Laying the foundations A new era for R&D in the Middle East A report from the Economist Intelligence Unit Sponsored by Laying the foundations A new era for R&D in the Middle East Contents Foreword About the research Executive summary Part I The push and pull of R&D investments From market push to environment pull? Box: Quintiles 10 Part II The need for diversification 12 Box: Petra Solar 13 Part III If you build it, will they come? 15 Education 17 Technology transfer 20 Clusters and ecosystems 21 Box: Shell 22 Conclusion 24 Appendix: survey results 25 © The Economist Intelligence Unit Limited 2011 Laying the foundations A new era for R&D in the Middle East Foreword C onscious of the need to diversify away from dependence on oil and gas revenue, and to increase job opportunities for an increasingly restive youthful population, Arab governments are redirecting their investments towards knowledge-intensive industries, having recognised the central role that innovation can play in the development of robust economies Yet, although ambition and financial resources are not lacking, the key challenge will be to convert these advantages into a sustainable ecosystem environment for research and development (R&D) With sound policies and a long-term vision, however, the Arab world has the potential to become a significant hub for R&D over the next decade Laying the foundations: A new era for R&D in the Middle East is an Economist Intelligence Unit report that examines the steps that countries in the Middle East are taking to boost their attractiveness as recipients of R&D investment The report is sponsored by the Advanced Technology Investment Company (ATIC) The Economist Intelligence Unit bears sole responsibility for the content of this report The findings and views expressed in this report not necessarily reflect the views of the sponsor The report was written by Rob Mitchell and edited by Stephanie Studer August 2011 © The Economist Intelligence Unit Limited 2011 Laying the foundations A new era for R&D in the Middle East About the research I For the purposes of this report, the Middle East and North Africa region is defined as the region’s Arab countries only, and does not include Turkey or Iran n July 2011 the Economist Intelligence Unit conducted an online survey of 214 executives from around the world Around one-half of the respondents were C-level executives and a similar proportion represented companies with US$500m or more in annual revenue All respondents had previously invested in R&D activities in the Middle East and North Africa1 To complement the survey results, we also conducted a programme of qualitative research that included in-depth interviews with a range of experts and senior executives The insights from these interviews appear throughout the report We would like to thank the following individuals (listed alphabetically by organisation name) who participated in the interview programme: l Marwan Abdulaziz, director of business development, Dubai Biotechnology and Research Park (DuBiotech), a member of TECOM Investments’ science cluster l Gary Amy, director of the water desalination research centre, King Abdullah University of Science and Technology (KAUST), Saudi Arabia l Andy Brown, managing director of Pearl GTL, Shell l Ralph Cavin, chief scientist, Semiconductor Research Corporation (SRC) l Timothy Dalton, program manager of the nano-science and technology partnership, IBM Research l Peter Heath, chancellor, American University of Sharjah, UAE l Wyatt Hume, provost, UAE University l Sunil Kumar, dean of engineering, NYU Abu Dhabi l Shihab Kuran, chief executive officer, Petra Solar, US l Tod Laursen, president, Khalifa University of Science, Technology and Research, UAE l Vladimir Misik, senior regional director, Middle East, clinical operations, Quintiles l Fred Moavenzadeh, president, Masdar Institute, UAE l Navi Radjou, fellow, Cambridge University’s Judge Business School, UK l Haitham Sibai, regional technical manager for the Middle East, 3M l Tom Speechley, senior partner, Abraaj Capital, UAE © The Economist Intelligence Unit Limited 2011 Laying the foundations A new era for R&D in the Middle East Executive summary F or the first half of the previous millennium, the Middle East was the most innovative and technically advanced region of the world During the so-called Islamic golden age, scholars and scientists across the Middle East and North Africa made major advances in mathematics, astronomy, medicine and engineering But as the scientific revolution took hold in 16th-century Europe, the Middle East’s position as a global scientific hub faded The industrial revolution later sealed the West’s success, as pole position in science and technology passed to Europe, and then in the 20th century to North America Meanwhile, the achievements of the Islamic golden age were consigned to history books The development of a new golden age for innovation in the Middle East may seem like a distant possibility, but there are signs that the region is starting to regain a foothold in the global innovation stakes Governments in the region, and particularly the six countries of the Gulf Co-operation Council (GCC), have been investing heavily in the infrastructure and