GII 2012 Middle East analysis

For the second year running two Middle Eastern countries have been named among the top 40 most innovative countries in the world, while rising star Jordan came in at 21 for innovation efficiency.

Qatar and the United Arab Emirates were ranked 33 and 37, in the GII 2012 down seven and three places respectively on last year’s ranking. Elsewhere in the region Bahrain increased five places to 41, Oman lifted 10 spots to 47 and Saudi Arabia up six to 48.

But in a separate innovation efficiency index, which shows how innovation inputs are best translated into innovation outputs, it was the low-to-middle income Middle East nations which mostly outperformed their oil-rich neighbours. The top five countries for the region were Jordan (at 21 in the world), Kuwait (54), Tunisia (59), Lebanon (73) and Egypt (78).

Innovation-based growth is crucial to all Middle Eastern countries facing the challenges of economic diversification, changing demographics, engagement of youth and globalization. 

Innovation lag: No quick fix

Lag affect of innovation

Despite results showing the region is improving in areas such as institution building, human capital, infrastructure and market and business sophistication, many innovative activities in the Middle East are failing to translate into the wider economy. There is no quick fix, said Karim Sabbagh, senior partner at Booz & Company, a knowledge partner for the G11 2012. “We’re probably half way through these generational investments. Hopefully in next few years the gap between the inputs and outputs will narrow.”

In the broader Middle East, countries like Jordan and Lebanon, which outranked the richer GCC economies in terms of innovation efficiency, have been more open to entrepreneurship from a social and economic standpoint.

“They have an entrepreneurship culture, they started the trajectory sooner so the outputs were already there. In the GCC, this way of thinking started maybe 10 years ago so there is still a lag. For me this is a temporary result," said Sabbagh. “But innovation is not the monopoly of any specific region, country, company or individual, it’s open to everyone.
"The top 10 countries in the GII 2012 – the majority of which have populations of between 4 million and 9 million - demonstrate that even small countries can be at the forefront of innovation.”

GCC countries rank well on input pillars - a result of improvements in institutional frameworks, its skilled labour force (with an expanded tertiary education), and deeper integration with local and global investment and trade markets - but come up short on knowledge, technology and creative outputs. Businesses are slowly adopting innovative practices and there has been limited export of creative goods and services.

Innovation plans need action 

While many sectors within the region have innovation plans they are still at a nascent stage and yet to be put into actionable strategies. Funds are often limited, access to credit is difficult particularly for the private sector, and infrastructure levels are often not developed enough to support large-scale innovation acitivities. The region faces a limited supply of knowledge workers to support innovation plans.

IP is also a challenge with the current regulatory framework failing to adequately protect intellectual capital or innovation investments.

Networks between innovative businesses are limited due to insufficient operational support.

Holistic approach needed

GCC must develop an holistic and integrated approach to overcome common science, technology and innovation (STI) challenges. Activities in these areas should be “harmonised around common platforms” to maximise social and economic benefits, Sabbagh said.

Innovation vital to economic diversification

The resource-rich GCC economies have made significant investments in human capital over the last years, but have yet to reap the full innovation benefits from these actions. Weaknesses in knowledge and technology output such as lack of patents,  have impacted their performance, according to GII lead researcher and and Project Manager at INSEAD eLab, Daniela Benavente.

Potential to improve

Qatar, the United Arab Emirates, Saudi Arabia, Bahrain, Oman, and Kuwait rated 10 percent below the trend line and were among a host of resource-rich, high-income “innovation underperformers” when comparing GII performance against GDP per capita. Middle-income earners in this group include Iran, Syria, Algeria and Yemen. These economies all have the potential for improving their innovation systems on the basis of their income levels, said Benavente. "It's a trend in many resource rich countries., maybe there is some crowding out of innovative investments, or maybe its related to strong GDP." 

Economies start by getting inputs in place before really taking off, Benavente said, noting GCC countries rated very well in these areas. "You start by getting small pockets of excellence then there is a multiplier affect to pull the rest of the economy ."

DISCUSSION ON GII 2012: THE TAKE-AWAYS

Here's what the panelists today had to say about innovation...

Sibusiso Sibisi, National Advisory Council on Innovation, South Africa, would like to see the sub-title of the GII report expanded to read "Innovation linkages for global growth and global public good."

Werner Bauer, Nestle CTO, says that people are a thousand times more valuable than systems or money.

Mohammed Al-Suwaiyel, KAST Saudi Arabia believes that innovation is essential for developed and developing worlds to achieve their potential, but the tools are different:

Jeong Kim, Bell Labs/Alcatel-Lucent says that quality matters in terms of people. Research is global and development can be global. You have to collaborate with the best minds around the world but in order to get the global benefit you have to tailor the results to local regions and needs.

