CHAPTER 6 101

The : Fostering a Unique Innovation Ecosystem for a Knowledge-Based Economy

Ahmad Bin Byat and Osman Sultan, du

The United Arab Emirates (UAE) is The telecommunications sector into a melting pot that taps into quickly transforming itself from an in the UAE also has a key role to the experiences and perspectives of oil-based economy to an innovative, play in promoting innovation and people from more than 200 differ- knowledge-based economy. In fact, in supporting the country’s evolu- ent nations, and its population has knowledge-based industries and ser- tion towards a knowledge-based grown enormously from 1975 to 6: The United Arab Emirates: Fostering a Unique Innovation Ecosystem Innovation Unique a Fostering Emirates: Arab United The 6: vices now make up a greater part of economy. Telecommunications 2012—much more than the global the UAE’s GDP than oil revenues, infrastructure and services are the average growth rate. It currently having grown from 32.1% in 2001 to backbone of a knowledge-based boasts one of the most advanced 37.5% in 2012.1 By moving towards economy. The sector’s players are education systems in the Middle East a knowledge-based economy, the particularly well positioned to cham- and North Africa (MENA) region, UAE has diversified its economy pion the UAE’s national innovation thanks to continuous investments and positioned itself as a key player ecosystem development goals by across all education levels. Moreover, in real estate, renewable energy, and using their experience in commer- advancing women’s education and aviation; it has also become a global cializing innovation, their technical economic participation has resulted hub for trade and logistics, financial talent, and their institutionalized in women assuming leadership roles services, and tourism. It has done this diversification into the digital space. throughout the nation. A burgeon- by innovating and aspiring to game- ing culture of innovation—fostered changing developments: the UAE is by the collaborative efforts of gov- home to the world’s tallest tower and The UAE’s innovation ecosystem ernment, educational institutions, its most sustainable eco-city, one of The three pillars of the innovation entrepreneurial organizations, cor- the world’s largest airlines, and state- ecosystem are human capital, finan- porations, and the media—is bridg- of-the art infrastructure and smart cial capital, and technological capi- ing cultural barriers. Finally, support government services—all helping it tal (Figure 1). The UAE is actively systems for innovation in the form of to move away from simply localizing working to promote innovation mentors, incubators, and accelera- external innovation to developing through policies and targeted initia- tors are starting to emerge. its own intellectual property and tives aimed at developing the human creative outputs. element of the ecosystem while also Education system The country’s leadership aspires addressing the key enablers of the The UAE’s budget allocation to to create a knowledge-based econ- human factor: the requirements of education represents more than omy fueled by innovation. This is financial and technological capital. 20% of its total government budget, evident in the UAE’s Vision 2021, higher than the benchmark average which aims to build a nation where Human capital of 13% (see Figure 2). The country ‘knowledgeable and innovative Human capital is fundamental to all is investing in building local talent Emiratis will confidently build a innovative change: a well-educated by overhauling primary, second- competitive and resilient economy.’2 and highly skilled population and ary, and higher education systems Towards this end, the UAE has workforce are a necessary condition and offering various opportunities invested significantly in education for the potential of innovation to be for vocational training. As a result, and capacity development, set- realized. To this end, the UAE has the country’s rank on the Education ting the foundation for long-term advanced its human capital on sev- sub-pillar of the Global Innovation competitiveness. eral fronts. The country has evolved THE GLOBAL INNOVATION INDEX 2014 102 THE GLOBAL INNOVATION INDEX 2014 6: The United Arab Emirates: Fostering a Unique Innovation Ecosystem Figure 1: The pillarsofinnovation intheUAE international partnerships. This This partnerships. international striking and UAE, the in branches open to universities top attracting universities, local world-class lishing estab by expanding are institutes young. are students when skills these teach to beginning is curriculum This collaboration. and communication, creativity, thinking, critical include skills these innovation; foster to needed skills 21st-century the build to curriculum anew developed has example, for Council, Educational Dhabi Abu The standards. tional interna with comply schools its in developed programmes the that ensure to strategy educational its improving constantly is UAE The effort. a continual is rate first strategy 2013. 2011 in in 15th to 65th from years, two in improved has Index Source: Strategy& analysis. In the UAE, higher education education higher UAE, the In education national its Keeping Crowd investment Seed, venture andangel Government funds Financial capital capital - - recent successes include: successes recent Afew sectors. different at targeted facilities research and education higher adequate develop to policies national by driven been has effort • versities from over 10 countries. from versities uni international 26 attracted has alone years. few past the in UAE the in branches opened School—have Business London the and Paris-Sorbonne, INSEAD, country)—including the to professionals practiced attract also (which degrees uate onpost-grad afocus with ties universi international Several university. research ognized rec internationally an become to aim its in engineering) trial indus and biomedical space, aero (including degrees neering engi various offer to begun has Research Technology,ence, and Sci of University Khalifa The