institutions to support research and development (R&D) activity And although it is still early days, a growing number of multinationals are dipping a toe in the waters and connecting new R&D centres in the Middle East to their global operations In this report, we examine the progress that countries in the region are making to create fertile environments for R&D investment We assess the appetite of multinationals to establish their R&D centres in the region and look at the prospects for the Middle East to become a sizeable hub for global R&D over the next decade Here are the key findings of the research: Companies are deepening and broadening their global R&D footprint Despite facing continuing pressure to cut costs and trim investment, the companies surveyed for this report remain keen supporters of R&D as a source of competitive advantage and future growth The vast majority expects to increase their investment in R&D over the next three years This R&D activity will also become more widely distributed, with most companies boosting the number of their R&D centres and diversifying their investments around the globe Most companies regard the Middle East as an increasingly important destination for R&D investment Over the next three years, more than half of the companies surveyed for this report expect to increase the level of their R&D investment in the Middle East This result is slightly skewed, however, by the presence of local companies in the survey Among those companies from outside the Middle East and North Africa, around 40% plan to increase their R&D investment in the region over the next three years For the most part, R&D centres in the region are currently relatively small, and generally focused on late-stage development, rather than “blue skies” research © The Economist Intelligence Unit Limited 2011 Laying the foundations A new era for R&D in the Middle East The Middle East possesses many of the key ingredients necessary for becoming an effective R&D hub in its own right When choosing a location for an R&D centre, companies prioritise the availability of talent and proximity to markets as the key criteria In theory, this should play well for the Middle East The region has a large, young population, relatively high per capita incomes and a strategic geographical location that enables it to serve as a gateway to other fast-growing regions, including Africa and the Asia Pacific region Centres of excellence in specific sectors are gradually emerging in some countries Although there is considerable variation across the MENA region, a number of governments are investing heavily in R&D infrastructure and institutions to diversify their economies, to create jobs and to make the transition to becoming knowledge-based societies Although R&D is still in its nascent stages in the region, there are signs that some countries are becoming internationally recognised as research destinations for a number of sectors, including agriculture, alternative energy and biotechnology Governments are naturally key players in building an R&D infrastructure, but greater participation of the private sector will also be required The countries at the vanguard of innovation in the Middle East combine a clear long-term vision with the resources to turn this into reality This is ensuring rapid progress in building the institutions and infrastructure that will create the foundations for sustainable R&D investment But government alone cannot create a fertile R&D environment More than half of respondents agree that government-led efforts to develop R&D clusters in the Middle East are insufficient to create genuine centres for innovation To turn robust R&D infrastructure into a hotbed for innovation, greater private-sector involvement will be required There are also concerns that there may be too much emphasis given to flagship projects Almost two-thirds agree that government-led R&D in the Middle East is too often focused on mega-projects, rather than more practical, small-scale initiatives A lack of management and technical skills remains a barrier to further R&D investment from multinationals In recent years, the Middle East has made significant progress in establishing educational centres that will provide a pipeline of R&D talent for the future Respondents say that talent is a key reason why they invest in the region, although they are also conscious that the supply of specialist engineering and management skills does not always meet demand This apparent contradiction may reflect a recognition that progress is being made in strengthening skills, but that there is still some way to go before the region can compete effectively on a global level To increase their share of global R&D, it will be important for governments in the Middle East to deepen their investment in education, particularly at the postgraduate level It will also be important to develop an innovation culture through the introduction of funding mechanisms and greater market competition © The Economist Intelligence Unit Limited 2011 Laying the foundations A new era for R&D in the Middle East Part I: The push and pull of R&D investments T BCG, Innovation 2010 he Middle East region has historically been fairly low on the priority