The announcement this summer of a $75-billion (Dh275.36 billion) investment deal between the UAE and India was proof, if proof were needed, of what underpins global competitiveness in emerging and emergent economies today — infrastructure.
In the 20th century, these projects were the ‘public works’ of industrialising countries. Today, as even advanced economies find their own bridges, airports and rail systems in need of repair, forward-thinking and fast-acting economies have used infrastructure spending to leapfrog ahead in progress.
This is confirmed by this year’s ‘Global Competitiveness Report’. Every year, the World Economic Forum ranks economies on a number of factors. One of the biggest increases the report records in the area of infrastructure is the UAE, which has moved from 19th to 4th in the world.
It is this kind of progress that puts a country into the global “super-league,” and that sees its expertise in demand globally. This is what exporting competitiveness can deliver.
Along with infrastructure, the UAE has strength in depth when it comes to the basic drivers of economic competitiveness. With institutions, ranked ninth according to this year’s index, and first-class public finances (seventh), it offers an effective platform for enabling sustainable growth in the 21st century.
We see this further in its well-functioning goods, labour and financial markets, which at third, 11th and 20th worldwide are again signs of an economy that has come of age.
Why does this matter? Because it provides the necessary foundation for the UAE not to simply compete in the digital age, but to excel in it. Without basic competitiveness fundamentals and efficient markets, no economy can transition to becoming innovation-driven, which is to say defined more by the talent and resourcefulness of its people rather than natural resources or fortuitous geographical location.
This is the key underlying fundamental of sustainable economic growth. Natural resources are finite and so is financial capital: human capital is not, and as the pace of technological change accelerates, only those economies that are able to innovate new products and services, or disrupt existing ones, will succeed in delivering broad-based prosperity for its people.
The UAE is one of only three economies in the region that, according to our methodology, has reached this stage of development, and it is already reaping the rewards as a globally recognised leader in areas of R&D as diverse as robotics, artificial intelligence, smart cities, space technology and advanced manufacturing.
These are the factors that will define the biggest shift under way in economic history — the fourth industrial revolution — a change that will reshape our world, and will be one of the primary drivers of discussion when the biggest summit of global experts convenes in the Emirates in a month’s time. Countries that are innovative and talent-based will reap the benefits of this change, achieve growth and will be well positioned to be the economic leaders of tomorrow.
This has not always been the case. As recently as 2007, with the world’s advanced economies at the precipice of the financial crisis, the Global Competitiveness Index concluded that the UAE was firmly a middle-ranking nation when it came to competitiveness.
A merited and comfortable position, but not one that bestowed on the country a reputation as a globally recognised innovator. What has happened in the country since now forms as close to international best practice as can be observed anywhere.
Faced with slowdowns in key markets, such as finance and a loss of confidence that had knock-on effects on real estate and other services, the government embarked on an ambitious programme of investment in soft and hard infrastructure that has transformed the economy.
This pivot from hydrocarbons to humans has proven to be a timely move.
The Forum’s latest research has found a strong link between those economies that are competitive and those that have proven to be the most resilient against the harshest effects of recession. Which is why the UAE, like the US and Switzerland among only a select number of other economies in the global first rank, were able to return to growth long before many of their peers.
What makes the UAE particularly special is its impressive ability to continuously reform and improve. The commitment to long-term reform should serve as an example to others, as many emerging markets unfortunately see their competitiveness decline through a failure to enact essential reform while prevailing economic winds were in their favour.
On my annual visits to the UAE, I have become accustomed to witnessing change, not only in terms of the skyline but also in terms of entrepreneurial spirit. The government has laid down the building blocks in the form of excellent airports and roads and efficient, functioning markets, and now the Emirates’ entrepreneurial classes are taking the nation further, helped by an openness that makes it among the very best in the world when it comes to attracting and retaining talent.
This is no longer a well-kept secret and, as a responsible global citizen, the country is now exporting its strengths for the benefit of other nations. By placing itself at the very centre of a highly networked global economy, it is building a future worthy of the people it is home to.
— The writer is Founder and Executive Chairman, World Economic Forum.
