Advancing the digital economy with innovation
How the Middle East has become one of the world's most competitive regions
Through the adoption of digital technologies and diversification of its economies from crude oil, the Middle East and North Africa (MENA) has become a fast-paced and competitive place to do business.
Gartner estimates that spending on technology in the MENA region grew by 4.5% in 2021, reaching over $170 billion – with more growth expected.
According to Worldbank, innovation is creating significant socio-economic benefits for MENA nations, boosting economic growth that could soon amount to hundreds of billions of dollars yearly and a huge surge in jobs. The financial institution’s 2022 report states that by fully digitalizing the economy, the Middle East could raise its GDP per capita by at least 46% over the next 30 years – a long-term gain of at least $1.6 trillion.
But how exactly is innovation contributing to the Middle East’s extraordinary economic growth?
R&D and innovation: the recipe to economic success
A core reason behind the Middle East’s technology-fueled economic boom is that digital innovation helps to reduce informational costs that constrain transactions, and those costs become lower the more they’re used. That’s why countries thriving in highly competitive and demanding economic environments are often very focused on innovation.
The World Intellectual Property Organization (WIPO) has even gone as far as establishing a direct link between investment in innovation and high GDP per capita, adding that companies with sizeable R&D budgets are often market leaders.
WIPO’s latest Global Innovation Index reports that rapid advances in biomedicine, energy, and information and communication technology (ICT) have the potential to “significantly transform every aspect of [an] economy,” leading some experts to predict that “the world might be on the cusp of a new innovation-driven era of high productivity growth.” But what does it take to be an innovation leader?
One example of a thriving global technology company is Chinese multi-conglomerate Huawei, whose growth is fueled by a history of innovation – and heavy investment. And now it’s cloud technology that’s enabling true innovation, especially in the Middle East.
“As the foundation of digital transformation, [cloud] provides the building blocks for other advanced technologies driving the digital world,” says Steven Yi, President of Huawei for the Middle East and Africa.
Huawei’s focus on innovation has turned its cloud platform into the world’s fastest-growing cloud ecosystem, attracting over three million developers just five years since launch.
Steven Yi, President of Huawei for the Middle East and Africa
Sustaining growth through talent and collaboration
While it’s clear that technological innovation is a critical factor in economic development in the Middle East, sustaining this growth can be challenging.
One way to ensure growth continues is by emphasizing the tech industry’s current talent and skills shortage, particularly the advanced skills critical to digital transformation. Doing so could ensure further progress in the digital economy.
New research by management consulting firm Korn Ferry estimates that the global talent shortage could result in about $8.5 trillion in unrealized annual revenues by 2030 if left unchecked.
While universities in the Middle East continue to produce talented ICT practitioners that have supported the region’s economic progress, the demand for IT solutions is still accelerating.
According to Yi, the MENA region needs to continue investing in talent development to ensure organizations have access to qualified personnel to pursue digital transformation goals. And engaging with diverse industry and ecosystem partners enables talent to flourish.
“Huawei has a long history of collaboration with governments, academia, and industry to enrich the [MENA] region’s talent ecosystem,” he says. The Huawei ICT Academy, the annual Huawei ICT Competition, and Seeds for the Future have trained thousands of Arab youth for tech careers.
“In the Middle East, we’ve set up 167 ICT Academies with over 3,500 students participating in the Seeds for the Future program. We’ve also trained over 120,000 ICT talents in this region.”
However, filling the skills gaps isn’t the only way to ensure the Middle East retains its digital growth. Collaboration is also paramount.
And for the future? The focus for the Middle East going forward should be on sustainability and green energy.
“The explosion of data in the digital era puts pressure on the industry’s commitment to reducing its carbon footprint,” says Yi. “Our research has found data traffic generated by digital services is expected to grow 13-fold by 2030, and unless energy efficiency improvements are made, the ICT industry’s energy consumption and carbon emissions will see a 2.3-fold increase.”
As technology progresses, its enduring growth and future potential can be unlocked and futureproofed by applying sustainability principles now.