G G

O O

V V Telecomm infrastructure &services Entrepreneurship mentorship Innovation culture Diverse globaltalent education system Best-in-class Human capital

E E

R R

N N

M M

E E Innovation

N N

T T

L L

E E

A A

D D

E E

R R

S S

H H

I I P Conducive intellectual P Focused research and Technological capital property structure property development ------initiatives. The government’s key government’s The initiatives. multiple through nationals its for guidance career and education ing continu in investment its by denced evi is agenda government’s the in place This government. the for ity prior atop is capabilities nationals’ • •

The development of UAE of development The research. advanced for acentre hosts and programmes science and arts liberal 2010, offers in launched Dhabi Abu of Emirate the and York New University between venture ajoint NYUAD, ability. sustain and energy alternative to dedicated institute research graduate-level first world’s the is (MIT), Technology of Institute Massachusetts the with eration coop close in 2007 in lished estab Institute, Masdar The

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103

Figure 2: Budget allocation for education as percent of total government budget

2a: UAE education budget, US$ billions (2012–14)* 2b: Benchmark education budget, various countries (2010–12)

23%

+13%

16%

2.68 13% 2.42 13% 12% 12% 2.11 10% 11% 11% US$ billions US$ Percent total gov’t budget gov’t total Percent 6: The United Arab Emirates: Fostering a Unique Innovation Ecosystem Innovation Unique a Fostering Emirates: Arab United The 6:

18% 20% 21% Spain France Sweden Percent total gov’t budget Germany Singapore Switzerland Netherlands United

Source: World Bank, 2013; UAE Ministry of Finance. * Note: Data are the latest available.