list for companies seeking new centres for R&D Companies that globalised their innovation processes typically favoured countries such as India and China, where a combination of low labour costs, abundant skills and massive local markets had created a fertile environment for R&D investment But as companies start to look further afield in their search for growth, the Middle East region is beginning to look increasingly attractive Among our survey respondents (all of whom already have some R&D stake in the Middle East and North Africa), 57% say that they will increase their level of investment in the region over the next three years (see chart 1) The broader distribution of R&D activities reflects a view that global innovation should remain a strategic imperative across the entire business cycle There is strong empirical evidence linking a focus on innovation with overall corporate performance Boston Consulting Group, for example, reckons that innovative companies outperform their peers by 12.4% in terms of total shareholder returns2 Over the next three years, most companies in our survey will redouble their efforts to use innovation as a competitive differentiator Almost one-quarter say that they will increase their overall level of Chart 1: Over the next three years, what change you expect to your company’s level of R&D investment in the following regions? (% respondents) Increase of 20% or more Increase of up to 20% Stay the same Up to 20% decrease Decrease of 20% or more Not applicable Africa 11 21 32 36 Asia-Pacific 21 38 21 1 19 Eastern Europe 22 36 41 31 Latin America 11 22 32 31 30 Middle East & North Africa 12 45 34 North America 12 32 25 23 Western Europe 27 30 © The Economist Intelligence Unit Limited 2011 24 Laying the foundations A new era for R&D in the Middle East Chart 2: What change have you made to your firm's overall levels of R&D investment in the past three years, and what change you expect to make over the next three years? (% respondents) Past three years Next three years Significant increase—more than 25% 13 23 Moderate increase—10-25% 24 25 Slight increase—up to 10% 27 31 No change 28 17 Slight decrease—up to 10% Moderate decrease—10%-25% 1 Significant decrease—more than 25% 0 investment in R&D by 25% or more, and only a tiny proportion (4%) say that they will reduce their spend Even during the downturn, few cut back on innovation, despite strong pressure to slash costs and rein in capital expenditure (see chart 2) Table 1: Regional retail markets (retail sales; US$ trn unless otherwise indicated) 2011 2012 2013 2014 2015 North America 3.99 4.16 4.33 4.54 4.76 % change, year on year (volume) 2.8 2.1 2.1 2.1 Western Europe 2.59 2.58 2.62 2.67 2.79 % change, year on year (volume) 0.1 0.9 1.1 1.1 1.4 1.11 1.24 1.37 1.53 Transition economies % change, year on year (volume) 3.8 4.2 5.1 4.8 4.8 Asia & Australasia 6.31 7.09 7.99 8.99 10.09 % change (volume) 6.1 6.1 6.5 Latin America 1.05 1.13 1.19 1.26 1.34 % change, year on year (volume) 2.5 3.5 3.9 4.3 4.7 Middle East & Africa 0.43 0.46 0.5 0.55 0.6 % change, year on year (volume) 4.8 4.9 4.7 4.8 15.37 16.53 17.87 19.38 21.12 3.5 3.9 3.8 3.8 4.1 World % change, year on year (volume) Source: Economist Intelligence Unit © The Economist Intelligence Unit Limited 2011 Laying the foundations A new era for R&D in the Middle East Interest in the Middle East as a destination for R&D is growing for a number of important reasons One is geographical good fortune Situated halfway between Europe and Asia, and with fast-growing regions such as the Asia Pacific region and Africa within striking distance, the Middle East has an enviable location as a potential hub for global R&D “Proximity to the world’s fastest-growing markets will make the Middle East very attractive for R&D investment,” says Navi Radjou, fellow of Cambridge University’s Judge Business School For some companies, the Middle East may even represent a better opportunity than India for establishing an R&D base “Instead of grappling with infrastructure issues in India that can cause difficulties doing business there, you could set up shop in Abu Dhabi, which has world-class, modern infrastructure and the latest technology,” says Sunil Kumar, dean of engineering at NYU Abu Dhabi The MENA region is also becoming more important as a market in its own right Between 2012 and 2015 it will grow by an annual average of around 5% The region is home to around 444m people, with a GDP per capita of around US$10,000 This is a sizeable market and one that many multinationals have not done enough to serve in the past “If you look at the region as a whole, you’ve got a lack of historic investment, combined with demographic growth, which means you’ve got supply and demand gaps in a variety of sectors,” says Tom Speechley, a senior partner at Abraaj Capital, the largest private equity group in the region A number of sectors can expect to see significant growth in the region In consumer goods, for example, retail sales will grow consistently above the global average over the next four years By 2015, almost 3% of global retail sales will derive from the Middle East and Africa (see table 1) In healthcare, spending per capita is expected to surge by 40% in dollar terms