Description
Competitiveness in Abu Dhabi is about creating the sustainable environment that enables the Emirates enterprises and its people to realize their full productive potential.
Abu Dhabi Competitiveness Report
Improving the Competitiveness of
the Emirate of Abu Dhabi
Competitiveness in Abu Dhabi
is about creating the sustainable
environment that enables the
Emirate’s enterprises and its
people to realize their full
productive potential
CONTENTS
FOREWORD 4
ACKNOWLEDGMENTS 5
COAD AND THE MISSION TO IMPROVE COMPETITIVENESS 6
EXECUTIVE SUMMARY 8
BACKGROUND 11
THE COMPETITIVENESS ASSESSMENT FRAMEWORK FOR ABU DHABI AND ITS SUB-REGIONS 14
HUMAN CAPITAL 16
BUSINESSES 24
ECONOMIC STRUCTURE 38
ABU DHABI CITY 52
AL GHARBIA 54
AL AIN 56
GOING FORWARD 58
ANNEX 60
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
3 2
4
As the United Arab Emirates enters its 42nd year of
existence, it is a timely opportunity to reflect on our
country’s extraordinary journey since 1971. Our
nation was blessed with a wise and compassionate
founding father – HH Sheikh Zayed Bin Sultan Al
Nahyan - who laid the groundwork for what the
UAE has become today: one of the world’s leading
economies and a bastion of peace, stability and
security.
Our visionary President, HH Sheikh Khalifa Bin
Zayed Al Nahyan, is continuing to build on this
solid foundation to propel the UAE forward as
one of the world’s most competitive economies.
Abu Dhabi Emirate – the largest Emirate in the
federation – is particularly well-positioned to be the
catalyst for this effort. The Abu Dhabi Vision 2030
– developed under the sage guidance of HH Sheikh
Mohammed Bin Zayed Al Nahyan, the Crown
Prince of Abu Dhabi, Deputy Supreme Commander
of the Armed Forces and Chairman of the Executive
Council - is setting the stage for the transformation
of Abu Dhabi into a diversified, highly-innovative
economy that will generate significant employment
opportunities and long-term growth.
This report benefitted from the support and contribution of numerous stakeholders.
Special thanks go to the following individuals and organizations:
Abu Dhabi Department of Economic Development
Abu Dhabi Chamber of Commerce and Industry
Abu Dhabi Council for Economic Development
Abu Dhabi Technology Development Committee
Abu Dhabi Tourism Authority
Al Ain Municipality
Khalifa Fund for Enterprise Development
National Bureau of Statistics
Statistics Center Abu Dhabi
The Western Region Development Council
Dr. Robert Huggins, Professor at Cardiff University,
UK and co-founder of the World Knowledge
Competitiveness Index
Dr. Yusuf Mansur, former CEO of the Jordan
Agency for Economic Development
Chairman, Abu Dhabi Department of
Economic Development
His Excellency Nasser Ahmed Alsowaidi
As the lead entity responsible for delivering the
economic agenda of Abu Dhabi, the Department
of Economic Development has made balanced
regional development a top priority. Toward
that end, there is a strong interest in applying an
evidence-based approach to pinpoint– at a regional
level – the principal competitiveness-related
strengths, challenges and opportunities in Abu
Dhabi City and the Eastern and Western Regions.
These findings will then be used to design and
implement a policy agenda to generate sustained
economic growth in all regions of the Emirate.
The inaugural Abu Dhabi Competitiveness Report,
prepared by the Competitiveness Office of Abu
Dhabi (COAD), is the culmination of several months
of dedicated effort by a team of DED staff members
and key stakeholders. The report is informed by a
rigorous regional competitiveness index – the first
of its kind in the GCC region - that will serve as the
principal tool to measure the Emirate’s progress in
achieving the goal outlined in Abu Dhabi Economic
Vision 2030 “to build a sustainable economy that
ensures a balanced social and regional economic
development approach that brings benefits to all.”