imperative going forward is to high school students aimed at creat- Diverse talent develop the deep technical skills that ing future leaders in mathematics, The representation of more than are required for disruptive innova- science, technology, and engineer- 200 nationalities within the coun- tions, as opposed to generalist skills. ing. AlNokhba, another ATIC pro- try has made the UAE a melting Almost 30% of students in higher gramme, provides internships and pot that is fertile ground for inno- education institutions in the UAE scholarships for bright Emirati grad- vation. Immigrants constituted are studying business and econom- uates across a broad range of advanced 96% of the total UAE workforce ics; 14% are studying engineering technology-driven industries. in 2013 and 99.5% of the nation’s and 8% are in the sciences. The private sector also con- 4 million private-sector employees. The National Human Resource tributes to the talent development Traditionally, the local popula- and Development Authority (Tan- of UAE nationals. In the UAE, tion has been more drawn towards mia) was established in 1999 to sup- telecommunications operators con- working in the public sector but port UAE nationals by linking them tribute 1% of their revenues to the this is now beginning to change; with potential employers and pro- ICT Fund of the TRA (a govern- the UAE government is encourag- viding them with career guidance. ment entity); one of the ICT Fund’s ing the local population to join In another example, Advanced mandates is to grant scholarships to the private sector to develop their Technology Investment Company UAE nationals to study engineer- skill sets. This is a boon for the (ATIC)—a wholly owned subsid- ing within the UAE or abroad. The UAE: multicultural teams help fuel iary of the Mubadala Development ICT Fund also promotes educational innovation by addressing issues in Company focused on the semicon- institutes within the ICT space by creative ways, drawing on mem- ductor industry—is actively develop- equipping them with laboratories. bers’ unique experiences from their ing Emirati talent in the technology countries of origin. space. For example, Tech Quest is Attracting foreign talent is an an ATIC programme for middle and important aspect of establishing THE GLOBAL INNOVATION INDEX 2014 104 THE GLOBAL INNOVATION INDEX 2014 6: The United Arab Emirates: Fostering a Unique Innovation Ecosystem an entrepreneurial culture among among culture entrepreneurial an fostering at aimed a competition Fikrati, through women support to 2013, seeks in Forum Economic World the by launched Community, Shapers Global Hub the of Dhabi Abu The awoman. is who member one board least at have to required is agency government every example, For initiatives. various through economy the in participation female increasing and leadership female ing advanc to committed is UAE The roles. entrepreneurial up taken have men), of 62.5% women with pared com workforce, the in participate (27.5% participation labour their restrict nuances cultural Although attainment. educational female for 2013 Forum’s World The Economic pool. ent tal UAE’s to diverse tributor freelancers. and companies media smaller benefits which City, Creative Fujairah and development; and growth industrial hub facilitating business world-class a Park, Technology and Industrial Al-Khaimah Ras excellence; learning and Management Resource Human to dedicated Village, Knowledge Dubai organizations; entertainment and media to dedicated Dhabi, Abu in production and media twofour54 including emirates, seven the across total in zones such 36 are there tives: incen administrative and tax special and ownership foreign enjoy 100% can businesses where up set been have zones Free drivers. key been have tax income of absence and ness, busi doing of ease infrastructure, state-of-the-art environment, ing welcom and asafe includes which country, the in life of quality good overall The immigrants. attracting in a role played have factors eral sev UAE, the In environment. and maintaining an innovative Women are another key con key Women another are ranked the UAE number one number UAE the ranked Global Gender Gap Report Report Gap Gender Global ------3 (YEIP), the Patent Filing Award, Filing Patent the (YEIP), Prize Innovators Young Emirati the as such awards various through UAE the in recognized visibly is ent tal Top-quality Sharjah. and Dhabi, Abu Dubai, in