WIPO DG Francis Gurry - Innovation is too important as an economic and social phenomenon to be overly-politicized.

THE VIEW FROM SINGAPORE: Local official comments on commitment to innovation

One reason for Singapore’s continued success in the Global Innovation Index is the government’s vision and backing for the development of infocomm that goes back 30 years when “the Singapore government took the challenge to systematically transform the country by leveraging infocomm technology,” Andrew Khaw, senior director of industry development of Infocomm Development Authority (IDA) of Singapore, said at the GII 2012 launch event held July 3 at INSEAD’s Asia campus in Singapore. “Today, infocomm is recognised as a key enabler in Singapore’s national, economic and social development. Singapore’s posture to constantly prepare for the future makes us open to exploring and embracing new innovative ideas.”

IDA works to stimulate sophisticated demand in the government, business and people sectors as well as sustain investment in manpower and infrastructure, Khaw said.

Co-innovation in the Singapore ICT industry

In recent months, IDA has facilitated co-innovation platforms with Global Lead Users driven in part by the need of global corporations to better leverage ICT for competitiveness and differentiation. Citibank, for example, has worked with IDA to set up a Citi Global Transaction Services (GTS) Centre of Innovation to develop innovative decision support services with local business analytics and user ICT companies.

According to Khaw, Citibank worked to provide Singapore ICT companies with opportunities to share their capabilities and to support them for prototyping, and productisation provides the opportunity for these technologies to be eventually deployed for its business globally. “We believe Singapore, being home to 7,000 MNC regional headquarters, plays an important role to encourage co-innovation.

INNOVATION IS NOT AN END IN ITSELF

"Innovation leads to greater  inclusion in the economy and ultimately to social stability and transformation," Sibusiso Sibisi, National Advisory Council on Innovation, South Africa, told delegates to the launch of the Global Innovation index 2012 in Geneva this morning. He said that innovation can lead to great inclusion in society by encouraging investment and support for new enterprises, thereby reducing unemployment and allowing more people to participate in the economy at large.

Nestle's CTO Werner Bauer echoed those sentiments adding "Innovation is not a gimmick; it's the real application by consumers - for billions of people - who are actually using the products created through innovation. This is the passion I have for innovation."

Switzerland's Support for Innovation Transformation

Sixty percent of Nestle's research and development funds are spent in Switzerland. "Switzerland has the right people and the right infrastructure," Bauer said. This percentage is large considering only 2% of Nestle's turnover comes from Switzerland, along with 3% of its 330,000-strong work force.

But how mobile is the talent pool? And how does Nestle retain talent? Bauer says the workforce stability is within the company as a whole, not just in Switzerland, and it is supported by company-driven education and training programs.

Innovation is not just the providence of developed industrialized countries

Arab nations too are supporting innovation.  According to Mohammed Al Suweiyel, President of King Abdulaziz City for Science and Technology KACST,  Saudi Arabia drives innovation in several ways:

1. Knowledge acquisition. Arabic knowledge content on the internet is very valuable in this regard. A few years ago it was only 5% of the Arabic population; today it's increased eight times thanks to providers such as Google.

2. Increased availability of broadband connection which allows people to access all sorts of content, including in Arabic.

Addtionally, Saudia Arabia is recognized as one of the world's more advanced developers of water desalinization technology.

Research, Development and Collaboration

Bell Labs, the research arm of Alcatel-Lucent, has been in the vanguard of  research and development of broadband. But their research association with universities has suffered from a lack of alignment of interests: professors who publish papers tend to be promoted out of the industrial research category.

"Academia is not organized to be able to actively abet industrial research," claims Jeong Kim, President of Bell Labs.

But when we say "collaboration" do we really mean it? How to share in patents for co-produced discoveries? Bell favors co-ownership; Nestle looks at the whole protection support inherent in the R&D environment before committing to setting up shop in an area. Most important is to find a good way to work together without relying on governments.

FUTURE OF INNOVATION DEPENDS ON TRANSFORMING IDEAS INTO ACTIONS

The 2012 GII rankings prove that strong economic performance goes hand-in-hand with strong innovative cultures within countries, economies and regions. " Innovative inputs such as investment in education and talent drive innovation," Per-Ola Karlsson, Senior Partner and Managing Director,   Europe, at Booz & Company told delegates attending the GII launch today in Geneva.

"New linkages between stakeholders are what turn ideas into successful outputs.," he said. "You cannot measure innovation simply on a quantitative basis such as number of patents issued. You have to take into account qualitative things such as strategy and other ways of nurturing innovation."

Booz & Company are a knowledge partner of the GII 2012, along with the Confederation of Indian Industry and Alcatel-Lucent.