The publication of the Abu Dhabi Competitiveness
Report will accelerate efforts to create a competitive
knowledge-based economy that benefits all of the
citizens of Abu Dhabi Emirate and its three regions.
We look forward to working with our stakeholders,
both public and private as well as Emirate-level and
federal, to ensure that the recommendations in this
report become reality.
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
FOREWORD ACKNOWLEDGMENTS
5 4
Internationally, “A nation’s competitiveness is the
degree to which a country can, under free and fair
market conditions, produce goods and services
which meet the test of international markets, while
simultaneously maintaining and expanding the real
incomes of its people over the long term.”
1
In the
context of Abu Dhabi, improving competitiveness
is about creating the sustainable environment that
enables the Emirate’s enterprises and its people to
realize their full productive potential. This entails
providing the conditions for the Emirate’s workforce,
businesses, sectors and regions to excel in both
local and global markets. The leadership of Abu
Dhabi has prioritized competitiveness as one of the
key objectives to building a sustainable economy for
the future, as defined in the Abu Dhabi Economic
Vision 2030.
With this goal in mind, the Competitiveness Office
of Abu Dhabi was launched in 2011 under the
Abu Dhabi Department of Economic Development
(ADDED), the lead entity responsible for delivering
the economic development strategy outlined in the
Abu Dhabi Economic Vision 2030.
The Competitiveness Office of Abu Dhabi
(COAD) Vision and Mission
Vision: Work in collaboration with stakeholders
to implement the best thinking in the field of
Competitiveness to support the people and
enterprises of Abu Dhabi in reaching their full
productive potential.
Mission: Enhance the global Competitiveness of
Abu Dhabi, its enterprises, and private businesses
by advocating policies, leading initiatives, and
creating a shared understanding and awareness
among its stakeholders.
COAD AND THE MISSION TO
IMPROVE COMPETITIVENESS
Abu Dhabi Economic Vision
“Abu Dhabi as a sustainable, diversified, high-value added economy
that encourages enterprises and entrepreneurship and well integrated
in the global economy leading to better opportunities for all”
1
The Organisation for Economic Co-operation and Development
7 6
The Emirate of Abu Dhabi has witnessed
transformative growth over the past forty years,
driven primarily by the ambitious economic agenda
of its leadership. The government of Abu Dhabi has
used the region’s natural resources to drive forward
social and economic developments, changing the
economic landscape of the Emirate and its position
internationally. By positioning itself as a hub for
businesses, visitors and investors, Abu Dhabi has
opened up its economy to the world, aiming to
attract premier talent from abroad while growing
the indigenous capacity of its population. It is
in this context that Abu Dhabi has increased its
competitive outlook and positioned itself on a track
for long-term sustainable growth.
Enhancing the competitiveness and productivity
of the Emirate is one of the key objectives
of the government, as articulated in the Abu
Dhabi Economic Vision 2030. It is under this
mandate that the Competitiveness Office of
Abu Dhabi (COAD) is carrying out its mission
to “enhance the global competitiveness of Abu
Dhabi, its enterprises, and private businesses
by developing policies, leading initiatives, and
creating a shared understanding and awareness
among its stakeholders.” The first Competitiveness
Report of Abu Dhabi represents an effort to
realize this mission by evaluating the drivers of
competitiveness, and then assessing Abu Dhabi’s
performance in a global context.
The Competitiveness Report serves five main
functions:
• Measure the competitiveness of Abu Dhabi
and its three main regions: Abu Dhabi City, Al
Ain, and Al Gharbia (The Western Region)
• Benchmark Abu Dhabi and its sub-regions
against other international comparative regions
• Highlight the key challenges and successes of
the Emirate from a competitiveness perspective
• Offer recommendations aimed at addressing
these challenges and improving the
competitive landscape going forward
• Align Abu Dhabi government initiatives toward
the Abu Dhabi competitiveness agenda
One unique feature of the Competitiveness Report
is the focus on Abu Dhabi’s sub-regions as key
sources of insight to the collective performance
of the Emirate. This report answers the question
“why regional competitiveness?” and provides the
rationale for a more granular analysis of economic
data beyond the national level. Understanding the
drivers of competitiveness from a regional and
even sub-regional perspective is critical as it allows
governments, businesses, and individuals to target
investments and provide specific solutions for
improvement.