organized been have ideas develop and pitch can preneurs entre aspiring Weekends which at Start-up successes. innovation celebrate that awards and content, themed events, media dedicated entrepreneurship- and innovation- regular through shift cultural this driving is organizations preneurial entre and media, corporations, private authorities, government 10%. of average a global with compared region, the in entrepreneurs tech of 35% for account women world: the of parts other many in than female are UAE the in entrepreneurs tech more fact, In home. from work to ity abil the and hours working flexible the of because entrepreneurship prefer may Women, particular, in aspirations. entrepreneurial have currently younger) or old 35 years are who (those millennials UAE of 71% nationals, UAE for employment preferred the been historically have UAE. the in diminish to starting are Such barriers ties. presentrisks—can serious difficul taking to aversion an and failure of fear as innovation—such to barriers Cultural ability. innovative enhances that environment an to essential is norm established an beyond look to ability the to conducive acteristics char individual and innovation ages encour that a culture Establishing Innovation culture community. the in change positive effects and opportunities, awareness, educates, promotes builds Women Council Business Emirates The women. Emirati A collaborative effort among among effort A collaborative jobs government Although 5 ------4 City), Turn8 (by DP World), Turn8City), (by i360 Internet Dubai (in in5 include These 2008. in active were that three the from increase substantial country—a the in operational are accelerators 10 incubators/ than shape—more ing tak is this UAE, the In mentoring. through is this do to ways effective most the of One entrepreneurs. young of fostering and encouraging the is innovation of ecosystem cessful asuc of element essential other One Entrepreneurial mentorship innovation. embrace Emiratis ing help it is importantly, Most needs. contemporary and culture tional tradi between gap the bridging is that amodel of example an is this Truly, scope. consumer and market the extending thus weaves, ditional tra of made cases iPad as such ucts, prod non-traditional create to skills their use to artisans the allows This insights. consumer and know-how business essential with them viding pro and entrepreneurs become to artisans Emirati skilled for platform a reliable being including nuances, many for interesting is model Sougha’s barriers. innovation ing reduc in instrumental be to proving is that Fund Khalifa the by launched initiative enterprise asocial Sougha, of that is entrepreneurship vative ideas. innovative their share can employees which through platform’ ‘ideation an started has and innovate to employees its encourages du instance, For region. the within entrepreneurship ontech sively exclu mentors—focus and alumni of anetwork and mentorship, ing, fund seed provide which TechStars, TechView.me as tions—such and organiza media Other neurship. entrepre to dedicated site a media has entrepreneurs, empowering for platform a regional Wamda, Award. Innovation Manchester the and An interesting example of inno of example interesting An ------105 accelerator, Silicon Oasis Founders, realize their dreams, network, and Government funds typically provide SeedStartup, Endeavor, twofour54’s exchange ideas with the goal of nur- early-stage funding and include the Ibtikar, afkar.me, the First Steps turing talent. Along with a platform TRA’s ICT Fund, the Khalifa Fund, Business Center, and the Dubai from which to launch the business, the Expo 2020 fund, and others. In SME Business Incubation Center. the winner also received mentorship terms of equity investment in the These incubators and accelera- by experts over the course of a year. UAE, venture capital (VC) is the tors offer a variety of mentorship and most accessible, despite the low risk business support services for UAE Telecommunications infrastructure and tolerance of VC funds. Seed capital nationals and immigrants alike. services and angel investment are still scarce SeedStartup, for example, brings Connectivity creates access to and are not yet institutionalized. international start-ups to a three- information and connects people, Crowd-based funding and invest- month acceleration programme held enabling them to learn online, build ment is a nascent form of funding in