In the following months, the existing ties between TCI Network and the practitioners in the Arabian Gulf Cooperation Council (GCC) states will be further strengthened as the region will host some future TCI activities (i.e. Dubai). TCI activities will provide an ideal opportunity for the GCC states to streamline their strategies and policies for making their economy more competitive and to focus on ways to take advantage of the current global financial crisis rather than merely cope with it.
TCI is a network of competiveness experts and cluster practitioners worldwide that aims at developing methodologies for achieving sustained economic growth through the triple helix model that includes the public sector, the private sector and academic sector in active collaboration. Over 500 TCI members and experts worldwide are expected to participate in these conferences. They will focus on strategies to improve competitiveness and thereby achieve sustained economic growth. The experts will elaborate on the innovative clusters of GCC economies such as construction, logistics, tourism, travel and finance. Dubai is recognized as the key hub for trade and financial activities in the UAE and the Gulf and there is now a pressing need for this development to be extended to other states and emirates in the region. The TCI conference in Dubai will serve as the perfect forum to demonstrate that to achieve a higher level of competiveness the GCC states have to look beyond their oil and gas wealth by exploring alternative potential possibilities.
GCC states will require an active response from business and trade representatives, governments, academicians and civic leaders for competiveness to take root and prosper for sustained economic growth in a diversified set of industries that provide employment opportunities for a young and growing population. A change of mindsets will also be necessary as industry will have to focus more on global markets and the changing competitive landscape and less on direction and financial support from government.
The notion of competiveness is not unknown to GCC states, and many have implemented competitiveness studies that have identified potential opportunities for diversification. Some states and emirates have conducted annual competitiveness reports and taken other initiatives. But there is still a long way to go. An encouraging fact is that all the GCC states ranked in the top 40 of the World Economic Forum's Global Competiveness Index, with Qatar leading at an impressive rank of 26 out of 134 countries, just ahead of Saudi Arabia at 27, United Arab Emirates at 31, Kuwait at 35, Bahrain at 37 and Oman at 38. The groundwork has been done; the platform set. Now, all that needs to be done is to enhance the level of GCC competiveness through capitalizing on opportunities and diversification.
Dubai took a major step forward when it established the Dubai Competiveness Council in 2008 and the United Arab Emirates has established a similar council at the federal level. Other GCC states too are in the process of establishing similar bodies. While Bahrain has a Competitiveness Council similar to that of Dubai's, Saudi Arabia has the National Competitiveness Centre and has launched its 10x10 initiative to be among the top ten countries in a series of global competitiveness rankings by the year 2010. Some measure of how far Dubai has come can be gauged from the fact that Dubai was recently ranked the most competitive economy in the Middle East according to a study commissioned by the Dubai Competitiveness Council, an arm of the Dubai Economic Council using an internationally respected comparative methodology. Similarly Dubai ranked 16th out of 65 economies in the National Competitiveness Report for 2009, published by the Institute for Industrial Policy Studies of the National University of Seoul, South Korea. It was the first time that Dubai was included in the report. Dubai's strengths include its achievements in health and environment, intellectual property rights, corporate governance, government business strategy and attracting direct and indirect foreign investment. Areas where it needs to show improvement include ethics and transparency, education and the quality of its workforce. Saudi Arabia, the Gulf's largest economy ranked 48th, while Oman ranked 42nd and Kuwait 30th. However, Kuwait and Qatar beat out the UAE and Saudi Arabia as the best countries in the world in which to do busines, according to the WEF's Global Competitiveness Index and Time Magazine. Kuwait came in at 30th, Qatar at 31st, Saudi Arabia at 35th and the UAE 37th while Oman was placed 42nd and Bahrain 43rd.
GCC states have taken heart from such indicators and have said while the global financial crisis has indeed impacted their part of the world as much as any other, it is now a matter of the past as they have come through the worst of the economic crisis and are on their way to recovering their sound financial footing. Most recently, the Ruler of Dubai, Sheikh Mohammed bin Rashid Al Maktoum, asserted, "We have overcome the crisis with the least amount of losses." I support his view. "Wall Street" (the financial markets) will pick up more quickly than "Main Street" or the economy in general, and the impact of this will be reflected in the Gulf States.
Analysts are of the opinion that despite a 45 percent drop in share values this year in Saudi Arabia and a similar situation in the UAE commercial capital of Dubai, the fundamentals of the economy seem to be solid. The GCC states have an advantage over other emerging markets such as China and India in that their main export is oil, something that despite recent massive jumps and falls is still trading at above average prices. Demand slows in times of global recession but the oil price has a long way to fall before becoming a worry for Gulf governments. Indeed, the Gulf and Middle East are being looked upon as a source of capital for the West. A slowdown is still expected in the GCC but so is a positive rate of growth ahead.
In the financial sector it is expected that human capital will swell as it becomes easier for the region to attract good quality professionals to the knowledge-based economies of Abu Dhabi, Dubai and Qatar. With the region's governments under pressure to generate jobs for aspiring young professionals, financial services and related sectors may provide a viable option with plenty of opportunity for people across the skills spectrum. Financial services can fuel growth in related sectors such as construction, professional services, communications, hospitality and travel. For every job created in finance three more are created in other sectors. Once again competitiveness and the awareness coming from it will be the way forward to a better economy and future.
If there has been any real impact felt it has been in the construction and real estate sectors with many of the landmark construction sites coming to a halt. Another area has been the banking sector with staff and operations culled. However, the effects of the recession may not be as severe as it has been elsewhere with the growth and high income which allow GCC governments to set aside funds from the booming years that could now be used for counter-recessionary measures despite the downturn in the performance of sovereign wealth funds.
Arthur Bayhan is Chief Executive Officer of The Competitiveness Support Fund in Pakistan. Since 2006, he is member of TCI Board of Directors
26 May 2009