To measure the performance of Abu Dhabi
and its sub-regions, COAD developed a
regional competitiveness model that measures
competitiveness of the Emirate against select
benchmark regions. Each benchmark was
chosen for its relevance to Abu Dhabi, either
due to its location and development parallels; its
success transitioning from a resource-based to a
knowledge-based economy, or as a leader in global
competitiveness. Each benchmark was measured
using almost 50 economic indicators, divided into
Inputs, Outputs, and Outcomes. The model also
takes into consideration Enablers, which are the
supporting conditions and qualitative factors that
impact competitiveness.
EXECUTIVE SUMMARY
Because a region’s economic competitiveness is
closely linked to its comparative advantage and
specialization within industries, in addition to
regions, the Report analyzes sector-specific data.
Target sector data provides relevant information
about which industries are contributing the most
to economic output, job creation, wages, worker
productivity and foreign investment. Providing
sector-level analysis ultimately allows for a more
disaggregated view of the economy and its
associated gaps and potential growth areas.
The Report takes an in-depth look at the results of
the model and the current competitive landscape
of the Emirate. The data findings are grouped into
the most pertinent areas for improvement, and
presented in the Competitiveness Assessment
Framework. This framework structures Abu
Dhabi’s specific challenges and suggested
recommendations under the three drivers of
competitiveness.
The first driver is Human Capital, which evaluates
the education, skill level, characteristics and overall
dynamism of Abu Dhabi’s workforce. While there
have been numerous educational reforms and
training initiatives put in place in recent years, key
challenges remain around skill building, higher
education and female labor force participation in
Al Gharbia. Al Ain has seen numerous successes
in the education field, but still faces difficulties
creating enough jobs and meaningful employment
opportunities for its local population, particularly for
its youth.
The second driver is Businesses, which examines
the entire value chain of doing business, beginning
with start-ups, then growth, financing, and the sale
of goods and services. The three areas examined
for business competitiveness in Abu Dhabi are
entrepreneurship, firm growth, and innovation.
While numerous initiatives have been established
by the government to increase the financing and
support services available to businesses, challenges
still remain for small enterprises seeking to enter
and compete in the marketplace.
The third, and final driver, is the Economic Structure
of Abu Dhabi and its regions. This driver provides a
longer-term outlook on competitiveness, measuring
the economy’s sustainability and its capacity to
generate wealth and maintain or increase standards
of living. This driver provides an aggregate view
of the economic activity of a region, taking into
consideration the diversification of sectors as well
as the geographic location of investment and
business activity. The main challenges discussed
in this section are diversification away from oil
and gas and into high value-added or knowledge
sectors, as well as reducing the regional disparities
between Al Gharbia, Al Ain and Abu Dhabi’s capital
city. Improving the incentives for private sector
investment is an essential element in improving
Abu Dhabi’s economic structure.
