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The Role of Knowledge in the Process of Innovation in the New Global Economy: MENA Prospective

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Hassan Y. Aly - Nile University
ERF 25th Annual Conference
Knowledge, Research Networks & Development Policy

10-12 March, 2019
Kuwait City, Kuwait




Published in: Government & Nonprofit
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The Role of Knowledge in the Process of Innovation in the New Global Economy: MENA Prospective

  1. 1. 1 The Role of Knowledge in the Process of Innovation in the New Global Economy: MENA Prospective Comments By Hassan Y. Aly, Professor of Economics, and Dean of the Business School at Nile University, Egypt Presentation to the ERF 25th Annual Conference, Kuwait City, Kuwait March 2019
  2. 2. 2 Policy Response “Create, Protect and Valorize IP • Public procurement • Patent collectives • Unlock university-based IP • Patent collectives are a way to « socialize » the costs and benefits of individual patents by pooling them by sector or country »? • Agreement on easing the patenting process and unlocking university based IP. However, most of the universities in the ME are teaching institutions and focus on research is rare and very theoretical. Pooling by country?
  3. 3. 3 Policy Response • “Redesign programs from “job centered” to “person centered” • Funding higher education • Savings and pension schemes ( tax free saving and portable pensions) • The focus should be “firm” centered rather than “person” centered! • Savings and Pension Schemes ( are these for GCC?). Pensions and new demographic facts. • Most ME countries do not have the capacity to fund higher education. The focus should be on changing the quality of higher educating.
  4. 4. 4 Policy Reponse • “As the nature of work changes so will the skills and expertise we look for in the workforce. As a result, the current emphasis on “upfront“ learning should be replaced by policies that remove barriers to reskilling with policies that incentivize lifelong learning and encourage public and private sector collaboration.” • Total agreement on the lifelong learning • However, our focus is on the unemployed in general and the youth in particular.
  5. 5. 5 Surplus of Unemployed and Misemployed Model of Growth * Applying the basic principle of Arthur Lewis’s model to the ME region ( very much like what the Chinese did). Basically, move labor from zero or negative MP to positive MP Some Stylized facts about the ME now: 1- Youth under 25th represent over 60% of the population of the ME. 2- Large percentage of this youth group are either unemployed, disguisedly unemployed, or misemployed due to the skills gap that exists. These groups may represent the unlimited supply of labor a la Arthur Lewis.
  6. 6. 6 Surplus of Unemployed and Misemployed Model of Growth Some More Stylized facts about the ME now: 3- Business education is ranked very low on the international scale. Egypt is dead last on the world competiveness report in the business education component. 4- Projections estimate that by 2020, the region will reach 60 percent overall smartphone adoption, in line with the rest of the world 5- The Middle East’s top IT players do not rank in the top 600 companies by annual revenue globally. (McKinsey 2016)
  7. 7. 7 Surplus of Unemployed and Misemployed Model of Growth ME Digital potential now: • There is a potential for unified digital market across the Middle East (160 million potential digital users by 2025) amounting to approximately 95 billion US$. • The Middle East and North Africa (MENA) region is ranked second in the world by number of daily YouTube videos views at more than 310 million • By 2020, projections suggest that there will be around 2 zettabytes of data in the Middle East— greater than the estimated number of grains of sand covering the entire Arabian
  8. 8. 8 Surplus of Unemployed and Misemployed Model of Growth 1- The mechanism by which these groups are turned into productive human capital through innovation, technology, and entrepreneurship is in the heart of the success of this model. 2- Youth led economic transformation is very possible and it would be the end result of this model if there is proper planning and coordination between the government, the private sector, and other supporting eco-system from NGOs to even the diaspora outside the country.
  9. 9. 9 Surplus of Unemployed and Misemployed Model of Growth 1- Governmental public policy that force firms to pay for training by universities and other educational institutions where the latter will be accountable to firms is very much in line with what “Paul Collier” explained yesterday. 2- The innovations, technology, and entrepreneurship should not be confined in one sector but in all sectors. Any new idea that will help improve productivity or connect the market players in agriculture, industry, trade, and any other service whether for the final or intermediate product or service should be pursued.
  10. 10. 10 Surplus of Unemployed and Misemployed Model of Growth In a nut shell: 1-Considering the unproductive Human Capital, the new oil of the region. 2-As exploration costs, extraction, and building refinery are essential primary costs to produce and sell oil, a holistic change in the education system is essential to use and improve the human capital productivity. 3-Creating a new class of young entrepreneurs who use innovations and technology is the goal of this model. 4- Digital can also have a positive impact on inclusion and poverty reduction, increase access to and quality of healthcare and education, and reduce CO2 emissions. Improvement in the Overall quality of life.
  11. 11. 11 Thank You
  12. 12. 12 McKinsey 10 RECOMMENDATIONS TO ACCELERATE DIGITISATION ACROSS THE ME REGION GOVERNEMNT • 1. Move from e-government-focused digital initiatives to full digital economy development • 2. Empower national digital agencies • 3. Create policy frameworks that foster, and do not hamper, digital innovation • 4. Seize the opportunity of large public IT spending to create home-grown IT players at scale
  13. 13. 13 McKinsey 10 RECOMMENDATIONS TO ACCELERATE DIGITISATION ACROSS THE ME REGION BUSINESS • 5. Take the once-in-a-lifetime opportunity to create critical digital platforms for the region • 6. Step up the collaboration among corporations and digital disrupters in the region • 7. Embrace agility through digital to address the ever-faster business environment
  14. 14. 14 McKinsey 10 RECOMMENDATIONS TO ACCELERATE DIGITISATION ACROSS THE ME REGION FUNDING • 8. Scale digital VC funding and increase visibility of investment opportunities TALENT • 9. Create digital curricula and seamless learning pathways from primary schools to higher education and into employment • 10. Rethink how to attract and retain digital talent and reconsider applicability of nationalization to digital

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