Reasons Why the Keys to the UAE’s Future is Innovation Not Oil

The leaders of the United Arab Emirates (UAE) take innovation seriously.  In just over 10-years they have tried to remake the country.  Projects include massive skyscrapers, new airports, world-class hospitals, and education promotion zones to name a few.   But this is only the beginning.  The country, which is still less than 50-years-old, has set a goal to be ranked among the top 20 most innovative countries in the world by 2021.  While the goal is commendable, what are the reasons?  After all, isn’t the country oil rich?

While Dubai has been the leader in the innovation drive, other emirates are not far behind.  This includes one of the smallest emirates in the country – Ras al-Khaimah.   A big reason for innovation drive in Ras al-Khaimah is the fact that the emirate is not oil rich.  As such, it has had to leverage the creativity of its people and its location to gain a competitive advantage.   Today, Ras al-Khaimah is has become a hub for education, healthcare, and industry.

A large part of the credit for this shift has been the policies of Sheikh Saud bin Saqr al Qasimi.  The Sheikh was educated in the U.S. and the hallmark of his reign has been his willingness to ensure his emirate is competitive.  This includes pro-western policies which have endured the emirate to foreign investors.

Even companies such as Google are getting in on the action.  The company has invested in an Innovation Hub which will help to STEM (Science, Technology, Engineering, and Math) skills.  This will help to increase competitiveness which will ultimately attract more investors.  It’s a virtuous cycle which is vital for the development of a vibrant startup scene.

Furthermore, the government is embracing eGovernment initiative by seeking to revolutionize how services are delivered.  This includes the use of smartphone applications for the provisioning of government services.

Another area where the country is investing heavily is alternative energy.  Now some might ask why given that it has significant oil reserves.  However, the leaders know the oil will not last forever.  Last year the Dubai Electricity and Water Authority (DEWA) initiated a program to promote the installation of solar panels.

Startups are also becoming increasingly important to the future of the UAE.  So much so, that a number of founders have moved their startups to the country in an attempt to get closer to their customers.  There is a big reason for this.  Not only is the UAE strategically located on the Arabian Peninsula.  It is also within a six-hour flight of nearly half of the world’s population.

The push is paying off.  Many of the world’s leading educational institutions have set up campuses in the country.  So have expatriate founders and leading private equity and venture capital groups.  This has also led to growth of the capital markets in Dubai and Abu Dhabi.

None other than Grant Thornton has called this a defining period for UAE capital markets.  This will be driven by the introduction of new products, including the establishment as a hub for Islamic lending.   This will lead to increased investment, more trading volume, and ultimately positioning the UAE as a regional financial hub.

Another area where the UAE has become hub for logistics. Given its history, this makes a lot of sense.   The emirates have always been a place for traders and sailors to meet.  This has to do with its strategic position on the Arabian Peninsula.   What this means in today’s world is air travel.

Dubai International Airport has grown to become the third busiest airport in the world.  But it is not just Dubai’s airport which is expanding.  Even smaller emirates like Ras al-Khaimah have invested in their airports.  This make sense as air travel is one of the ways the world is linked today.

For the leaders of the UAE, they understand that the future of the country lies not in its oil reserves but rather innovation.  This means shifting policies to promote investment and upgrading the country’s infrastructure.  The end result will be an economy which is less tied to global oil markets and is seen as a leader in the region and the world.