Dubai: The UAE has more than doubled employment to 3.5 million in 2009 from 1.7 million in 2000 with jobs growing at a compound annual growth rate of 8.35 per cent, according to a report on knowledge economy published by the World Bank.

This is the highest growth rate in employment in the Middle East and North Africa (Mena), reflecting the country’s achievement in the knowledge economy, the report said.

“In the UAE, Dubai has based its development over two decades on a clear knowledge and innovation strategy. Its strategy of building a transport and logistics hub (centred on a world-class port) has spawned a successful tourism industry. In addition, the UAE has developed core competencies in technology, media, and telecommunications,” the report said.

Dubai had created the region’s first knowledge cluster – Dubai Internet City, Dubai Media City, Knowledge Village as part of its quest to transform the trading economy into a knowledge economy, as part of the government’s vision. Currently the emirate is helping set up two Smart Cities in India’s Kerala state and Malta.

Experts feel, the Arab countries could benefit from the UAE’s expertise in the knowledge economy that could help reshape some of the Arab economies in transition.

Economic growth

The report: Transforming Arab Economies: Travelling the Knowledge and Innovation Road, published by the World Bank, Centre for Mediterrannean Integration (CMI) and European Investment Bank, shows how an economy based on innovation and knowledge can help promote greater economic growth and spur competitiveness.

Inger Andersen, Vice-President for the Middle East and North Africa at the World Bank, said, the report could help countries in the Arab world imagine a new kind of development strategy with a knowledge and innovation-driven model at its very heart. “The report lays out helpfully how this approach can help Arab countries diversify their economies and innovate, creating new enterprises and jobs,” he said in a statement.

The report, launched on Wednesday in Rabat at an event organised with the Islamic Educational, Scientific and Cultural Organisation (ISESCO), underlines that greater investment in a knowledge-economy model will be needed to meet the job creation challenge common to the region.

Many Arab countries have made progress over the last decade in terms of rolling out education access and information and communication technologies (ICT), gradually improving the institutional environment for private-sector led growth. Morocco and Tunisia have worked to support innovation, especially through the creation of technoparks and industrial zones that have attracted foreign direct investment and advanced manufacturing operations.

“If small countries like Finland and Singapore, medium-sized ones like Malaysia and South Korea, and large like Brazil, China, and India are able to harness the power of technical change, then countries in the Arab world can do so too,” said Mats Karlsson, CMI Director, said. “But patience and determination will be required, because the fruits of investments in knowledge may not begin to appear for a few years.”

Human resources

However, the good thing is, some Arab countries have already begun travelling the knowledge-economy road, upgrading their human resources through improvements in education that have significantly increased the region’s capacity to absorb new technologies and know-how, investing in ICT infrastructure and the backbone logistics needed to connect to the global economy, building solid research and development structures, and improving their overall business environment.

“This is particularly true of the oil-rich GCC countries, which aim to transform some of their cities into global innovation spots,” the report says. Among the resource-poor countries, several countries have made noticeable efforts to organise their development strategies around knowledge-economy initiatives through sectoral or national plans.

The country rankings on the Global Competitiveness Index (GCI) show that the GCC countries lead the pack. Some countries, such as Tunisia and Morocco, perform relatively better on this competitiveness index than on the Knowledge Economy Index (KEI), which, unlike the GCI, does not account for a broader and complex set of parameters affecting micro-level performance.

Arab Spring

“The changes in country rankings between 2011 and 2013 on the GCI can be an indication of how different countries have been affected by the events of the Arab Spring,” it said.

Unemployment is incontestably the main challenge facing Arab countries. The Middle East and North Africa (MENA) region has a disproportionately large share of young people and suffers from the world’s highest rate of youth unemployment.

At 20–25 per cent, the rate is twice the global average and it reaches 40 per cent in Egypt and Tunisia, notably among those with tertiary education. More than 100 million people are between the ages of 15 and 29, making up 30 per cent of the region’s total population and about 47 per cent of the working-age population.

More than 10 million young people enter the labour market annually, but three out of four working age women do not participate in the labour force. It is estimated that to accommodate these young people and prevent a further rise in unemployment in the region, approximately 40 million jobs must be created over the next decade.