A significant shift towards sustainable and inclusive industrialization is urgently needed in the Arab region. Infrastructure development is crucial in a context of rising unemployment, the inefficient and unsustainable use of natural resources, increasing debt and protracted crises. Infrastructure projects continue to face serious challenges, including financing constraints, limitations in institutional capacity and crises.
Despite recent strides in R&D, a persistent gap remains between scientific research and the demands of industries and local markets. The volume of research and publications is disconnected from practical technological applications and has little significant impact on economies and societies. There are notable attempts to mainstream technology and seize opportunities from digitalization in various economic sectors, yet the integration of technologies into manufacturing processes is either limited or non-existent. In cases where greater engagement with technologies exists, countries tend to be users instead of developers or exporters. This is especially problematic given the march of the fourth industrial revolution globally, which is leaving the region behind.
SDG 9 is a composite goal that is difficult to fully trace through the policy landscape. This chapter addresses two core policy areas relevant across the Arab region.
The first area encompasses sustainable industrialization policies, with a focus on the manufacturing sector and the development of SMEs. Industrial strategies geared towards economic diversification are means to build sectors that are independent from oil and gas. Policies can focus on accelerating the development of the industrial sector, improving its competitiveness and promoting investments, while encouraging clean production and environmental considerations with clear linkages to SDGs 12 and 13.
The second area entails scientific R&D and innovation, with an emphasis on national strategies and means of implementation, monitoring and funding. Effective R&D strategies translate scientific research into practical applications that respond to the demands of the marketplace. Such strategies are coupled with monitoring frameworks and nationally relevant indicators that go beyond counting the number of researchers or amounts of funding allocated.1
The private sector plays a limited but important role through public-private partnerships. Political support to such partnerships is growing with countries taking measures to foster environments that incentivize businesses to provide expertise and help alleviate burdens on public budgets.3 Fifteen Arab countries4 have issued public-private partnership laws or updated existing ones in the past 10 years. The attributes and effectiveness of these laws vary according to national contexts and each country’s legal framework.
While gross domestic expenditure on R&D in high-income Arab countries has improved since 2015, it remains less than the global average (figure 9.2), despite important amounts allocated and spent. Gulf Cooperation Council countries are allocating large sums for scientific research, more than $1 billion in Qatar and around $5.12 billion in Saudi Arabia,23 but they may not have sufficient absorptive capacity. While such countries have sophisticated infrastructure and facilities for R&D, expenditure as a share of GDP is small compared to other countries and regions. Another gap, which applies to the region, is that public spending is more focused on research than product development, with limited spending by the private sector.
The Arab middle-income country group has the highest percentage of manufacturing employment (12.2 per cent) compared to other subregions. The percentage of female researchers in each of Algeria, Egypt, Morocco and Tunisia is higher than the world average (31.2 per cent).28 The percentage of small-scale industries with a loan or line of credit (20.9 per cent) is higher than that of other subregions but the second lowest compared to other regions in the world. National research priorities are selected in a manner that maximizes the benefits of research investments and directs funds towards high-potential areas.
Arab least developed and conflict-affected countries that do not have science, technology and innovation policies or capacities to implement them are at risk of being left behind. Armed conflict creates additional obstacles by destroying infrastructure and factories. | The United Nations Technology Bank for Least Developed Countries is conducting research on science, technology and innovation needs. It also aims to facilitate technology and knowledge transfer as well as resource mobilization. A technology needs assessment is currently underway in Djibouti. The bank also offers capacitybuilding programmes to researchers, students and entrepreneurs. A programme for strengthening and establishing national science academies has already led to the formation of new academies in least developed countries outside the Arab region; the bank has committed to providing similar support in North Africa.
a
Mauritania recently launched innovation incubators that support and fund young entrepreneurs aiming to build innovative businesses. The most notable are the Kosmos Innovation Center and the Hadina RIMTIC. They operate within a wider national effort to improve the R&D and innovation ecosystem, including by establishing a national council and an innovation unit, and developing an R&D strategy. b |
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Women: Despite the rising number of female graduates in science and technology fields, women remain underrepresented in employment in these sectors. Further, the expected increase in automation and the integration of 4IR technologies will affect low-skilled and repetitive manual labour jobs where women often concentrate. | In Oman, Bank Muscat offers services to support and encourage women entrepreneurs at different stages of business growth. It also collaborates with Riyada – the Public Authority for SME Development to provide leadership development opportunities and vital connections to help advance women’s businesses.