by 2015 From market push to environment pull? The increasing share of global sales represented by the Middle East and North Africa is encouraging Chart 3: What have been the key reasons for your firm conducting R&D in the Middle East? Select up to two (% respondents) Overall importance of local market for our firm 45 Desire to tap into local talent 31 To adapt our products/services to local markets 29 Desire to join a growing R&D ecosystem in our sector 23 To access government/financial incentives 21 To build closer partnerships with local firms It is a key centre of R&D within our industry Other, please specify Not applicable, we have not yet set up an R&D centre there 11 © The Economist Intelligence Unit Limited 2011 Laying the foundations A new era for R&D in the Middle East Chart 4: Which of the following sectors you think are most closely associated with R&D investment in the Middle East? Select up to three (% respondents) Biotechnology, pharmaceuticals & life sciences 40 Alternative energy & cleantech 38 Agriculture & water 34 Information technology 20 Design & construction 19 Consumer goods 18 Electronics and electrical engineering 18 Technology: other hi-tech Telecommunications Technology: semiconductors Technology: medical and optical instruments Technology: nanotechnology, robotics Other, please specify None of the above companies to increase their R&D footprint in the region Asked about the main reasons for conducting R&D in the Middle East, respondents point to the local market as the key factor (see chart 3) Ensuring that products and services meet the needs of customers in the Middle East can require companies to take into account specific environmental factors, such as climate, consumer preferences, spending power or genetics “Sometimes products may require a slight modification to suit the local climate and nature of the environment,” says Haitham Sibai, regional technical manager for the Middle East region at 3M, the global technology company “The only way we can grow is by becoming local and building the R&D capabilities to enable these modifications to be understood and made.” Local R&D can also help to solve problems that are specific to the region In general, for example, the MENA region is dry and hot, which means that there are specific challenges linked to water scarcity, and good opportunities to research the capabilities of solar power Asked about the sectors that they think are most closely associated with R&D investment in the region, respondents point to biotechnology and pharmaceuticals, agriculture and water, and alternative energy as the most prominent (see chart 4) In Saudi Arabia, the King Abdullah University of Science and Technology (KAUST) has established a research centre to conduct R&D into water desalination and reuse technologies that involve © The Economist Intelligence Unit Limited 2011 Appendix Survey results Laying the foundations A new era for R&D in the Middle East How many R&D centres does your company currently have, and how many does it plan to have in three years' time? (% respondents) Now Three years' time 51 25 39 42 29 44 19 19 21 24 6 7 10 10 11 11 1 12 13 14 15 16 1 17 1 18 1 19 0 20 More than 20 11 27 12 © The Economist Intelligence Unit Limited 2011 Appendix Survey results Laying the foundations A new era for R&D in the Middle East Over the next three years, what change you expect to your company’s level of R&D investment in the following regions? (% respondents) Increase of 20% or more Increase of up to 20% Stay the same Up to 20% decrease Decrease of 20% or more Not applicable Africa 11 21 32 36 Asia-Pacific 21 38 21 1 19 Eastern Europe 22 36 41 31 Latin America 11 22 32 31 30 Middle East & North Africa 12 45 34 North America 12 32 25 23 Western Europe 27 30 24 Which of the following factors are most important for your company when deciding on a location for an R&D centre? Select up to three (% respondents) Availability of engineers/scientists/other specialist skills 43 Size of local market 37 Proximity to local market 35 Quality of local universities 27 Availability of finance and funding 26 Existence of R&D clusters specialising in your industry 26 Economic prospects of local market 23 Quality of local infrastructure (eg, roads, airports, telecommunications) 17 Political stability 17 Government incentives, including tax incentives 14 Local labour costs 10 Time zone Other, please specify 28 © The Economist Intelligence Unit Limited 2011 Appendix Survey results Laying the foundations A new era for R&D in the Middle East Which of the following factors are most likely to prevent your company from investing in a particular location for R&D? Select up to three (% respondents) Political instability 58 Weak protection of intellectual property 43 Lack of government support for R&D 39 High tax rates 36 Complex or burdensome regulatory environment 29 Absence of high-quality educational institutions 27 Weak/limited local R&D ecosystem 22 Weak infrastructure 21 Other, please specify Which of the following best represents your firm’s R&D efforts in the Middle East? (% respondents) We not currently conduct R&D in the Middle East, but plan to start doing so within the next three years 38 We have set up a fledgling R&D