The Dubai Industrial Strategy 2030 entered its implementation phase at the beginning of this year with aspirations to create 27,000 industrial jobs by 2030. Earlier this month, the Executive Council of Dubai provided an update on its most notable progress.
As we enter the final quarter of 2017, just some of this year’s key achievements include Emirates SkyCargo’s launch of SkyPharma, a facility dedicated to pharmaceutical shipments at Dubai International Airport; Unilever’s investment of more than Dh1 billion to open the region’s largest personal-care products plant, at Dubai Industrial Park; and the unveiling of the blueprint for Dubai Food Park, which will have a full range of wholesale services for the food sector.
Such achievements all contribute towards theGovernment’s wider, long-term goal to make Dubai “an international hub for knowledge-based, innovation and sustainable industrial activities”. To help achieve this, the strategy targets six industrial sub-sectors — aerospace; maritime; pharmaceuticals and medical equipment; aluminium and fabricated metals; fast-moving consumable goods; and machinery and equipment.
This is industrial strategy at its very best: the government guiding its direction and selecting economic sectors in which it believes it can win.
Although many people in the West believe in companies as the be-all of business — and this belief has had much success in nurturing innovators — governments have a role too and this is being demonstrated through industrial strategy. What has emerged in recent decades, especially as concerns communities like Dubai Science Park, is that a winning formula can be for government to provide the frame and canvas, and then stand back and let companies create the painting.
This happens in a number of ways. Let me take Sweden as an example, having recently returned from a trip to Nordic Life Science Days held in Malmo. The cities of Malmo and Lund both saw their traditional industries such as shipbuilding suffer throughout the 1980s. So the county governor, Nils Horjel, helped guide an exercise that identified two sectors as the future pillars of the local economy: computers and electronics, and chemistry and biotechnology.
He began the process by bringing academics and businesses together in the country’s first science park, called Ideon. Then he worked with businesspeople to sharpen the park’s focus. They chose mobile phones and selected Ericsson as their champion. Ericsson took space in the park and began hiring reams of engineers.
Ericsson became an early leader in mobile phones but eventually lost its edge. Still, Ideon has proved resilient and today its focus is on biotech.
South Korea offers another example. To rebuild the economy after the Korean War, the government selected key strategic industries for growth, then slowly worked its way up the value chain from textiles all the way to high-tech. The government worked with corporate groups — “chaebols” such as Samsung and Hyundai — that could help achieve these goals.
In their book “The Samsung Way”, Jaeyong Song and Kyungmook Lee describe how this worked. Samsung, they note, “started as a trader and distributor of, among other things, vegetables and dried seafood.”
Its aspirations rose with the government’s. In the mid-1950s to late 1960s, Song and Lee write that “supported by the Korean government’s export promotion and import substitution policy, Samsung grew into a large company”.
The hand-in-glove approach continued in the next decade, Song and Lee write: “When the Korean government turned its attention to heavy industry and chemicals in 1973, Samsung expanded into petrochemicals, construction, and shipbuilding.”
Even in America, where the free market is a cardinal value, government has played a role in picking winners through its heavy investments in research and development. As the University of Sussex economist Mariana Mazzucato asserted in the “Financial Times” last year, “Almost every technology that makes the iPhone smart was funded by the government.”
The Dubai approach to industrial strategy features a stronger role for government than has traditionally been the case in the UK or US. How has our approach worked?
You can judge for yourself next time you drive down Shaikh Zayed Road. Look to your side and you will see towers where 40 years ago there was only sand. Look further to the sea and see islands where before was only water; look to the skies and see the planes of our fabulous airline rising into the clouds.
The writer is Executive Director at Dubai Science Park and the Chairing Member of the Pharmaceutical and Medical Equipment Taskforce of the Dubai Industrial Strategy 2030.
