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Globally, innovation rankings tend to be correlated with per capita income levels. On average, Arab countries rank 85th and are roughly comparable with countries such as Indonesia. Challenge areas include creative outputs as well as knowledge and technology outputs. Jordan is among a select group of emerging and middle-income countries—including China, Costa Rica, Hungary, India, Malaysia, and Vietnam—that are rapidly moving up the rankings relative to per capita income levels. Gulf Cooperation Council (GCC) countries, such as Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates, generally rank higher and are among the top 50 economies in the world. In these countries, knowledge and technology outputs are a particular challenge relative to comparators, whereas measures of knowledge infrastructure, human capital and research, and business sophistication are strengths.
 

Global Innovation Rankings for Arab States, 2013

Source: Dutta and Lanvin 2013.

Source: Dutta and Lanvin 2013.

Source: Dutta and Lanvin 2013.

What Are Corporate Executives Saying?

With the help of private firms, a growing number of innovation initiatives in the Arab world are pushing the technology frontier. Executives view business strategies as transitioning from “buying” to “doing” innovation, with rising interest in building in-house innovation skills. Interviews with 167 executives in a range of sectors in the GCC countries and North Africa and the Levant in 2013, revealed how they are stretching the innovation frontier. In Egypt, for example, IBM has partnered with the government and a university to create the Cairo Center for Nanotechnology R&D, as part of government efforts to introduce service sciences, management, and engineering into the national curriculum. Qatar’s winning World Cup 2022 bid includes developing environmentally-friendly cooling technologies and using modular stadium sections to construct 22 stadiums around the world and in developing countries. In Riyadh, the Saudi Basic Industries Corporation (SABIC) is operating a new application development center to give customers full-service technical support. And in the United Arab Emirates, Du Telecommunications Company is bringing together a consortium of regional operators to create a pan-Arab online social media platform. Regionally, Gulf Bridge International plans to connect the Middle East and India with Europe via an 8,125-mile undersea fiber-optic cable.

Why do companies innovate? For the executives surveyed, innovation is seen as an important component of their high-growth strategies and a way to achieve competitive differentiation, gain market share, improve customer satisfaction and loyalty, enhance organizational performance, and grow revenues. Over 90 percent of the executives surveyed expect growth strategies to change significantly in 2014, and nearly three-fourths aim to achieve innovation or “breakthroughs” involving both technological and business model changes. A large share of growth is expected to come from emerging new businesses; next-generation technologies together with large-scale investments in new oil and gas technologies, renewable energies, and greater connectivity worldwide are driving this trend.

Leading the pack are high-growth firms with a strong focus on innovation strategy, customer focus, and innovation culture. Customers, competitors, and employees are viewed as primary sources of innovation. More successful approaches focus on giving employees the opportunity to influence innovation strategies and be involved with high-profile initiatives, together with financial and recognition rewards.

Read Part II

Julia Devlin is nonresident senior fellow in the Global Economy and Development program at Brookings Institution. She formerly worked as consultant at the World Bank Group and as a lecturer in economics at the University of Virginia. Her focus is economic development, private sector development, energy and trade in the Middle East and North Africa. She holds a Ph.D. in Economics.