Build resilient infrastructure,
promote inclusive and
sustainable industrialization
and foster innovation

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A. Introduction

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.

Inclusive and sustainable industrialization drives sustained economic growth and increases opportunities for decent jobs (SDG 8). Accordingly, it helps reduce poverty (SDG 1), hunger (SDG 2) and inequalities (SDGs 5 and 10). It can also improve health and well-being (SDG 3), increase resource and energy efficiency (SDGs 6, 7, 11 and 12), and reduce greenhouse gases and other polluting emissions, including from chemicals (SDGs 13, 14 and 15).

The growth of the manufacturing sector is essential for industrial development and usually generates innovations. If it is not sustainably planned, however, industrial development imposes trade-offs in terms of the SDGs due to increased emissions (SDG 13) and consumption of natural resources (SDGs 6, 7, 12 and 15).

Reliable, inclusive and sustainable infrastructure has a key role in improving rural and urban livelihoods (SDG 11). Improvements in transport can strengthen logistics and supply chains for food, boost agricultural productivity (SDG 2) and facilitate access to services such as health (SDG 3) and education (SDG 4).

R&D can make contributions to most, if not all, of the SDGs. It may be a precondition to achieving some goals. While R&D is necessary to advance agricultural production (SDG 2), produce vaccines (SDG 3) and develop clean energy (SDG 7), SDG 9 addresses the overall scientific research system.

Sources: UNIDO, 2021b; Mantlana and Maoela, 2019.

What the data say

Data included in this section are from the ESCWA Arab SDG Monitor, unless otherwise indicated (accessed in December 2023).
Manufacturing remains weak despite progress after the COVID-19 pandemic. Manufacturing value added as a proportion of GDP was 10.3 per cent in the Arab region in 2022 compared to a world average of 16.7 per cent.
Innovation remains underfunded and underprioritized. In 2021, the region had 630 full-time researchers per million inhabitants compared to a world average of 1,353. Only 0.61 per cent of GDP was spent regionally on R&D; the world average was 1.93 per cent.
Manufacturing value added per capita was $621.80 in 2022, around one third of the world average. Alarmingly, the regional value has regressed since 2015; it was further negatively impacted by the pandemic. At the subregional level, manufacturing value added per capita was significantly higher in Gulf Cooperation Council countries ($2,898.50 in 2022). It has returned to and even exceeded its pre-pandemic level.
The proportion of medium- and high-tech manufacturing value added reached 32.4 per cent of total value added in 2020. Although the share has fluctuated over the years, it has seen an overall increase of 1.2 per cent since 2000. The global trend has regressed.
In a context of de-industrialization, manufacturing employment in the region has regressed since 2000 and was 10.3 per cent in 2021, compared to a world average of 13.6 per cent.
Across the region, 2G mobile network coverage exceeded 96 per cent in 2022, almost equal to the world average. The percentage was the same for 3G coverage. Yet 4G coverage was 76 per cent compared to a world average of 88 per cent.
Small-scale industries lack financial support. Only one in seven small manufacturers benefited from a loan or line of credit in 2023, which was half the global value.
The volume of passengers travelling by air increased regionally and globally from 2017 to 2019 but dropped substantially worldwide due to the COVID-19 pandemic. By 2021, recovery in the Arab region was slow and had reached only one third of pre-pandemic figures.
Carbon dioxide emissions per unit of manufacturing value added have decreased in the region since 2015, reaching 1.1 kilograms per dollar in 2020, but they are still around double the world value. Carbon dioxide emitted from fuel combustion in the region is low compared to other regions and constituted 4.6 per cent of the amount emitted globally in 2020.
Freight volume transported by air (ton kilometres) dropped by approximately 14 per cent in 2020 due to the pandemic. It fully recovered and exceeded its pre-pandemic values in 2021, reaching over 33 billion ton kilometres or 15 per cent of the global value. Most of this value is transported by high-income countries in the region, which rank third after Europe and North America and East and South-East Asia.
For an up-to-date view of SDG 9 data at the national and regional levels and an analysis of data availability, please visit the ESCWA Arab SDG Monitor.

