Strategy& urges shift to high quality research focus in the GCC

26 October 2018 4 min. read

While GCC governments have been making significant investments in research infrastructure, a new report from Strategy& argues that attention should now be focused on the quality of research.

According to research from PwC’s strategy consulting arm Strategy&, total capital expenditure in the GCC on research facilities such as state-of-the-art labs and university education infrastructure will reach nearly $40 billion over the twenty years to 2030. While described as admirable, the firm argues however that not enough investment is being given to high-quality research, with research & development spending in the region below global benchmarks.

And the dearth of R&D spending will come at a broader cost; the Strategy& analysis estimates that for every one percent increase in R&D outlay, GCC nations could benefit up to the tune of 2.2 percent in economic growth – with high-quality research facilitating the region’s ambitious economic transformation away from a reliance on resources, as well as reducing its high import burden and even strengthening its social mechanisms.

“By encouraging the output and quality of academic and corporate research, they can enable innovation and the development of new products and solutions, enhance workforce skills, and inform public policy,” said Shihab Elborai, who in was recent months promoted to partner in the Strategy&’s Energy, Chemicals, and Utilities practice. “As a result, these advances will contribute to adaptability and increased productivity.”Ratio of R&D expenditure to GDP in GCC compared to OECD

As is stands, R&D spend (including capex) as a percentage of GDP equates to no greater than 1 percent for any of the GCC member states, maxing out at 0.9 percent in the Emirates and dropping to as low as 0.1 percent in Bahrain – with Qatar, Kuwait and Oman at 0.5 percent or under and Saudi Arabia registering 0.8 percent, for a 0.46 percent regional average. The average across the OECD, which is predominantly comprised of European and Anglo nations, is 2.5 percent.

The upshot; GCC countries are forced to import knowledge. Quantifying this cost, the Strategy& report states that the trade deficit in terms of knowledge-intensive services, which includes R&D, professional and tech-based services, ran as high as 4.0 percent of GDP in Oman on 2015 figures and sat at 1.3 percent in Kuwait and 0.8 percent in Saudi Arabia. As a contrast, the UK and US have achieved respective knowledge trade surpluses of 1.3 percent and 0.2 percent.

Having previous called the establishment of local behavioural science units to support the efficacy of policymaking, the firm further notes that, regardless of the costs, certain imported knowledge, especially that of the scientific kind, may not be readily adaptable to a local context, or may not even be available at all. As such, the firm says, the countries of the GCC are currently overlooking an important growth opportunity.Obstacles to academic research in the GCCStill, there remain a local number of obstacles in terms of developing a high-level research ecosystem in the region, most notable the research environment and structural limitations within academia, as well as scarce partnerships with international researchers and the private sector. Surveying 78 professors from 14 universities across the Gulf, the most common challenges cited were a lack of time and the availability of Ph.D. programmes (including candidates), along with limited funding and a lack of administrative support.

“At present, private-sector led and academic research is limited. Local universities have few channels for collaboration with international universities, the private sector, or the government, while the region’s legal system does not effectively protect researchers’ intellectual property and provide them with commercialisation support,” said Strategy& principal Yahya Anouti. “This reduces the output and quality of their research, and precludes innovation and any meaningful input into social and economic policy.

Alice Klat, director of Strategy&’s dedicated Middle East think-tank the Ideation Centre, adds in conclusion; “Governments should launch structural initiatives to shore up this ecosystem starting within academia and, more important, acquire a better understanding of the ways in which academia can contribute to societal and economic improvement. However, the real impact will be generated by enterprising and fruitful collaboration between universities and corporations.”