Dubai. The programme provides their skills, and collaborate in real within the UAE, and provides early- value-added services and events (e.g., time. In a world where physical stage funding for start-ups. a demo day that connects start-ups boundaries are steadily diminish- with investors) and seed investment ing, good telecommunications can Government funds 6: The United Arab Emirates: Fostering a Unique Innovation Ecosystem Innovation Unique a Fostering Emirates: Arab United The 6: up to US$25,000 for a 10% flat stake. be a catalyst to fulfilling dreams. The government has undertaken Start-ups from Bahrain, India, Italy, Beyond basic connectivity, tele- many initiatives to support the Jordan, Malaysia, Tanzania, the communications infrastructure and funding of innovation. The TRA’s United Kingdom, and the United services play a critical role in sup- ICT Fund aims to drive the coun- States of America (USA) have porting innovation. For example, try’s ICT sector by providing R&D already participated in SeedStartup’s du offers a user-friendly platform funding, scholarships for students of programme. In another example, called ‘du Developer Cloud’ that ICT engineering programmes, and Dubai SME provides a variety of enables innovators to develop support for incubators. Additionally, advisory and incubation services mobile applications at no cost. du the Khalifa Fund for Enterprise to small and medium-size enter- has also launched a series of initia- Development (with approximately prises (SMEs) in Dubai, including tives in line with Dubai’s vision of US$550 million in capital) aims to the Intilaq programme focused becoming a Smart City and in line develop local enterprises in Abu on UAE nationals, the Business also with the UAE’s overall Smart Dhabi by funding programmes, Incubation Center, and the Dubai Government programme. These including microfinance and start-up Entrepreneurship Academy. Dubai initiatives include the provision of loans, and by supporting entrepre- SME also issues best practice rec- WiFi access across all public areas in neurs. The Expo 2020 Partnership ommendations, launches competi- the UAE, the introduction of smart Fund (€100 million) supports inno- tions (e.g., the Young Entrepreneur telecommunications building infra- vation and entrepreneurship ideas Competition, or YEC), and ranks structure guidelines, and the devel- of varying size, scale, and stages of the top 100 SMEs in Dubai each opment of a smart application for the development with a focus on mobil- year. Furthermore, the TRA’s General Directorate of Residency ity, sustainability, and the creation of ICT Fund supports government- and Foreigners Affairs. opportunities.6 sponsored incubators within the country by financing entrepreneurs Financial capital Seed, angel, and venture capital in the ICT space within these incu- Even highly skilled human capital As noted earlier, government fund- bation centres. cannot perform to its full potential ing alone requires supplementation The UAE private sector too is without sufficient financial capital. with private funding to meet the establishing and supporting plat- Ensuring that funds are made avail- growing demand. In the UAE, seed forms for collaboration, innovation, able can usefully be an object of gov- capital is also available through incu- and new entrepreneurial ventures. ernment policy, but private sources bators and, more recently, through One of the foremost examples of this of capital also have a role to play. crowd investment. This capital is still was The Entrepreneur reality show, Within the UAE, several sources of scarce, however, and institutional- presented by du and aired region- funding are available, including gov- ized angel investment networks that ally. This show provided a plat- ernment funds, equity investing, and provide smart capital are absent. form for aspiring entrepreneurs to crowd funding or crowd investment. This gap prevents innovators from THE GLOBAL INNOVATION INDEX 2014 106 THE GLOBAL INNOVATION INDEX 2014 6: The United Arab Emirates: Fostering a Unique Innovation Ecosystem Source: World and OECD average data: World Bank, 2013; UAE data: Strategy& analysis. Strategy& 2013; data: UAE Bank, World data: average OECD and World Source: Figure 4:R&Dexpenditure asa%ofGDP(2011) system. innovation UAE the in stakeholders key with interviews analysis; Strategy& Source: Figure 3: The fundinggapintheUAE innovation ecosystem

