The term ‘innovation’ has become something of a buzzword in the Middle East and North Africa (MENA) as more governments acknowledge the pivotal role that research and development play in building new industries, generating employment, and fuelling economic growth. Each nation within the diverse MENA region has its own reasons for shifting focus toward a knowledge-based economy. These range from reducing dependence on oil and gas income to generating job opportunities as unemployment rates intensify.

This article explores the extent to which governments – on a global scale and within the region – are investing in research and development; and discusses MENA’s potential to become an internationally recognised center of innovation in the future.

Worldwide investment in innovation

According to The National Science Board’s Science and Engineering Indicators for 2014, worldwide expenditure on R&D increased steadily between 2001 and 2011. These findings are based on data from the OECD and UNESCO’s Institute for Statistics1.

In 2011, the world spent an estimated USD 1,435 billion (current purchasing power parity dollars) on research and development. In 2006, the comparative figure was USD 1,051 billion; and in 2001, it was USD 753 billion. This represents an average 6.4% annual growth over the 5-year period and 6.7% over the 10-year period.

The R&D heavyweights

The World Bank Group measures research and development expenditure as a percentage of GDP, based on data from UNESCO’s Institute for Statistics. According to the Group, these figures reflect “current and capital expenditures (both public and private) on creative work undertaken systematically to increase knowledge, including knowledge of humanity, culture, and society, and the use of knowledge for new applications.”2

The data shows that 2.13% of the world’s GDP went toward R&D in 2011. As detailed in Figure 1 below, the countries that focused the most investment on R&D activities were Korea with 4.04% of GDP, Finland with 3.80%, Japan and Sweden with 3.39% individually, and Denmark with 2.98%.

Figure 1: Top 15 countries by R&D expenditure (% of GDP) in 2011

SUPPORTING INNOVATION IN THE MIDDLE EAST & NORTH AFRICA

Page 1 of 3

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5

WorldBelgium

Netherlands

SingaporeFrance

EstoniaSlovenia

IcelandUnited States

AustriaGermanyDenmark

Sweden

Korea, Rep.Finland

Japan

2.132.03

2.212.232.25

2.372.47

2.602.762.77

2.892.98

3.39

4.04

3.803.39

Data: World Bank Group

S027427_v2.indd 1 26/11/2015 15:40

SUPPORTING INNOVATION IN THE MIDDLE EAST & NORTH AFRICA

How MENA measures up

By contrast, the MENA states included in the study lagged behind. Turkey, the UAE, Egypt, Oman, Kuwait and Iraq all spent below 1% of GDP on research and development in 20113.

Figure 2: MENA countries: R&D expenditure (% of GDP) in 2011

State of research in MENA

The relatively low expenditure on R&D in many parts of the Middle East and North Africa may contribute to the slow pace of knowledge development in the region, as reflected in the UNESCO Science Report for 20104.

Comparing research activity on a global scale, key findings of this study include:

• 20 Arab states produced 6,000 books compared to more than 100,000 in North America (similar population size)

• There are 371 researchers per million Arab citizens compared to a world average of 1,081

• Arab states generate an average of 41 papers per year, per million people compared to a global average of 147

Government share in R&D funding

Although there is variation across the region, the investment by several MENA governments in R&D far outweighs the contribution from the private sector. According to UNESCO statistics5, gross domestic expenditure on R&D (GERD) by government in 2011 was as high as 100% in Iraq, 94.8% in Kuwait, and 41.6% in Oman. In Turkey, however, this portion was a more moderate 29.2%.

Looking at the international R&D heavy-hitters, GERD funded by government during the same period was only 16.4% in Japan, 24.9% in Korea, 25% in Finland, 27.7% in Sweden, and 28.2% in Denmark.

While federal support is essential in laying a foundation for R&D excellence and furthering knowledge in every field, some experts6 are concerned that governments in the MENA region focus too much of their R&D funding on mega-projects – rather than spreading their resources between more smaller-scale programmes. By offering more grants to entrepreneurs and small- to medium-sized enterprises, MENA states could foster greater economic diversification, job creation and growth.

Channelling more resources toward education, especially higher education at a postgraduate level, could also provide a pipeline of R&D expertise for creating more a sustainable knowledge-based economy.

Before the region is recognised as a global hub of innovation, governments in the MENA region may have to introduce funding mechanisms for a broader range of projects that aim to nurture academic talent, grow research skills, and build better capacity for development from the ground up.

Page 2 of 3

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5

United ArabEmirates

Turkey

Oman

Kuwait

Iraq

World

Egypt, Arab Rep.

0.49

0.86

0.13

0.09

0.03

2.13

0.43

Data: World Bank Group

S027427_v2.indd 2 26/11/2015 15:40

SUPPORTING INNOVATION IN THE MIDDLE EAST & NORTH AFRICA

Visit mena.thomsonreuters.com

For more information, contact your representative or visit us online.

© 2015 Thomson Reuters. S027427 11/15.Thomson Reuters and the Kinesis logo are trademarks of Thomson Reuters.

REFERENCES:1 & 6: National Science Foundation, Science and Engineering Indicators 2014

2 & 3: The World Bank Group Open Data, 2011

4: ‘Does the Arab world (not) need basic science?’, Nature Middle East, April 2012

5: UNESCO Institute for Statistics Data Center

S027427_v2.indd 3 26/11/2015 15:40