centre in the Middle East to test the waters 23 We have a small to midsize R&D operation in the Middle East, relative to our other activities globally 27 We have a major R&D operation in the Middle East, comparable with major centres we operate elsewhere The Middle East is our primary source of R&D 10 29 © The Economist Intelligence Unit Limited 2011 Appendix Survey results Laying the foundations A new era for R&D in the Middle East Approximately what percentage of your firm’s global R&D operation is conducted in the Middle East today? And how much you expect it will account for in three years’ time? (% respondents) Now Three years' time None 30 10% 43 39 20% 25 30% 10 40% 50% 60% 1 70% 1 80% 0 90% 100% 7 In which of the following stages of R&D is your firm active either on a global basis and/or within the MENA region specifically? (% respondents) Globally MENA Early stage: basic science/fundamental research 47 34 Middle stage: applied research/product development 41 Late stage: product adaptation/localisation 34 30 41 © The Economist Intelligence Unit Limited 2011 64 Appendix Survey results Laying the foundations A new era for R&D in the Middle East Which of the following external stakeholders make the most important intellectual contribution to your company’s innovations globally? (% respondents) Customers 47 Partners 15 Suppliers 14 Universities 12 Government Grass-roots entrepreneurs Other, please specify None of the above Which of the following external stakeholders make the most important intellectual contribution to your company’s innovations within the MENA region specifically? (% respondents) Customers 40 Suppliers 22 Partners 14 Government Universities Grass-roots entrepreneurs Other, please specify None of the above 31 © The Economist Intelligence Unit Limited 2011 Appendix Survey results Laying the foundations A new era for R&D in the Middle East What have been the key reasons for your firm conducting R&D in the Middle East? Select up to two (% respondents) Overall importance of local market for our firm 45 Desire to tap into local talent 31 To adapt our products/services to local markets 29 Desire to join a growing R&D ecosystem in our sector 23 To access government/financial incentives 21 To build closer partnerships with local firms It is a key centre of R&D within our industry Other, please specify Not applicable, we have not yet set up an R&D centre there 11 Within your firm’s R&D centre(s) in the Middle East, what are the key internal innovation challenges that hinder progress? Select all that apply (% respondents) Quality/availability of key engineering/science skills 50 Quality/availability of key management/leadership skills 41 Fostering a culture of innovation 33 Implementing appropriate rewards and incentives 23 Limited funds and/or resources 21 Fostering effective collaboration between local researchers and their peers globally 19 Allocating projects to local researchers that are sufficiently appealing, relative to our global research efforts 11 Fostering effective collaboration between local researchers and other stakeholders in our innovation ecosystem (eg, partners, universities) 10 Other, please specify Not applicable, we have not yet set up an R&D centre there 13 32 © The Economist Intelligence Unit Limited 2011 Appendix Survey results Laying the foundations A new era for R&D in the Middle East In your view, which of the following actions would most in order to boost the investment attractiveness of the MENA region for your firm, in terms of its R&D? Select up to two (% respondents) Improved education system and/or standards 32 Increased number of graduates with advanced degrees (eg, PhDs) 30 Closer links between academia and business 29 Increased investment incentives (eg, tax breaks) 29 Increased average government R&D spend 24 Increased intellectual property protections 19 Better living environments for knowledge workers 18 Immigration policies that attract scientists and engineers 16 More broadly accessible education 15 Regulatory policies that support R&D investment 14 Better support for small, entrepreneurial businesses 13 Development of specific R&D clusters 13 Other, please specify 33 © The Economist Intelligence Unit Limited 2011 Appendix Survey results Laying the foundations A new era for R&D in the Middle East Which of the following sectors you think are most closely associated with R&D investment in the Middle East? Select up to three (% respondents) Biotechnology, pharmaceuticals & life sciences 40 Alternative energy & cleantech 38 Agriculture & water 34 Information technology 20 Design & construction 19 Consumer goods 18 Electronics and electrical engineering 18 Technology: other hi-tech Telecommunications Technology: semiconductors Technology: medical and optical instruments Technology: nanotechnology, robotics Other, please specify None of the above Which of the following statements best captures your view of R&D ecosystems in the Middle East over the next three years? (% respondents) The Middle East already hosts world-class R&D ecosystems and will continue to so 12 The Middle East has major potential to operate world-class R&D ecosystems, but some improvements are still required 31 The Middle East has major potential to