Percent of GDP Enterprise value US$0–20,000 US$1.5–2 million US$2–8 million US$8–20 million US$20 million 0.0 0.5 1.0 1.5 2.0 2.5 0.47% No collateral/track record required UAE Crowd investment Incubators VC funds VC Gap Gap Private equity Private (nascent) Funding conditions World 2.08% programmes Government OECD MemberStates Collateral/track record required Commercial banks 2.32% Guarantees or less; Aflamnah, a source of asource Aflamnah, less; or US$5,000 require that projects support to USA the in Kickstarter by pioneered model the follows which Zoomal, include UAE the in operating are that organizations region. the in capital seed of scarcity the address help may organizations crowd-investment new as it further, boost to aneed is However, there UAE. the in accepted slowly being it see to encouraging it is globally, stage anascent at still is investment crowd Although start-ups. for ing fund early-stage of source viable a becoming is that approach tive innova an is Crowd investment Crowd investment sector. technology the within cially espe investments, equity on growth focused region the in funds equity private few the given challenging, been has funding follow-on ing VC funding. raised recently purchases—have large other and schools, services, financial pare com to residents UAE enables that enterprise the Souqalmal, and prise; enter products beauty the Glambox, service; car chauffeur-driven online the Careem, as start-ups—such based UAE- of range awide Nonetheless, start-ups. established in invest to fer pre and risk-averse still are VC firms although accessible, relatively ing Afund Series made has trend This period. time over that region MENA the in deals total the of 7% captured UAE the data, onavailable Based on technology. itof (47%) focused much with 2012, 2010 and between 50% by grown has region the in growing. is UAE the in investing actively funds Figure 3). (see VCfor funding eligible becoming and stage product the to stage idea the from growing Examples of crowd-investment crowd-investment of Examples obtain Afunding, Series Beyond VC regional of number The The number of VC deals VC deals of number 7 The ------8 107 project-based crowd funding in the US$1.3 billion for university R&D The ICT Fund has dedicated AED region focused on films; PiSlice, an between 2009 and 2018. In addition, 25 million to support the Arabic online platform to facilitate micro- the government will Digital Content initiative, which finance; and Eureeca, a platform launch a research funding mecha- will develop tools and programmes providing funding in exchange for nism to institutionalize research to enhance Arabic content. The ICT equity. activities in higher education insti- Fund also finances Ankabout, the tutions and secure sustainable fund- UAE’s Advanced National Research Technological capital ing. Abu Dhabi’s plans are already and Education Network (NREN), Along with human capital and resulting in the development of new offering academic institutions con- financial capital, technology is R&D centres. For example, Khalifa nectivity to other education net- critical for unlocking ground-zero University and Mubadala Aerospace works around the world. innovation. Although the UAE’s are planning to establish an aero- As a result of this recent R&D spending on R&D as a percentage space research and innovation centre activity, innovative technologies are of its GDP is still below interna- at Khalifa University. emerging in the country (see Box 1). tional benchmarks, in an attempt Beyond driving R&D in uni- Examples include: to address the need for this essential versities, the UAE government is • A Khalifa University professor Ecosystem Innovation Unique a Fostering Emirates: Arab United The 6: element of innovation, the coun- keen on establishing scientific hubs who benefited from the uni- try is kick-starting several targeted to address socioeconomic issues rel- versity’s internal research fund and industry-focused initiatives to evant to the region. For example, was granted a US patent for the develop its R&D efforts, as men- TechnoPark was established as a world’s smallest semiconductor tioned in the following section. science and technology park whose transistor.9 Furthermore, the UAE government scientific activities are managed by has reviewed its laws on intellectual the Dubai Institute of Technology • Emirati students were granted a property and copyright to align (DIT). DIT is focused on enhancing US patent for inventing a foot- them with international standards. research in five sectors: water, health, based vehicle navigation system energy, engineering, and logistics to allow disabled people to drive Targeted research and development and mobility. The International cars without using their hands.10 In line with UAE’s vision of a Center for Biosaline Agriculture is • The Masdar Institute and Abu knowledge-based economy, the another example of an R&D cen- Dhabi National Oil Corpora- government’s R&D efforts are tre focused on innovation specific tion (ADNOC) are developing targeted at specific sectors to solve to regional issues. It is a centre of a technology that enables com- its market needs and key socio- excellence that aims to deliver agri- mercial-scale projects for carbon economic challenges. However, cultural and water scarcity solutions capture, usage, and storage, thus the UAE’s R&D expenditure as a in marginal environments. minimizing carbon footprint.11 percentage of its GDP was 0.47% Investment in R&D has seen in 2011 (0.74% of non-oil GDP), some success, even though most of • The Masdar Institute is develop- below the global average of 2.08% the proposals are from the public ing a technology to desalinate and the OECD average of 2.32% (see sector. For example, Emirati com- sea water using renewable energy Figure 4). Several players are imple- panies, including Masdar Capital sources, and is building the Lon- menting programmes and initiatives (a division of Masdar Institute) and don Array, the world’s largest to solve this issue, including govern- ATIC, are investing in international offshore wind farm.12 ment, universities, and government- companies with advanced tech- backed companies. As for the rest of nologies with the aim of potentially Conducive intellectual property structure the MENA region—and quite dif- bringing these technologies to the As the UAE evolves in its innovation ferent from global trends—it is the region in the future. journey, it will need to build a robust public sector, rather than the private The telecommunications sector and enforceable intellectual property sector, driving efforts to encourage in the UAE, through the TRA’s rights system. Recently, the govern- R&D in the UAE. ICT Fund, is actively sponsoring ment has reviewed its laws on intel- One example of a public scheme R&D projects and centres in vari- lectual property and copyright and to enhance R&D is the Abu Dhabi ous universities, including Khalifa harmonized them with international Education Council, which pledged University and UAE University. standards (e.g., the US Patent Office THE GLOBAL INNOVATION INDEX 2014 108 THE GLOBAL INNOVATION INDEX 2014 6: The United Arab Emirates: Fostering a Unique Innovation Ecosystem Figure inMENA(2012–15) 1.1:Numberoftech start-ups exhaustive not is table this in list The Note: Source: analysis. Strategy& Table UAE 1.1:Some start-ups eral entrepreneurship success stories (see to becomeentrepreneurs,spawningsev- has inspiredEmiratisandimmigrantsalike The UAE’s budding innovation ecosystem Box 1:UAE start-ups Note: Of the MENA start-ups that emerged in 2005–2012, 17% were launched in the UAE. the in launched 17% were 2005–2012, in emerged that start-ups MENA the Of Note: analysis. Strategy& 2012; & Sullivan, Frost with collaboration in DIC Source: Eureeca.com Wally mumzworld.com propertyfinder.ae Closet The Luxury Bayt.com JadoPado nabbesh.com Qordoba Souqalmal.com Glambox.me Careem Just Falafel cobone Zawya Start-up name Start-up