Competitiveness
Inputs
Increase
Diversification
Enlarge the
Enterprise Base
Enhance
Competitiveness
Key Determinants of Regional Competitiveness
The Abu Dhabi Economic Vision 2030
The Emirate of Abu Dhabi Policy
Agenda 2007
Competitiveness
Outputs
Competitiveness Enablers
Competitiveness
Outcomes
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
9 8
Regional Competitiveness Model
Competitiveness
Inputs
Human
capital
Physical
capital
Financial
capital
GDP growth
Trade
volume
Market structure
New firm
generation
Productivity
Knowledge
output
Long-term improvements in living standards
Competitiveness
Outputs
Enablers
Competitiveness
Outcomes
Competitiveness inputs are
the underlying drivers of
economic performance
Competitiveness outputs
are the measures of
economic performance
Competitiveness outcomes
are the long-term impacts of
economic performance
Enablers are the conditions and/or qualitative factors that
have an impact on the competitiveness of the economy
Finally, specific recommendations are provided for
each challenge, as well as case studies on how
benchmark regions improved competitiveness in
these relevant areas. In many instances, Abu Dhabi
has set global examples which can be considered
competitiveness success stories. These include
the Western Region Development Council’s work
to attract investment into Al Gharbia; industrial
improvements from the development of Free Zones;
and the Abu Dhabi Education Council’s New School
Model to improve the quality of education across
the Emirate. These success stories are interspersed
throughout the report to highlight some of the
Emirate’s competitiveness achievements to date.
Going forward, the objective is for this report to be
published biennially to track Abu Dhabi’s ongoing
improvements and progress towards enhancing
competitiveness. This will include updates on
new public and private sector initiatives as well
as the outcome of the specific challenges and
recommendations currently identified. As more
data becomes available for Abu Dhabi and its
sub-regions, the report can provide additional
disaggregated competitiveness intelligence and
analysis to better serve the needs of COAD’s
stakeholders. This first report paves the way for an
informed discussion about regional competitiveness
in Abu Dhabi, with the hopes that these efforts will
lead to an improved environment for the people,
businesses, and regions of the Emirate.
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
BACKGROUND
The past five years have ushered in tremendous
change for Abu Dhabi, as the Emirate has emerged
from the global financial crisis with robust growth
figures and sweeping changes to its economic
landscape. Much of this change has been driven
in large by the Emirate’s public sector, which has
taken on a number of reforms and committed
significant investment capital into its infrastructure,
institutions and local economy. In 2008 the
Emirate released the Abu Dhabi Economic Vision
2030, which provides a detailed strategic plan to
position the region toward long-term sustainable
growth. The government has used the Vision as
the guiding framework to increase Abu Dhabi’s
competitiveness on both a local and global scale.
Much of the initial investment by the public sector
and closely allied development arms such as
Mubadala has been in revamping the physical
landscape and infrastructure of the Emirate. This
includes the development of entire business and
residential clusters, hospitals, roads, and what will
become the one of world’s largest seaports and
petrochemical manufacturing plants. These recent
large-scale infrastructure investments are intended
to lay the groundwork for the Emirate’s transition
away from its dependence on oil production and
towards a knowledge-based economy. With public-
sector driven investments in cutting-edge physical
capital, the Emirate’s leadership envisages the
continued growth of new and adjacent industries.
The 2030 Vision has also sparked the increase of
public sector offerings for businesses. Government
entities such as the Khalifa Fund for Enterprise
Development, a two billion dirham entity aimed at
bolstering small businesses, and the Department
of Economic Development are driving the growth
of private sector enterprises throughout the region
by improving the business environment. Economic
zones with favorable regulatory systems such as
KIZAD and Masdar City have sprung up throughout
the Emirate to drive regional and foreign investment,
mostly in manufacturing and industrial sectors. The
focus on industrial zones, combined with an already
advantageous tax regime, is testament to the
government’s efforts at opening up the Emirate as a
hub for international trade and business.
While early investments were characterized by
large infrastructure projects, the government of Abu
Dhabi is now trying to ensure that its citizens have
the opportunities to succeed in the rapidly changing
economy. Efforts to ‘Emiratize’ sectors, or increase
the number of National citizens in the workforce
have been taken up by the public sector, most
notably the Abu Dhabi Tawteen Council. Increasing
Emiritization requires focused programs and
investments in education, skill development and
training. Training its workforce for high skilled-jobs,
and ensuring that the types of knowledge-based
sectors and industries exist for the local workforce
is the biggest challenge the Emirate currently faces.
