote their sustainable growth and prosperity Nation Balance Competitiveness is the ability to achieve long term Prosperity with a balance between Productivity & Quality of Life for the nation Productivity Quality of Life 7
Inspired by the UAE s Vision 2021 ECC derives its vision and the country s competitiveness agenda UAE 2021 Vision We want to be among the best countries in the world by 2021 ECC Vision To enable the UAE to become one of the most competitive countries in the world ECC Mission To enhance UAE s long term prosperity through sustainable development and a high quality of life for the nation s people 8
In the journey to achieve UAE s vision, the nation as a whole should continue to focus on the building blocks of competitiveness UAE nationals Effective Services Infrastructure Policy & Regulations Business environment Investments Trade Transportation Energy ICT Financial Education Health Judicial System Social Economic Governance Environmental Community 9
Along these building blocks the UAE has set competitiveness objectives: UAE Competitiveness Objectives Build a world class education system ECC Objectives Facilitate Emiratis integration into private sector employment Advocate UAE national s competitiveness 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 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 10
ECC has been supporting both Public & Private sectors in initiating new projects or initiatives 11
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 Global Competitiveness 111 Indicators Doing Business 24 Indicators Financial Development 119 Indicators Prosperity Index 89 Indicators Annual Sept. 30% Statistics 70% Surveys 120 Interviews Annual- Sept. 100%* Statistics 0%* Surveys 70 Interviews Annual- Oct. 80% Statistics 20% Surveys 120 Interviews Annual- Oct. 52% Statistics 48% Surveys 100 Interviews The Competitiveness Year Book 248 Indicators Human Development Index 4 Indicators Global Information Technology 71 Indicators Annual- May 68% Statistics 32% Surveys 50 Interviews Annual Oct. 100% Statistics 0% Surveys No Interviews Annual- March 45% Statistics 55% Surveys 120 Interviews Global Innovation Index 60 Indicators Global Enabling Trade 54 Indicators 14 Indicators The Global Travel and Tourism Competitiveness 73 Indicators Annual- Sept. 68% Statistics 32% Surveys WEF Data Annual-May 50% Statistics 50% Surveys 120 Interviews Global Gender Gap Report Annual-Oct. 0% Statistics 100% Surveys Annual- March 63% Statistics 37% Surveys 120 Interviews *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 1 st in Arab World 37/169 56/169 Norway The Legatum Prosperity Index 27/110 1 st in Arab World _ 49/110 Norway Global Enabling Trade Report 16/125 1 st in Arab World 34/125 40/125 Singapore Travel & Tourism Competitiveness 30/139 1 st in Arab World 42/139 62/139 Switzerland Global Information Technology Report 24/138 1 st in Arab World 25/138 33/138 Sweden Global Gender Gap Report 103/134 1 st in Arab World 117/134 129/134 Iceland Global Innovation Index 34/125 2 nd in Arab World 31/125 44/125 Singapore Doing Business Report 33/183 2 nd in Arab World 36/183 12/183 Singapore World Competitiveness Yearbook 28/59 2 nd in Arab World 8/59 _ USA Global Competitiveness Report 27/142 3 rd in Arab World 14/142 17/142 Switzerland Global Financial Report 25/60 3 rd in Arab World _ 23/60 Hong Kong 13
Highlights of UAE's good performance include: (1/2) IMD Report 2011, UAE Ranked 28 Globally The GCR 2011-2012, UAE Ranked 27 Globally Travel & Tourism Competitiveness Report 2011 (T&T), UAE Ranked 30 Globally Doing Business Report 2012 UAE Ranked 33 Globally Indicator Rank Indicator Rank Indicator Rank Indicator Rank Corporate tax rate on profit 1 Consumption tax rate 1 Collected total tax revenues (%) Effective personal income tax rate Employee's social security contribution rate Employer's social security contribution rate Government subsidies (%) 1 Mobile telephone subscribers Exchange rate stability 2 Dependency ratio 2 Mobile telephone costs 4 Consumer price inflation 5 Exports of goods (%) 5 1 1 1 1 1 Wastefulness of Mobile government telephone spending subscriptions 5 1 Gov t Business procurement costs of of 3 advanced crime and tech violence products Quality of air transport 4 Business infrastructure costs of 4 crime and violence Inflation, annual % 1 Quality change of air 4 transport infrastructure