On the road to 2030 – suggested policy approaches to accelerate progress on SDG 9

Improve the alignment of infrastructure strategies with national and regional trade strategies, and strengthen horizontal and vertical coordination within governments on infrastructure planning, public investments, public procurement and public-private partnerships.
Prioritize manufacturing as a means for economic diversification and job creation while focusing on niche markets, utilizing technology and integrating the principles of sustainable development.
Integrate innovation within public policy planning at the national level and enhance collaboration on innovation projects between academia and industry to encourage innovation across sectors.
Support the science-policy interface and develop regulations that help channel scientific advice to policymakers. Establish national frameworks or observatories dedicated to industrial data collection to support the monitoring and analysis of industrial performance and to feed information into decision-making and policy design.
Strengthen regional cooperation and develop policies, processes and structures for the effective transfer of technology, at the intra- and interregional levels, particularly for manufacturing.
Invest in building human capacities for establishing and operating innovative, technology-focused start-ups, including through upskilling and reskilling, and push for a cultural shift in favour of entrepreneurship.
Diversify financing instruments available to small and medium enterprises (SMEs), including small-scale industries, and facilitate their access to such financing. To that end, it is important to remove structural barriers related to business registration, licensing, permits, taxes and other relevant processes.

B. The policy landscape for SDG 9

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

Infrastructure analysis is approached from a plans and projects viewpoint. Traditionally, the definition of infrastructure has focused on large physical systems and networks necessary for nations to function, including transport, energy, water and sanitation, and telecommunications. The expansion of this understanding to include institutions providing health care, education and governance confirms infrastructure development as a priority for achieving the SDGs.
For information on each infrastructure type, refer to the corresponding SDG chapters: health-care infrastructure (SDG 3), school infrastructure (SDG 4), water infrastructure (SDG 6), energy infrastructure (SDG 7), urban infrastructure (SDG 11) and ICT infrastructure (SDG 17).
Infrastructure development in the region is mainly undertaken by governments and financed through public funding and multilateral and bilateral lenders. Despite overall progress in developing physical infrastructure in the region, performance across countries and infrastructure types is not uniform. For example, while ICT infrastructure is relatively developed, transport infrastructure is limited in terms of connectivity and logistics, a major challenge to trade and productive sectors such as manufacturing.2 Despite this backdrop, major infrastructure projects with sizeable investments have been launched in several countries, ranging from new cities to transport schemes and nuclear plants.
The Quality Infrastructure for Sustainable Development (QI4SD) Index was launched in 2022, covering 137 countries. Out of 16 Arab countries included in it, only the United Arab Emirates ranks in the top 25 countries globally, followed by Tunisia (39), Saudi Arabia (45), Egypt (56) and Morocco (68). The ranking does not correlate to income level; several Arab middle-income countries rank above high-income countries in the region.

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.