As most of the economic activity is driven by the
public sector, this is also the career of choice for
most Emiratis (at least six out of ten Nationals in
Abu Dhabi)
2
. Building a robust private sector and
providing ample opportunities for citizens to excel in
private industries is one of the primary objectives for
Abu Dhabi.
Strong physical development and investment have
impacted the competitiveness of the Emirate by
attracting high levels of trade, commerce, business
activity and an inflow of expatriate workers into
the region. Improving competitiveness for Abu
Dhabi’s next stage will entail further development of
businesses and labor force, so that the Emirate is
an attractive place to do business going forward.
2
SCAD Statistical Yearbook 2012 (2011 data)
11 10
Why regional competitiveness?
While most competitiveness indices provide useful
insight into the economic performance of a country,
granular data at the regional level is necessary
to drive targeted policy and program initiatives.
Evaluating Abu Dhabi not only at the regional
level, but also looking into the key challenges
and successes at the sub-regional level will allow
for more tailored solutions for the people and
businesses in each part of the Emirate.
Regional competitiveness is generally defined as the
capacity of a sub-national economy to attract and
maintain firms with stable or rising market shares
in an activity, while maintaining stable or increasing
standards of living for those who participate in it
3
.
This definition implies a number of guiding
principles in terms of determining regional
competitiveness:
• Regional competitiveness should not only lead to
increasing market share in a particular industry,
but it should also raise or at least maintain the
standard of living in that region, since increasing
the well-being of the population should be
the ultimate goal of all competitive activity.
• Regional competitiveness is determined
by the presence of conditions that enable
firms to compete and generate value.
• Although a region’s competitiveness
is linked to its economic performance,
measurement must also incorporate the
“assets” of the local business environment.
• Regional competitiveness occurs only when
sustainable growth is achieved at wages
that enhance overall standards of living.
4
• A key factor in achieving such growth
is the presence of innovative firms that
ultimately generate new jobs.
• Competitiveness is likely to vary across geographic
space, with regions developing at different
rates depending on their drivers of growth.
Regions that compete solely on the basis of low
wages, low-skilled labor, and low taxes alone will
not be positioned for long-term growth as they will
be at a distinct competitive disadvantage compared
to regions that compete on the basis of higher skills
and higher wages.
Human capital, innovative capacity and the
quality of physical infrastructure all impact the
competitiveness of a sector. These assets in turn
help to attract innovative and creative people which
give a region its competitive advantage. In other
words, competitiveness is increasingly concerned
with creativity, knowledge, and environmental
conditions, rather than being based purely on
accumulated wealth.
Measuring competitiveness at a regional level
provides a better mechanism for governments
to target programs and initiatives, improving
social welfare and economic outcomes where
the greatest gaps exist. There is an emerging
consensus internationally that regions constitute the
new focus of foreign direct investment attraction
strategies; moreover, concentration of R&D and
knowledge transfer at a regional level facilitates the
development of industrial and service clusters that
can have a transformative impact on a country’s
economy. Illustrative examples include the high
tech clusters in Silicon Valley, California and Route
57 in Boston.
Certain regions in a country have specific attributes
that will make them more likely destinations for
investment. Some regions may be more resource
rich than others; other regions may include large
urban centers versus more rural, agrarian areas.
By focusing on competitiveness at a regional level,
governments can better design and implement
programs that can reduce regional disparities.
5
They
can also develop initiatives to encourage foreign
and domestic investment and entrepreneurship
in regions that may be competitive in certain
sectors and promote industry linkages and cluster
development where they are most feasible.
3
Storper, M. (1997) The Regional World: Territorial Development in a Global Economy. Guilford, New York. The definition of
competitiveness equates with the ‘high road of regional competition’, where regions compete by achieving high levels of innovation,
upgrading and growth, rather than the ‘low road competition’ associated with promoting the lower costs of labor, land or capital.
4
Paul Krugman (2003), a renowned skeptic of the competitiveness concept, has in more recent years suggested that the competitiveness
of a region is based on its ability to provide sufficiently attractive wages and/or employment prospects and a return on capital.