Number of start-ups 2012 424 520 96 A crowd-investment platform where businessescanraise capitalfrom thecrowd Personal finance application withmore than100,000users E-commerce platform formothers Real estate listingservice items Platform forbuyingandsellingluxury jobsiteOnline linking jobseekers withemployers; Bayt.com hasmore than12.5millionregistered jobseekers withinnovativeE-commerce portal approach to userexperience andsupplychainmanagement competition presented by du;prizes, provided AED500,000inprofessional by services. du, ofAED1millionwithafurther Skill exchange andcontract platform businesseswithproject-based talent; winnerof connecting The Entrepreneur, areality TV localization whileintegrating localcustoms andcultural references solutions,Language software includingcontent andservice development andwebsite, socialmediaapplication, andbusinessdocument Hummingbird Ventures initssecond round offunding Financial education, comparison website infinancialservices, andhealthcare; andservices forproducts raised US$1.2millionfrom regionally samplingshopandcommunity; received beauty Online US$1.4millionfrom STC Ventures, R&R Ventures, andMBC Ventures to expand raised US$1.7millioninaround car-booking service; ledbyOnline STC Ventures andincludingangelinvestors global, currently planningIPO Vegetarian fast-foodchainincorporating worldwide tastes inthefalafelrecipe onhealth;franchise withafocus businessmodel, going (rumored to bebetween US$20millionandUS$40million) Daily dealswebsite; launchedin2010;acquired by New York–based investment firm Tiger Management foranundisclosedamount businessintelligenceOnline platform onMENA;acquired focused by Thomson Reuters Business type between 2012 and 2015. By 2015, the UAE rise atafasterratethantheMENAaverage nology start-uplaunchesareforecastedto Table 1.1). For example, UAE-based tech- +19% 2015 695 185 880 start-ups (seeFigure1.1). is expectedtowitness185newtech-based n n UAE MENA (excluding UAE) 109 and Patent Cooperation Treaty).13 In Telecommunications opera- work together to drive the same addition, the Abu Dhabi Technology tors are in a position to cham- objective. Development Committee developed pion the development of national While major improvements the Takamul programme, which innovation ecosystems and can have been made across each element offers advisory and financial support play a key role in catalyzing the of the innovation ecosystem, there for international patent applications. human, financial, and techno- are some gaps that still need to be The total number of patent applica- logical factors in innovation. addressed: tions underwritten by Takamul has • Attract and promote talent. now risen to 66, of which 33 were • Limited technical talent. The Talent is critical for the develop- underwritten in 2013 alone.14 number of students going into ment of a sustainable innovation STEM fields (science, technol- ecosystem. Although it is impor- ogy, engineering, and math- tant to fill capability gaps in the Lessons learned ematics) in the UAE is still low short term by attracting and sup- In the UAE’s innovation ecosystem, compared with international porting immigrant talent, fun- the pieces of the puzzle are falling standards. As a result, there are damental improvements through into place. The nation now offers limited specialists with deep longer-term initiatives to the sys- Ecosystem Innovation Unique a Fostering Emirates: Arab United The 6: a number of unique advantages, technical skills (e.g., developers, tem for training domestic talent including a strong education system, user experience experts) who are essential. The UAE is doing a diverse pool of multinational and can contribute to ground-zero this by overhauling its education local talent, a growing innovation innovation. system and making some funda- culture, and a series of targeted R&D mental changes to the culture so • Restricted R&D budgets in initiatives. The collaborative efforts that the population will embrace the private sector. Although the and leadership of the government innovation. UAE government has put