  • Saudi Arabia has launched real estate and infrastructure projects worth $1.25 trillion5 as part of implementing its Vision 2030 and fulfilling an overall objective of economic growth and diversification as well as increased employment. The Government has invested in the construction of airports, ports, highways and new industrial and tourism zones. Notable megaprojects include NEOM and the Red Sea development project.
  • As part of its Vision 2030, the Government of Egypt has acknowledged that strong infrastructure is a lever for social and economic development. By the end of 2023, infrastructure projects in construction, energy, water and transport were valued at $400 billion.6 The Government is also implementing megaprojects budgeted at more than $10 billion7 for housing, industrial complexes, railways, and undertakings such as the Suez Canal development and the New Administrative Capital.
  • Between 2001 and 2017, Morocco invested between 25 and 38 per cent of its GDP8 in infrastructure development, one of the highest rates globally. Infrastructure projects in transport, water and sanitation, irrigation, ICT and electricity have significantly improved access rates, thus diminishing the gap between rural and urban areas. Factors that have contributed to progress include partnerships with the private sector, strengthened public procurement and facilitation of mixed ownership with state-owned enterprises. Morocco continues to invest mostly in energy, transport and construction, with a current allocation of around $150 billion.9
Several Arab countries are planning or designing industrial policies to increase the share of manufacturing in GDP and exports as a sector with better prospects for economic diversification and growth (see the chapter on SDG 8). Industrial policies have been complemented with measures that include identifying niche areas of manufacturing, improving the business environment, strengthening links with scientific research, integrating new technologies, facilitating access to global value chains, promoting exports to global markets and trade negotiations.
  • Bahrain, Qatar and the United Arab Emirates have specified key performance indicators to assess the increased contribution of the industrial sector to GDP.10 Tunisia plans to elevate the contribution of manufacturing to GDP to 20 per cent by 2035.11
  • As part of its structural reform, Egypt seeks to boost industrialization through targeted interventions in manufacturing, agribusiness and ICT. These measures are expected to increase the collective GDP contribution of these sectors to at least 30 per cent by 2024.
  • Oman plans to increase the percentage of industrial exports in total exports from 16 per cent in 2015 to 28 per cent in 2040.
  • The Saudi Advanced Manufacturing Hub was launched in partnership with the World Economic Forum and aims to make Saudi Arabia a global hub for industrial innovation and advanced manufacturing. As a result, factories for pharma, aircraft components, metal forming and other industries have been set up, and multinational companies are establishing facilities.
  • The shift in Morocco to targeted industrial policies over two decades has positioned the country as a leader in some industries. For example, reforms to the state-owned phosphate corporate put Morocco in the top five global manufacturers of fertilizers.12
Measurement gaps

Global indicators have been useful in presenting an overall measurement and comparability framework for the region’s industrial performance. For example, the Index of Industrial Production for the Arab region was higher than the global average prior to 2019. Since then, it has dropped and not recovered fully. At a subregional level, the Competitive Industrial Performance Index of high-income countries (0.065) was less than half the value measured globally (0.131) in 2021.

Globally calculated indices may not be sufficient, pointing to a need to develop measurement frameworks and statistical monitoring systems customized to national and regional needs. As a good practice for measuring impact, the Industrial Observatory of Jordan produces evidence-based industrial analysis. It provides data sets on employment, energy, trade and industry, and includes links to regional and international databases.

Sources: UNIDO calculation of the 2021 values for both indexes; UNIDO, 2024.
To support the implementation of industrial policies, middle- and high-income countries are establishing industrial clusters. Established or planned industrial clusters, complexes, parks, poles or cities are evident in at least 13 countries.13 The concentration of resources (infrastructure, funding and human capacities) in industrial clusters has cultivated a conducive environment for growth and integration into global value chains. Clusters have also brought together different stakeholders, including businesses, government actors and research institutions, although collaboration with academia is still generally weak.
  • Saudi Arabia had established 36 industrial cities by 2021 through its Saudi Authority for Industrial Cities and Technology Zones (Modon), which employs over 570,000 workers and has attracted aggregate private sector investment of over $100 billion.14
Industrial policies can be complemented with instruments and measures to support local manufacturing. For example, Arab countries are adopting the “Made in” label (Bahrain, Egypt, Lebanon, Morocco, Saudi Arabia and the United Arab Emirates).
  • Morocco has established 149 industrial zones covering a variety of sectors and helping the automotive sector become the first exporting sector providing over 220,000 job opportunities (see the chapter on SDG 8).15
Patenting activities

Patents are a useful tool for stimulating technology and industry development. They are also relevant as a proxy for measuring innovation. The share of patents in the region compared to the world remains very low, although it has slightly improved since 2018. Patent applications in the region comprised a mere 0.5 per cent of patents worldwide in 2022, with a total of 17,260 applications and only 5,786 patent grants. The top countries, by order of contribution, were Saudi Arabia, Morocco, the United Arab Emirates, Egypt and Algeria.

