Innovation is becoming a new gauge of economic success, with countries competing to pioneer that next game-changing technology
With a rising global middle class and emerging economies competing for a spot on the world stage, can innovation become the new currency of tomorrow? At a Dubai World Cup Long Weekend majlis session, hosted by Falcon and Associates, the idea was floated that the ability to combine talent, resources and opportunities into a continuous stream of innovation will be a new measure of wealth by which countries are ranked. That means even countries with a small population or low GDP have the potential to become superpowers in this new world economy.
Emerging markets now make up 50 per cent of global GDP, compared with 15 per cent in the 1990s. These changes have led to the tremendous growth of emerging middle classes, forecast to reach five billion by 2030 and mostly concentrated in emerging and growth economies. By then, Asia will host 64 per cent of the global middle class and account for more than 40 per cent of global middle-class consumption, according to The Brookings Institution.
“We are in an environment where for economic growth to succeed, for living standards to keep rising, nations need to keep innovating,” says Marios Maratheftis, Global Chief Economist at Standard Chartered Bank.
We are in an environment where for economic growth to succeed, for living standards to keep rising, nations need to keep innovating
“The key to sustainable growth is to be able to improve your productivity. By using the same resources, you should be able to grow more and more, year after year. The only way to become more productive is by becoming much more innovative. This is a trend we are seeing across the world. It’s going to continue and is going to accelerate even further.”
This is especially true for the so-called Global South nations.
In China, the number of Silicon Valley-based investors visiting the country to learn from internet-enabled businesses is soaring. Outside the internet world, hundreds of midsize companies in the Chinese industrial sector are creating their own version of the Mittelstand, a term coined to describe SMEs in German-speaking nations.
These companies are increasingly competing with the Fortune 1000 firms, with innovations in areas such as biotechnology, pharmaceuticals, consumer electronics, medical technology, drones and telecomms equipment.
The GDP-per-capita impact of mobile phones in emerging economies has proven to be greater than in developed ones. Having a cellphone in people’s hands has opened up opportunities for new business models
In southeast Asia and Africa, a boom in tech innovation, especially mobile technology, has transformed lives. There’s been no shortage of innovations in Africa’s ‘Silicon Savannah’, which has produced ideas as varied as Wi-Fi on public transport in Kenya to mobile midwifery services in Ghana.
Mobile phones have played a key role in these developments, as startups recognised that most Africans didn’t own computers. The continent has some 650 million mobile phone users – more than the US or Europe – who account for a direct economic impact of US$32bn.
“Mobile technology has become the bridge to the formal economy for millions of people in Africa and South Asia, bringing them access to services and job opportunities,” says Kabir Kumar, Senior Financial Sector Specialist at CGAP, a collective of global organisations seeking to advance financial inclusion.
“The GDP-per-capita impact of mobile phones in emerging economies has proven to be greater than in developed ones. Having a cellphone in people’s hands has opened up opportunities for new business models that were not previously possible.”
Given the abundance of talents around the region, there is no reason Dubai cannot be the next Silicon Valley
Meanwhile, these new tech hubs are competing with established global centres. In 2014, more software programmers moved to Bangalore, India’s technology hub, than to Silicon Valley, LinkedIn data shows. Other Indian cities, including Chennai, Hyderabad and Pune, were among the top global destinations for technical talent. Silicon Valley came fifth, trailing the four Indian cities, and was followed by Seattle and Austin, Texas.
Pejman Nozad, a Silicon Valley commentator, says Mena can play an important role in the tech world. He sees Dubai, the region’s business and tourism hub, as “the closest city in the world to a startup”.
“It is vibrant, exciting and forward-thinking, with people from around the world participating in its future. In addition, the infrastructure of Dubai is key in making the city a destination for tech entrepreneurs.”
Dubai is on the right track, Nozad continues, “to build a culture that cultivates innovation and risk-taking.
“Given the abundance of talents around the region, there is no reason the city cannot be the next Silicon Valley.”