sev- is capitalizing on these strengths eral initiatives in place to stimu- while addressing the challenges that • Provide and promote smart late R&D activities, the overall remain. The private sector is play- capital at all funding levels. spending in the country still lags ing a critical role in supporting the Different types and amounts of behind because of limited spend- government’s agenda and promoting funding are required at vari- ing by the private sector. the national innovation ecosystem. ous stages of innovation evolu- The UAE has had to overcome tion depending on its risk/return • Environmental sustainabil- several challenges in its journey profile, whether this innovation ity. The UAE needs to ensure towards becoming a knowledge- is taking place in a start-up or that its rapid pace of economic based society. These include wide a larger enterprise. Fostering an development is sustainable. This dependence on oil revenues, a small innovation ecosystem requires entails lowering the country’s population, and a cultural aversion ensuring adequate early-stage ecological footprint and effec- to taking risks. Through its own funding, venture capital, and tively addressing climate change example, the UAE can offer several growth equity. Any gaps in these to sustain a natural environment recommendations to countries look- funding sources can break the conducive to innovation that ing at commencing on their own overall system. will continue attracting foreign innovation journey: talent. The development of Mas- • Partnerships, partnerships, dar City and investment in solar • Institutionalize top-down partnerships. Various stake- parks, by both the government aspirations. A clear government holders are required to work and the private sector, are steps vision that visibly communicates simultaneously and in concert in the right direction. the importance of innovation on for innovation to happen. This the government agenda creates includes entrepreneurs, govern- • Increased prevalence of health a top-down push for innovation ment entities, educational insti- issues. High incidence of diabe- and prioritizes key focus areas. tutions, funds, the media, entre- tes, early onset heart conditions, preneurial organizations, and and widespread obesity are three • Unlock telecommunications others. Unlocking innovation serious health issues currently operators’ potential role in requires getting these disparate facing UAE nationals. A healthy the innovation ecosystem. parties with distinct agendas to mind goes hand in hand with a THE GLOBAL INNOVATION INDEX 2014 110 THE GLOBAL INNOVATION INDEX 2014 6: The United Arab Emirates: Fostering a Unique Innovation Ecosystem Notes people. anation’s for benefits associated the reaping to thus and innovating, to conducive more is that ronment envi an with them implement to needed effort the repay will policies Such UAE. the for worked has what of part essential an ers—are stakehold among cooperation and funding, talent, vision, clear that address these issues—issues of policies evolving, still is ecosystem 2

10 11 12 13 1 3 4 5 6 7 8 9 Although the UAE’s innovation UAE’s the innovation Although initiative. Counts Step du’s as such Every sector private the by movements and pledges government through started already has shift economy. This knowledge-based a progressive, of development the supporting for critical is lifestyles healthy promoting and issues these ing address thus body, and healthy pdf. English.pdf UAE-Vision2021-Brochure-English. ae/downloads/UAE-Vision2021-Brochure- Vision 2021,p.1;seehttp://www.vision2021. services. communication, andrealestatebusiness restaurants andhotels,transport,storage include financialservices,manufacturing, Council, 2013.Knowledge-basedindustries php?lang=ENG; seeNationalMedia www.uaeyearbook.com/yearbook2013. The yearbookisavailableathttp:// Yearbook 2013unlessspecifiedotherwise. The datainthechapterareallfromUAE World EconomicForum,2013. Bayt.com, 2014. The Economist,2013. Wam, 2013. Ventures, andWamdaCapital. 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