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AICEP
Agência para o Investimento e Comércio Externo de Portugal

CABEÇALHO

Globally, economies with agile ecosystems that are equipped with the infrastructure to support innovation in technology are witnessing a revolution. In order for governments, large-scale multinationals and new start-ups to take advantage of this revolution, the right support systems and regulations must be in place. And the movement of data needs to be low-cost and flexible.

Nowhere is this more apparent than in the Middle East. In 2016, 33% of companies were at an advanced level of digitization, according to PwC, and this is expected to more than double to 72% by 2020. Data centres could be the Gulf’s new refineries.

But it's not all plain sailing. The Middle East was late to the first, second and third industrial revolutions. This time, it must be ahead of the curve. There are certain common elements to strong entrepreneurial ecosystems. Some of these are within policy-makers’ control, such as reducing bureaucracy and moving government online. Others stem less directly from government action, such as social changes to foster a strong academic base and encourage greater diversity of talent and more women in the workforce. Fortunately in Bahrain, more than 70% of coders are female. But just as important as these changes are actions to create an entrepreneurial environment and provide easy access to funding for start-ups.

 

Our region has its challenges, including legacy issues such as difficulties in registering businesses, job protectionism, and low investment in research and development (R&D). In the Middle East, countries generally spend less than 1% of their GDP on R&D, compared to the OECD average spend of 2.5%. According to a Strategy & Middle East report, Gulf Cooperation Council (GCC) states could achieve 2.2% growth by increasing R&D spending by 1%.

 

There are other inhibitors of innovation, including a general lack of skills and training; closed visa policies which restrict entrepreneurship; and complex customs processes. Across the Middle East and North Africa (MENA), intra-regional trade as a percentage of total trade is traditionally much lower than other regions, at just under 10%.

 

On the other hand, we have a significant advantage thanks to our youthful demographic profile. The region’s median age is under 30, and strong population growth continues. There is no country in the GCC where people under 25 make up less than 30% of the population.

 

This article is part of the World Economic Forum on the Middle East and North Africa

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