Business impact of 1 malaria Total tax rate 4 Malaria 1 Extent cases/100,000 and effect pop of 5 taxation Tuberculosis 1 incidence/100,000 Firm-level pop technology 5 absorption Extent and effect of 3 Burden taxation of customs 5 procedures Total tax rate, % 5 profits Flexibility of wage determination 5 Ease of hiring foreign labor 1 Access to improved drinking water Mobile telephone subscribers 1 Effectiveness of marketing and branding Sustainability of T&T industry development Business costs of crime and violence Quality of air transport infrastructure International air transport network Extent and effect of taxation 5 1 1 3 4 4 4 Trading Across Borders Registering Property Paying Taxes 7 Getting Electricity 5 6 10 Working hours 5 Gov t procurement of advanced tech products 5 14
Highlights of UAE's good performance include:(2/2) Financial Development Report 2011, UAE Ranked 25 Globally The Global Information Technology Report 2010-2011, UAE Ranked 24 Globally The Global Enabling Trade Report 2010, UAE ranked 16 Globally Indicator Rank Indicator Rank Indicator Rank Financial stability 5 Taxes 3 Banking system stability 3 Retail access 12 Burden of government regulation 10 Extent & effect of taxation 5 Total tax rate, % profits 5 Mobile network coverage, % pop. covered 1 Burden of customs procedures, 1 7 (best) Cost to import, US$ per container 4 Documents to export, number 6 Cost to export, US$ per container 5 3 Electricity production, kwh/capita 5 Paved roads, % of total 1 Mobile cellular tariffs (PPP $) 5 Quality of air transport infrastructure 3 Gov t prioritization of ICT 6 Quality of roads 7 Gov t procurement of advanced tech 3 Quality of port infrastructure 7 Importance of ICT to gov t vision 3 Mobile phone subscriptions/100 pop 1 Impact of ICT on access to basic services 5 Mobile telephone subscriptions per 100 population Ethics and corruption 10 Government efficiency 7 1 Firm-level technology absorption 5 Domestic competition 5 Gov t success in ICT promotion 2 Openness to foreign participation 9 ICT use & gov t efficiency 4 Ease of hiring foreign labor 1 Restriction on international capital flows 9 Reliability of police services 6 Business costs of crime and violence 7 15
The UAE has also some challenges that we must address to remain competitive, things like. National Data Systems Entrepreneurship and Access to Credit Foreign Ownership of Companies Women in the Workforce Social Cohesion 16
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 17
ECC seeks to build on UAE s success and foster a culture of innovation towards reaching its Vision 2021 To be amongst the best countries in the world by 2021 Theme 1: United in Ambition and Responsibility Theme 2: United in Destiny Theme 3: United in Knowledge A Competitive economy driven by knowledgeable and innovative Emiratis 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 Theme 4: United in Prosperity 18
The link between innovation and the nation s prosperity is a strong one Prosperity Prosperity is the goal of economic development efforts Productivity Competitiveness 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 To create more value, workers and their firms cannot deliver the same Innovation old goods and services through the same old methods and processes They must do something new and better They must innovate 19
Innovations are new products, production or services methods that prove to be commercially or socially useful Types of Innovation Recognized by OECD 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 OECD Definition for Innovation 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. National Innovation Systems OECD definitions.. 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) http://stats.oecd.org/glossary/index.htm 20
The World Economic Forum s Global Competitiveness Index classifies the UAE as an innovation-driven economy Economies at Stage of Development Stage 1: Factor Driven Economies Transition from 1 to 2 Stage 2: Efficiency Driven Economies Transition from 2 to 3 Stage 3: Innovation Driven Economies Bangladesh (108) Cameroon (116) Ethiopia (106) Ghana (114) India (56) Pakistan (118) Yemen (138) Algeria (87) Egypt (94) Philippines (75) Qatar (14) Saudi Arabia (17) Sri Lanka (52) Syria (98) Ukraine (82) Bulgaria (74) China (26) Colombia (97) Indonesia (46) Jordan (71) Morocco (73) 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) 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 Innovation Outcomes Product Innovation Process Innovation Marketing Innovation Organizational Innovation R&D, Innovation and Entrepreneurship Activities Human Capital (Scientists, Engineers, Inventors, Designers) Financial Capital & Infrastructures (Labs, Centers, Universities) Culture & Values (entrepreneurial spirit, innovation orientation, collaboration) Innovation Inputs Source: Schumpeter, 1934; ECC team analysis 22
