By Joseph Dana
21 December 2019
Akey element of the current rise of emerging markets is the movement of people. This is due to several overlapping factors. The growth in the aviation sector means there are more and cheaper flights connecting the world. At the same time, Internet connectivity and the proliferation of increasingly sophisticated Smartphones are enabling entrepreneurs everywhere to operate remote offices and access the best talent across the emerging world.
Now, a new initiative by Saudi Arabia offers an opportunity to parse the desirability of offering citizenship to international talent versus offering soft infrastructure to global nomads.
From Singapore to Dubai, emerging hub cities attract talent because of their world-class infrastructure, aviation sector and friendly business environment. If you want proof of just how important these hubs are to the emerging market economy, consider this: The two largest technology acquisitions in the history of the Middle East came from companies based in Dubai operated by expatriates. Careem, the ride-hailing service that operates across the Middle East and North Africa, was acquired by Uber this year for US$3.1 billion. The company was founded by a Pakistani and a Swede who met while working for McKinsey. Souq.com, an online retailer started by a Syrian entrepreneur, was bought by Amazon for $580 million in 2017.
The fact that the UAE government has made building a knowledge economy a key priority means that even more resources will go into infrastructure and initiatives such as “e-business residency,” whereby entrepreneurs can set up virtual companies in the country regardless of where they operate.
These policies are working and other Arab Gulf nations are taking note. Many technology startups, especially in financial technology, are also setting up shop in Dubai. In my reporting on fintech startups around the African continent, I have noticed one common thread: Entrepreneurs in this sector all spend a great deal of time in Dubai for meetings, for conferences and to raise capital. It’s not uncommon for these startups to operate small offices in the UAE just to maintain a foothold where the action is taking place.
Given the UAE’s success in transforming Dubai into an economic hub of the emerging world, other Gulf nations are beginning to emulate the Emirati model. Saudi Arabia is the most notable example. As part of Crown Prince Mohammad bin Salman’s plans to diversify the Saudi economy away from hydrocarbons and toward technology, the country has invested heavily in the knowledge economy.
Saudi Arabia also is opening its doors to the world. Visas on arrival are now available for citizens of several countries and special investor visas have been minted. And this month, King Salman announced that citizenship would be offered to outstanding members of the science, medical and technology community who have lived in the kingdom for more than five years. Gulf nations historically have been reluctant to offer citizenship to foreigners and expatriates even though they are hosts to large foreign-born populations.
As an attempt to attract talent, the Saudi initiative is laudable, but it misses the mark. The kind of established top talents it targets likely are already happy with the citizenship they have. Instead, such programs are more usefully employed in talent spotting future leaders in their fields. To this end, even, citizenship is only one component in the array of opportunities offered to them – it might even be the last item on the list.
Think of all this as a horizon of possibilities. In emerging markets, collaboration is taking place across borders facilitated by Internet connectivity and travel. As a consequence, citizenship is increasingly a secondary concern. Entrepreneurs are traveling between countries more than ever. Hence the expansion of ease of entry, as opposed to the offer of a passport, may be the greater virtue and enabler.
The latest initiative in Dubai to offer e-business registration arguably is more in line with the nature of the technology economy than an offer of citizenship to individuals. Based on Estonia’s widely successful e-residence program, the Dubai plan will allow businesses to incorporate electronically and then operate from anywhere. They will benefit from the UAE’s business and legal infrastructure without having to leave the markets where their products are being developed and used.
Given the size of the Saudi economy, a similar program could have even greater benefits. The aim should be to respond to the needs of young companies. And what startups need most is flexibility.
Through infrastructure investment and favourable business regulations, Saudi Arabia could easily attract talent from across emerging markets who are able to travel to the kingdom easily when they need to. If Saudi Arabia can offer attractive and flexible conditions for the next generation of global entrepreneurs, there will be a waiting line to set up shop.
Original Headline: Building a knowledge economy in the Middle East
Source: The Asia Times