operate world-class R&D ecosystems, but significant improvements are still required 25 The Middle East has moderate potential to operate R&D ecosystems in this timeframe 19 The Middle East has limited potential for establishing R&D ecosystems in this timeframe 12 Don’t know 34 © The Economist Intelligence Unit Limited 2011 Appendix Survey results Laying the foundations A new era for R&D in the Middle East Over the next three years, how much more investment you expect your industry to make into the Middle East, in terms of R&D? (% respondents) Significant increase—25% or more 11 Moderate increase—10-25% 27 Slight increase—up to 10% 39 No change 22 Slight decrease—up to 10% Moderate decrease—10%-25% Significant decrease—25% or more What assessment would you give to the relative strengths of the Middle East as a potential destination for R&D investment? Please rate to where is strong and is weak (% respondents) Strong Above average Average Below average Weak Government support for R&D 14 28 36 14 Tax environment 13 33 40 Availability of skills 11 30 36 15 Political stability 12 19 33 22 13 Availability of financing 14 36 38 11 Size of local market 11 36 36 15 11 Geographic location 11 33 42 Quality of local educational establishments 32 35 21 Regulatory environment 25 45 19 Protection of intellectual property 35 27 39 20 © The Economist Intelligence Unit Limited 2011 Appendix Survey results Laying the foundations A new era for R&D in the Middle East Which of the following forces you think will play the most significant role in driving the uptake of R&D in the Middle East? (% respondents) Economic pressures (eg, the need for diversification) 43 Competitive pressures (eg, outperforming regional rivals) 24 Environmental pressures (eg, water shortages, climate change) 17 Social pressures (eg, meeting the needs of citizens) 17 To what extent you agree or disagree with the following statements? (% respondents) Strongly agree Strongly disagree Barring the provision of funds, reduced state participation in R&D in the Middle East would allow the private sector to innovate better 16 30 37 12 Government-led efforts to develop R&D clusters in the Middle East are insufficient to create genuine centres for innovation 18 39 32 Socio-cultural factors play a major role in hindering the take up of R&D in the Middle East 25 33 33 Political instability and social unrest will set back R&D in the region in the short term, but boost it in the medium term 21 44 23 The quality of post-graduate qualifications in the Middle East are of a sufficiently high enough standard for international R&D work 26 42 18 The Middle East’s efforts to foster local R&D now has genuine momentum 11 28 41 17 Government-led R&D projects in the Middle East are too often focused on mega-projects, rather than more practical small-scale initiatives 17 36 38 36 © The Economist Intelligence Unit Limited 2011 71 Appendix Survey results Laying the foundations A new era for R&D in the Middle East In which country is your company headquartered? (% respondents) United States of America 18 Saudi Arabia United Arab Emirates United Kingdom India Egypt Canada Mexico Brazil Germany Japan China France Spain Pakistan Israel Netherlands Chile Colombia Portugal Switzerland Other In which region are you personally based? (% respondents) Middle East and Africa 27 Western Europe 23 North America 22 Asia-Pacific 18 Latin America Eastern Europe 37 © The Economist Intelligence Unit Limited 2011 Appendix Survey results Laying the foundations A new era for R&D in the Middle East What is your primary industry? (% respondents) Aerospace & defence Agriculture and agribusiness Automotive 13 Chemicals 15 Cleantech Construction and real estate Consumer goods Education Energy and natural resources Entertainment, media and publishing Financial services Government/Public sector Healthcare, pharmaceuticals and biotechnology 12 Information Technology Logistics and distribution Manufacturing: hi-tech Manufacturing: medium-tech Manufacturing: other Natural sciences: pure & applied research Professional services Retailing Technology: medical & optical instruments Technology: nanotechnology & robotics Technology: electronics and electrical engineering Technology: semiconductors Technology: other hi- or medium-tech Telecommunications Transportation, travel and tourism 38 © The Economist Intelligence Unit Limited 2011 Appendix Survey results Laying the foundations A new era for R&D in the Middle East What are your company's annual global revenues in US dollars? (% respondents) $500m or less 26 $500m to $1bn 22 $1bn to $5bn 21 $5bn to $10bn $10bn or more 23 What is your title? (% respondents) Board member CEO/President/Managing director 18 CFO/Treasurer/Comptroller CIO/Technology director Other C-level executive 19 SVP/VP/Director 12 Head of business unit Head of department 12 Manager 22 Other 39 © The Economist Intelligence Unit Limited 2011 While every effort has been taken to verify the accuracy of this information, neither The Economist Intelligence Unit Ltd nor the sponsor of this report can accept any responsibility or liability for reliance by any person on this white paper or any of the information, opinions or conclusions set out in this white paper GENEVA Boulevard des Tranchees 16 1206 Geneva Switzerland Tel: +41 22 566 24 70 E-mail: geneva@eiu.com LONDON 25 St James’s Street London, SW1A 1HG United Kingdom Tel: +44 20 7830 7000 E-mail: london@eiu.com FRANKFURT Bockenheimer Landstrasse 51-53 60325 Frankfurt am Main Germany Tel: +49 69 7171 880 E-mail: frankfurt@eiu.com PARIS rue Paul Baudry Paris, 75008 France Tel: +33 5393 6600 E-mail: paris@eiu.com DUBAI PO Box 450056 Office No 1301A Thuraya Tower Dubai Media City United Arab Emirates Tel: +971 433 4202 E-mail: dubai@eiu.com [...]