c
In Egypt, the Micro, Small and Medium Enterprises Development Agency collaborated with the United Nations Development Programme to offer loans that have reached more than 520,000 of these businesses; 48 per cent of beneficiaries have been women. d |
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Older employees/workers: Increased overlap between technology and industries has accompanied a perception that older employees/workers may be unwilling to embrace new technologies such as Artificial Intelligence. The speed at which digital technology is advancing will require the upskilling and reskilling of employees, an issue not yet widely addressed in the region. This is particularly important for employees over 55 years of age. | In Saudi Arabia, 47 per cent of employers are training staff to cover gaps in expertise. The Digital Government Authority launched a programme to develop digital skills in the public sector in partnership with local and global academic institutions. e |
1. The relationship between the number of researchers and amounts of R&D funding versus innovation output is not necessarily linear.
2. OECD, 2021.
3. Ibid.
4. The Comoros, Djibouti, Egypt, Jordan, Kuwait, Lebanon, Mauritania, Morocco, Oman, the State of Palestine, Qatar, Saudi Arabia, the Syrian Arab Republic, Tunisia and the United Arab Emirates.
5. Zawya, 2023.
6. MEED, 2023a.
7. Egypt, 2021.
8. World Bank, 2020b.
9. MEED, 2023b.
10. See for example: Qatar Ministry of Commerce and Industry, 2018; United Arab Emirates, 2023.
11. Tunisia Ministry of Industry, Energy and Mines, 2022.
12. Tanchum, 2022.
13. Egypt, Jordan, Kuwait, Lebanon, Libya, Mauritania, Morocco, Oman, Qatar, Saudi Arabia, the State of Palestine, Tunisia and the United Arab Emirates.
14. Saudi Authority for Industrial Cities and Technology Zones – Modon, 2021.
15. Morocco Ministry of Industry and Trade, 2023; Zawya, 2021; Riera and Paetzold, 2020.
16. Bahrain, Jordan, Lebanon, Morocco, Oman, Saudi Arabia, Tunisia and the United Arab Emirates.
17. European Union, 2023.
18. Algeria, Egypt, Kuwait, Mauritania, Oman, Qatar, Saudi Arabia, Tunisia and the United Arab Emirates have laws and Bahrain, Iraq, Jordan, Lebanon, Morocco, the State of Palestine and the Syrian Arab Republic have structures, strategies or initiatives to offer support or finance. For more information, visit ESCWA’s Arab SMEs Portal.
19. Tamkeen, 2023.
20. Zawya, 2020; Sohar, 2023.
21. Sharakah, 2023.
22. World Bank, 2023.
23. Invest Qatar, 2023; Saudi Arabia’s General Authority for Statistics, 2022.
24. WIPO, 2022.
25. Arab News, 2021.
26. In 2020, the number of researchers (full-time equivalent) per million inhabitants in the United Arab Emirates was 2,489 compared to a global average of 1,353. ESCWA, 2023b, accessed December 2023.
27. UNESCO, 2021.
28. UNESCO, 2022.
29. Egypt Ministry of Trade and Industry, 2015.
30. Al Abdallat and Tutunji, 2012.
31. Morocco, 2020.
32. UNESCO, 2021.
33. Attaqa, 2022.
34. UNESCO, 2021.
35. European Commission, 2022.
36. Arvantis and Hanafi, 2019.
37. Dossou and Hanaa, 2020.
38. El-Sayed and Ghoneima, 2022.
39. The State of Palestine, Ministry of Telecommunications and Information Technology, 2019.
40. World Bank, 2018.
41. UNESCO, 2021.
42. Noumba Um, 2020.
43. The National Fund for Small and Medium Enterprise Development, 2023.
44. UNESCO defines five main sources for R&D funding as: business enterprise, government, higher education, private non-profit and the rest of the world.
the world.45. UNESCO, 2021.
46. ITU, 2020.
47. UNIDO, 2021a.
48. Qatar Development Bank, n.d.
49. Oman Development Bank, 2021.
50. Saudi Industrial Development Fund, 2021.
51. Arab Fund for Economic and Social Development, 2022.
52. Islamic Development Bank, 2022.
53. Cherkaoui, 2023.
54. Hussein, 2023; Bahrain Ministry of Industry and Commerce, n.d.
55. The Peninsula, 2022.
56. UNIDO, 2023.
57. UNESCO, 2021.
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