National Innovation Systems are institutional networks between entities that foster synergies to connect people, ideas and resources Market Private Sector: Corporations and SME s Education and Public or Private Research Center Government: Innovation Policies Regulations Governance Infrastructure Physical Infrastructures Clusters VC s & Financial Systems Standards and Norms Source: OECD, the Oslo manual, ADL, ECC team analysis 23
Best practice government policies are required to drive the innovation process and the private sector has a critical role to play A strong and focused university research base feeds the pipeline for commercialization Technology development is more successful when it forms part of a broader regional development strategy The entrepreneurial culture of a university is key to its technology transfer success Innovation centers can provide a focal point for technology-based activities Science & Technology Innovation Model Federal R&D funding provides a critical base for technology transfer and commercialization efforts Successful technology transfer mechanisms are long term investments and can take decades to accomplish Commercial Application- Driven Innovation Model Private corporations can play a major role in stimulating science and technology research Individual champions catalyze most successful technology-based economic development Early-stage capital is a critical ingredient in launching university startups 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 24
UAE is continuously upgrading its capabilities to be an enabler of innovation in various roles: Innovation Policy Lawmaker UAE has lowest software piracy rates in the Gulf and MENA, and improving protection for IP rights to support diversification into knowledge-based industries. Educator UAE s university system increasingly become a research driven. (e.g. Masdar Institute, UAE University, Khalifah University, Zayed University, Abu Dhabi University, NYU, etc) Researcher Government led research is slowly taking root (e.g. National Research Foundation, Center for Biosaline Agriculture, Masdar Institute, Imperial College London Diabetes Center) Funder 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) Facilitator 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) Governance Framework Source: Arthur D Little ECC team analysis 25
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 26
Some leading innovators include: (1/2) Leaders Include Industry Applications include ICTs Etisalat Du ICT Fund Across all industries, across the whole value chain from supply chain to design, production and customer relationship management Biotechnology Clean Technology Biosaline Institute, Central Veterinary Research (Camel research) Imperial College Diabetes Julphar Masdar Masdar Institute Mubadala Agriculture (new crops) Medical (new drug development) Bioengineerin Pharmaceuticals In all industries Energy also concerns individuals and households High Technology ATIC Mercator, Emirates Airlines Semiconductors, Computer science New materials Aviation related programming and software Source: ECC team analysis 27
Some leading innovators include: (2/2) Leaders Include Industry Applications include Heavy industries, aeronautics Abu Dhabi Aircraft Technologies (ADAT) STRATA & SANAD DUBAL Aerospace technology Aluminum smeltering (proprietary technology) Public-Private Partnerships Dubai Trade DP World Tejari Logistics Trade Services Industry-Academia Partnerships Masdar Institute-MIT, NYU Semiconductor Foundry-ATIC Wamda-Abraaj Capital Various Clusters Dubai Media City Twofour54 DIFC Content creation Entertainment Marketing Finance Source: ECC team analysis 28
Call to Action we want your stories of innovation ECC would like to hear about your story of innovation: 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: shaheena.mohamed@ecc.ae 29