Sources: WIPO, 2023. For more information, see ESCWA, 2024.
There are some promising efforts to make industries more sustainable. Although industrial policies in the region are generally sector-specific and focused on economic growth, at least eight Arab countries16 have integrated some elements of sustainable industrial development in their policies and considered social and environmental components.
Net-zero commitments present opportunities for developing industrial infrastructure and ecosystems, and strengthening linkages with the energy and agriculture sectors.
  • The Ministry of Industry and Advanced Technology in the United Arab Emirates seeks to increase the efficiency and sustainability of production cycles and supply chains by driving R&D, setting standards for industrial infrastructure, and implementing policies to reduce resource consumption and support carbon neutrality efforts.
  • The most recent industrial strategy of Bahrain promotes the circular economy, environmental and social governance, and net-zero carbon emissions.
  • Morocco plans to enhance the use of green energy and has a policy package including environment laws and financial incentives for reducing industrial pollution.
Efforts are underway to strengthen the role of SMEs and improve their competitiveness through focused measures to foster innovation. SMEs in the region account for more than 90 per cent of businesses across different economic sectors, a share that may reach 99 per cent in Algeria.17 To counter barriers to SME growth, national measures are no longer limited to grants or tax exemptions but extend to providing digital transformation services, advice, mentoring, capacity-building, access to funds and links to global value chains. Sixteen Arab countries18 support SMEs through strategies and institutions, or have passed or updated laws to facilitate access to funding, relax restrictions on establishing small firms or simplify business procedures.
SME growth and success depends on removing structural barriers in the business environment. Establishment of a fund to support SMEs, for example, will not lead to successful results if firms continue to face obstacles such as cumbersome regulations and the limited availability of skills.

SME digitalization efforts are lagging even as digitalization is key for innovation and will help SMEs reduce costs, improve efficiency, and access markets and resources such as training opportunities, talent recruitment networks and financing. While there are studies on digitalization in SMEs, a gap persists in formally measuring digitalization based on indicators such as access to and use of e-payment gateways and e-commerce.
  • The Tamkeen government agency of Bahrain assists the development of the private sector, offers skills-building services and facilitates access to finance. It focuses on SMEs, start-ups and entrepreneurs, particularly high-potential and innovative ones. In 2022, Tamkeen contributed over $259.95 million to the economy of Bahrain and supported more than 18,400 employment and training opportunities.19
  • Oman has been shaping and sustaining an enabling environment for SMEs to operate. The Government allows 100 per cent foreign ownership and has set up a one-stop-shop across ports and free trade zones to reduce red tape and speed the establishment of enterprises.20 On the financing side, Sharakah is a closed joint stock company in Oman that offers a range of services and financial support for SME development. Over 180 SMEs have been assisted in manufacturing, services and trading. Support is planned for transformative industries such as hydroponic farms, fish processing, logistics, tourism, technology and innovation.21

D. Policies to leave no one behind

Leaving no one behind in the context of SDG 9 is often considered through the lens of marginalization. This looks at those who lack access to technology, are digitally illiterate or require equity-based policies to integrate into the knowledge economy. Another dimension relates to geographical areas that are not connected to various infrastructure grids or networks, contributing to limited development in rural areas and to internal migration to cities. The majority of the poor cannot participate in technological development, due to the quality of education or lack of skills and infrastructure in their communities, even if some are benefiting through programmes in health or other services.

Leaving no one behind in the context of SDG 9 must be addressed through macro-level policies that target subnational inequalities, contribute to rural development, improve accessibility and address “last mile” challenges.
People with disabilities are at risk of being left behind if assistive technologies are not deployed and interface design overlooks their specific needs. Addressing these issues requires concerted efforts to prioritize accessibility in technology design and development, adherence to accessibility standards and guidelines, and engagement with persons with disabilities to understand their needs and preferences. Promoting awareness of digital accessibility can help foster a more inclusive technological landscape for all users. See the chapter on SDG 17 for more details and country examples.

Table 9.1

Examples of policies to leave no one behind
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
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
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
  • a. United Nations, 2023b.
  • b. ESCWA, 2017; United Nations Technology Bank for the Least Developed Countries, 2022.
  • c. Bank Muscat, 2023; al Maskry, 2016.
  • d. Egypt, 2021.
  • e. Pwc, 2022; Alarabiya, 2021.

