The State and Innovation in the Gulf Working Group II

On June 3-4, 2014, CIRS held the second working group under the State and Innovation in the Gulf research initiative. Participants reconvened in Doha to discuss their paper submissions that collectively analyze efforts of GCC states to diversify their oil-based economies into knowledge-based economies (KBEs), the manifestation of these efforts on the ground, and the structural realities that facilitate or hinder this transition.

Significant dependence on the oil and gas industry has led to the development of national visions and strategies that actively seek to diversify GCC economies. These diversification efforts are not merely related to the diffusion of risk by decreasing dependence on the volatile oil and gas sector, but are rather increasingly intertwined with elements associated with KBEs – namely job creation and the development of sectors with high knowledge content. Global rankings such as the World Bank’s Knowledge Assessment Methodology database provide a comparative indication of the status of knowledge economies around the world. While GCC countries rank below European and North American countries in the World Bank’s KAM database, they also score significantly higher than other states in the MENA region. Despite this relative indication of GCC rankings, participants questioned the applicability of these assessments to the region due to the Gulf’s peculiar economic transition throughout the decades. Developed countries around the world – those that tend to score higher on these global rankings - have gone through a developmental evolution from agrarian to industrial economies, then transitioned to information societies, which led to the present knowledge economies. Gulf states however, are attempting to leapfrog from pearling and trading economies to robust KBEs. The core cause of this rapid transition in the region – in comparison to other resource-based economies such as Norway – is attributable to the concurrent discovery of oil and establishment of nationhood, leading Gulf rulers to focus on strengthening their rule by building physical infrastructure, providing basic services, and essentially suspending the diversification process. Production oriented structures and practices were thus sidelined by robust oil earnings, leading participants to question: can countries which have not been through the industrial revolution enter the knowledge economy phase of development?

One of the ways in which Gulf states are attempting to build the foundations of their respective KBEs is by heavily investing in human capital and intangible assets through the establishment of vast educational and research facilities. By replicating and adopting models of education from abroad, this form of investment enables Gulf states to  “leapfrog the lengthy and costly process of indigenous growth and maturity” - indicating a strong motivation to catch-up with the developed world and compete in the global race for innovation. While borrowing and replicating models may have its advantages in reducing the time and cost of establishing native educational systems, the process of borrowing, adoption and implementation is a complex and costly one itself.  Cultural transmission is one of the core components of education, and as such, having a standard model that is imported from abroad omits the required cultural and contextual fit for education systems to be locally effective. Second, excessive reliance on foreign models and external providers retards the growth of local capacity building in the Gulf – essentially hindering the ability to foster knowledge and expertise produced locally.  Despite this tendency to replicate and borrow, Gulf states have exhibited forms of innovation in developing their education systems. Education City – the flagship of Qatar Foundation in Qatar – is a model of clustered international branch campuses (IBCS), where a number of foreign universities operate under the umbrella of Education City.  This clustered model of IBCs creates opportunities for integrating the educational experiences of the different universities, allowing students to cross-register for classes and providing a platform for joint-degree programs and research collaborations to take place. Due to the benefits of this model of clustered IBCs – or the Education City model – other regions of the globe are attempting to adopt it. While the benefits are clear, it is a costly endeavor and its global level of diffusion will largely be dictated by the ability of states with fewer resources than Qatar to effectively replicate the model.

Large investments in higher education are tailored towards developing the skills of the national workforce and producing the “knowledge worker” that is required by KBEs. Despite this investment in human capital however, Gulf nationals are continuously drawn to employment in the public sector – where they accrue large benefits from the state – as opposed to seeking employment in the private sector. While foreigners comprise the bulk of GCC populations and as such dominate the private sector, they have a temporary presence in the labor market due migration policies that limit their duration of stay. This has adverse effects on developing KBEs due to hindering local knowledge retention and transfer of imported foreign knowledge. In developed countries, the private sector is traditionally conceived of as the bearer and fosterer of innovation; however, with minimal presence of nationals in the private sector and the temporally limited presence of expatriates, there exists a large disjuncture between investment in human capital and labor market outcomes that reap the benefits of these investments. In an attempt to fill this gap, GCC states are promoting entrepreneurship by developing institutions that support local entrepreneurs and SMEs, with the aims of building a robust private sector that is promotive of innovation. In the recent years, the SME ecosystem has witnessed a mushrooming of institutions and organizations mandated to cater their services towards the support of private business. While the strategies and infrastructure for SME promotion may be set in place, the pervasive rentier arrangement in the Gulf provides a thick security blanket of social benefits that continues to deter nationals from fostering an entrepreneurial spirit – a spirit that is largely based on uncertainty and risk-taking.

Increasingly so, it is apparent that what is lacking in the GCC is not necessarily the infrastructure or the investment in pillars of a knowledge based economy – but in creating an environment and a national system that is conducive to knowledge creation and innovation. When it comes to university-industry-government collaborations, it appears that the role of the government in incentivizing both universities and industries to collaborate in knowledge exchange and management is weak in some GCC states such as Qatar.  As such, industries continue to operate in silos, curtailing the diffusion of knowledge throughout the economy. Moreover, it becomes evident that while state rhetoric is supportive of creating KBEs that foster innovation, the structural realities of Gulf states – namely the rentier arrangements and the demographic imbalance – actively mitigate against the translation of these national visions and strategies into concrete realities, hindering the realization of KBEs and keeping innovation at shallow levels.

Participants and Discussants:

  • Haytham Abduljawad, Qatar Petroleum
  • Zahra Babar, CIRS – Georgetown University School of Foreign Service in Qatar
  • John Crist, Georgetown University School of Foreign Service in Qatar
  • Crystal A. Ennis, Balsillie School of International Affairs
  • Martin Hvidt, Zayed University
  • Mehran Kamrava, CIRS – Georgetown University School of Foreign Service in Qatar
  • Daniel Kirk, Emirates College for Advanced Education
  • Suzi Mirgani, CIRS – Georgetown University School of Foreign Service in Qatar
  • Dwaa Osman, CIRS – Georgetown University School of Foreign Service in Qatar
  • Elizabeth Wanucha, CIRS – Georgetown University School of Foreign Service in Qatar

Article by Dwaa Osman, Research Analyst at CIRS