... services,” says Mr Moavenzadeh “Substantial investment in R&D capacity 20 © The Economist Intelligence Unit Limited 2011 Laying the foundations A new era for R&D in the Middle East over the past few years could be a strong incentive for multinationals to have a presence in the region.” In Saudi Arabia, for example, the King Abdulaziz City for Science and Technology (KACST), a national science agency, has formed.. .Laying the foundations A new era for R&D in the Middle East collaborating with more than a dozen industrial partners “This is a very water-scarce region, so there are only two real choices, which are to desalinate sea water or reclaim waste water,” says Gary Amy, director of the water desalination research centre at KAUST Genetic and cultural differences within the local population are also prompting... that have enormous aspirations and I think that in itself is quite a catalyst for innovation and development.” © The Economist Intelligence Unit Limited 2011 Laying the foundations A new era for R&D in the Middle East investments in sales and marketing But, over time, they have broadened their investment, adding cold storage facilities and, in some cases, manufacturing and Phase-IV development The. .. helping address Jordan’s energy needs, the R&D centre is also seen as a catalyst for creating a market for jobs in green industries in the country According to Mr Kuran, the talent available in Jordan is of very high quality “Jordan has a very broad base of talent,” he says “And we can speak from experience at Petra Solar, because many of our young PhDs are graduates of Jordanian universities.” Although... develop solar and smart grid technologies, initially for deployment in Jordan, but ultimately with a broader Middle East market in mind The Middle East is a very large 13 market for solar power,” says Mr Kuran The energy needs are there, the funds are available and the solar resource is abundant What we can do is become the facilitator that matches those funds with the technology and market.” In addition... the waters 23 We have a small to midsize R&D operation in the Middle East, relative to our other activities globally 27 We have a major R&D operation in the Middle East, comparable with major centres we operate elsewhere 2 The Middle East is our primary source of R&D 10 29 © The Economist Intelligence Unit Limited 2011 Appendix Survey results Laying the foundations A new era for R&D in the Middle East. .. Economist Intelligence Unit Limited 2011 Laying the foundations A new era for R&D in the Middle East of concentrating innovation resources within a defined area In the Middle East, governments have taken this experience to heart, and have worked hard to build an ecosystem in which innovation capabilities are clustered together around specific sectors or capabilities Most respondents think this approach has... is Kuwait, which places 36th out of 82 countries Saudi Arabia is ranked 37th, followed by the United Arab Emirates in 44th position But over the past few years, investment in the infrastructure and institutions for R&D has accelerated dramatically in some countries Qatar, the UAE and Saudi Arabia, for example, are formulating a strong vision for a future knowledge-based economy What’s more, they are... education and R&D infrastructure They are providing valuable incentives to multinationals and establishing science parks and other clusters to attract investment to the region In their turn, multinationals are realising that their R&D facilities need to be local if they are to compete for a share in this fast-growing market A number of sectors, including alternative energy, agriculture, and water, are... local R&D activity aimed at solving local problems is an exciting development “It’s a win-win situation,” he says “We can gain revenue and access to talent in Jordan, and the Jordanian economy can benefit from technology transfer, job creation, and addressing its energy crisis.” © The Economist Intelligence Unit Limited 2011 Laying the foundations A new era for R&D in the Middle East in the region Although ... 2011 Laying the foundations A new era for R&D in the Middle East in the region Although this has many aspects, a central one will be the promotion of the region as a destination for scientific and... United States of America 18 Saudi Arabia United Arab Emirates United Kingdom India Egypt Canada Mexico Brazil Germany Japan China France Spain Pakistan Israel Netherlands Chile Colombia Portugal Switzerland... 2011 Laying the foundations A new era for R&D in the Middle East the biggest potential impact (see chart 8) And only 40% of respondents think that, overall, the quality of local educational establishments