E. The financing landscape

By one estimate, the Arab region needs to spend at least 8.2 per cent of GDP to meet infrastructure goals by 2030.42 Financing for quality, reliable, sustainable and resilient infrastructure projects, however, cannot be adequately tracked. Some insights come from existing or emerging finance mechanisms and institutions that support SMEs as well as R&D to promote sustainable industrialization and foster innovation.

There are national efforts to support small-scale industries through dedicated funds or measures to facilitate access to finance. As an example, the Kuwaiti National Fund for SME Development was established in Kuwait with a capital of $6.5 billion to cover up to 80 per cent of SME funding needs.43 Governance restructuring, programme development and a review of regulations have taken place since the establishment of the fund with a view to improving impact.

Spending on R&D in the region remains low, at 0.61 per cent of GDP in 2021, with most coming from government resources. Figure 9.4 shows that for most countries, data are sparse and outdated. Disaggregation by the source of funding44 and type of sectoral spending is also limited or unavailable. The low percentage of spending is partly attributed to limited absorptive capacity or a high GDP value in resource-rich countries. It also seems unaffected by the significant expansion in higher education in recent years and generous public funding for universities. In some cases, contract research from oil and gas companies has provided universities with substantial funding but with limited impacts or contributions to society. There should be an increased focus on funding effective research communities and interdisciplinary approaches to produce outputs that yield social returns.45
The proportion of small-scale industries with a loan or line of credit is less than 50 per cent in Arab countries with data available. It is as little as 2.4 per cent in Iraq (2022) and the Sudan (2014), 3.4 per cent in Yemen (2013) and 4.1 per cent in Egypt (2020).

Source: ESCWA, 2023b.

Figure 9.4

Research and development expenditure as a proportion of GDP (Percentage)


Source: ESCWA, 2023b.

Figure 9.5

Official development assistance providers in the region per SDG (Percentage)


Source: OECD, 2017.
The investment needed to connect the unconnected to broadband in the region is estimated to be $28 billion.46 Globally, the top 25 providers of official development assistance committed $18.4 billion to SDG 9 as a whole in 2019. Among Arab providers of assistance, SDG 9 is the most funded of the global goals (figure 9.5).

Existing institutions and mechanisms to optimize financing for SDG 9
National development banks can support economic agents to ensure the continuity of their operations in times of economic turbulence. This will require developing human resources and building skills.47 The Qatar Development Bank has been investing in the SME ecosystem and has launched initiatives such as the Export Development and Promotion Agency, TASDEER, and the Qatar Business Incubation Centre; both support local production. The bank also has an SME equity fund and recognizes excellence through special awards.48 The Oman Development Bank offers facilities to SMEs and microenterprises in a number of industrial sectors, including manufacturing, technology and logistics. In 2021, it approved OMR 54 million ($140.3 million) for loans, with the highest allocation going to enterprises in the manufacturing sector.49

Table 9.1

Functions of national development banks in post-pandemic recovery

Source: UNIDO, 2021a.
Specialized national funds: The Saudi Industrial Development Fund supports competitive enterprises with a view to diversifying the economy of Saudi Arabia. Its mandate has been aligned with Saudi Vision 2030. In the past decade, the fund has approved 1,545 medium- and long-term loans for industrial projects amounting to SAR 107 billion ($28.5 billion). The fund saw capital growth from SAR 40 billion in 2012 to SAR 105 billion in 2019.50
Regional development banks: These banks secure and mobilize resources to support governments of developing countries with infrastructure and economic projects. They also focus on regional integration by backing joint country projects. The Arab Fund for Economic and Social Development has committed over $36 billion in loans since its establishment. From 2019 to 2021, loans for infrastructure and productive sectors topped $1.7 billion.51 Over the same period, loans from the Islamic Development Bank to Arab countries for infrastructure and productive sectors exceeded $310 million, with most going to Lebanon and Mauritania.52
Attracting foreign direct investment: In Morocco, foreign direct investment for industrial development is becoming more important. Morocco has attracted substantial flows by taking concrete actions that drew investors – namely, infrastructure upgrades, upskilling and ecosystem building – instead of pursuing subsidies or tax exemptions (see the chapter on SDG 8).53
Financing sustainable industrial transformation: This requires scaled-up, coordinated, and targeted public and private investments. On the public sector side, measures are needed to incentivize private investments using fiscal and financial instruments. Examples include enacting tax credits or spurring demand through public procurement that is innovative or green. Public development banks can assume a role in filling resource and knowledge gaps (market intelligence) and regulatory measures can incentivize commercial lending through risk-sharing. The proportion of small-scale industries with a loan or line of credit (15.2 per cent) is still around half the global value and less than any other region worldwide (figure 9.6).

Figure 9.6

SDG indicator 9.3.2: proportion of small-scale industries with a loan or line of credit, 2023 (Percentage)
Source: Based on data from ESCWA, 2023b, as of December 2023.

F. Regional dimensions

SDG 9 collaborations and partnerships in the Arab region have already seen fruition in certain cases, mostly on the subregional level. They are focused on industrial development and scientific research and take several forms within the region and beyond.

1. Rethinking supply chains

Prior to the COVID-19 pandemic, globalization led to the geographic diversification of supply chains; for Arab countries, it meant greater links to markets worldwide. Since the pandemic, there has been a reconsideration of supply chains towards more localization, in addition to an increased focus on digitization and modernization. The level of advancement is mixed. While Gulf Cooperation Council countries are developing state-of-the-art infrastructure for logistics and aiming to becoming international hubs for the movement of people and commodities, middle-income countries have made more limited progress. The pandemic highlighted the importance of strengthening supply chain resilience as key for manufacturing and industries. As such, regional integration opportunities revolve around actions that streamline logistics and tariff systems, digitize supply chains, facilitate the mobility of people and goods, and promote an enabling environment for the integration of companies in supply chains.

2. Intraregional partnerships across some Arab countries

The Integrated Industrial Partnership for Sustainable Economic Development was established in 2022 to unlock industrial opportunities and achieve integration in resources, capabilities and experiences in several sectors: agriculture, food and fertilizers; pharmaceuticals; textiles; minerals and petrochemicals. Current members include Bahrain, Egypt, Jordan and the United Arab Emirates. The partnership started with an initial investment fund of $10 billion. In early 2023, 12 agreements for 9 industrial projects were signed with an investment value exceeding $2 billion.54 Bilateral collaborations include the Qatar-Oman joint venture; its first phase served transportation needs during the 2022 FIFA world cup in Qatar, where 800 buses out of 4,000 were fully electric with zero carbon emissions.55

3. Regional initiatives led by one or more countries

Saudi Arabia launched the Middle East Green Initiative to incentivize regional collaboration in meeting climate targets and mitigating climate change impacts. It has set an ambitious target of collectively achieving a 60 per cent reduction in emissions regionally. Including many regional activities, the initiative provides a platform to accelerate the circular economy and its potential to transform the future of industries in the region. See more details in chapter on SDG 12.

4. Coalitions aim to mobilize commitment

Countries have joined coalitions to advance the production and use of low-carbon industrial materials. Saudi Arabia and the United Arab Emirates are members of the Industrial Deep Decarbonisation Initiative, which is a global coalition of governments and private sector companies aiming to decarbonize heavy industries (steel, cement and concrete) responsible for over 50 per cent of carbon emissions. The initiative includes a commitment to a Green Public Procurement Pledge. Members will work towards shaping a global framework of standards on low and near-zero emissions as well as an approach to data collection and reporting.56
The Arab Industrial Development, Standardization and Mining Organization has been collaborating with the ESCWA Technology Centre on regional integration in industrial research and links between universities and industries. The organization has several programmes that push regional integration and cross-sector collaboration in artificial intelligence, nanotechnology and sustainable mining.

For more information, see AIDSMO.

5. Intra- and interregional scientific collaboration among countries

From outside the region, the European Union is a top collaborator with Arab countries in scientific research. Within the region, the largest number of co-authored papers is between Egypt and Saudi Arabia.57 With scientific research capacity largely locked inside universities and research centres, these collaborations could strengthen links to industry and commercialization.

Endnotes

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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