5
Huggins, Robert. A Regional Perspective on Competitiveness. Presentation to Competitiveness Office of Abu Dhabi, 6 November 2012
Benchmarks – Overview and
Rationale
In order to better assess Abu Dhabi’s competitive
positioning on an international scale, select
benchmarks were compared across numerous
competitiveness indicators. These benchmarks
provide useful insight into Abu Dhabi’s standing as
they have distinct characteristics that are relevant
to Abu Dhabi’s current economic profile or they are
well aligned with its medium-to-long term strategy
for improving competitiveness. Alberta, Canada,
Norway and Singapore were used as benchmarks
in this report.
The main criteria considered were as follows:
Petroleum abundant
Extensive downstream industry
development
Diversified, knowledge-based economy
High standards of living
Global competitiveness leader
High percentage of foreign labor
High levels of government investment and
wealth per capita
Successful in attracting high levels of
foreign investment and joint ventures
Skilled human capital base
The Norwegian economy is one of the most
competitive and prosperous economies in the world
and its citizens enjoy a high standard of living. Like
Abu Dhabi, Norway is a resource abundant country
with the largest oil and gas reserves in Europe.
These energy resources have played a critical
role in accelerating Norway’s economic growth.
However, Norway has largely diversified away from
oil and gas into the services sector with a focus on
healthcare, social and financial services. Currently,
the oil and gas sector contributes approximately
20% to the country’s GDP.
6
Furthermore, the
government has played an active role in creating an
enabling environment to enhance competitiveness
and generate sustainable economic growth.
Although Singapore has limited natural resources,
it has retained the top rankings in numerous
international competitiveness indices due to
a highly skilled and productive labor force, a
business-friendly environment, and the presence
of several high-technology industries. It is one of
the world’s most favorable business environments
due to a consistent and transparent regulatory
framework, streamlined business processes, and
low personal and corporate tax rates. Similar to Abu
Dhabi, Singapore has relied on an expatriate labor
force to meet the demands of its growing economy.
Singapore’s employment pass scheme has allowed
high caliber foreign workers to obtain jobs and long-
term residency in the country. Due to its limited
natural resources, Singapore focused on developing
its knowledge-based and high technology sectors
early on by drawing on a highly skilled pool of
foreign scientists and workers. During the initial
period following independence, the government
assumed a lead role in developing and driving an
industrial strategy that enabled the city state to
become highly competitive. Singapore applies a
hybrid approach, using both interventionist and free
market strategies to develop its economy.
Alberta, a Canadian province, is another
benchmark for Abu Dhabi. It ranked second after
Norway on the Index of Economic Well-being in
2010. Like Abu Dhabi, it is an oil-rich region
containing the world’s third largest reserves of oil
sands.
7
For the most part, growth in the province
has been driven by exploitation of the oil and gas
reserves; however, Alberta has diversified into the
financial, business services and manufacturing
sectors. Currently, the oil and gas sector contributes
approximately 27% to GDP.
8
As Alberta continues
to exploit its energy resources, it is doing so in an
environmentally responsible manner by setting
emission reduction targets for industries and
regularly monitoring air quality throughout the
year
9
. Alberta has developed a business-friendly
reputation due to its lower than average tax rates
and higher than average standard of living.
Comparisons of Abu Dhabi’s competitiveness with
the aforementioned benchmarks will highlight the
Emirate’s comparative strengths as well as the
opportunities for improvement.
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
6
Statistics Norway, 2011
7
Alberta Energy, http://www.energy.alberta.ca/ourbusiness/oilsands.asp
8
Statistics Canada, 2011
9
Alberta Enterprise and Advanced Education, “Highlights of Alberta Economy, 2012”, 2012
13 12
Improving the overall economic competitiveness of
Abu Dhabi requires a comprehensive assessment
of where the Emirate currently stands, and how
it is driving towards the strategy as set out in
the Abu Dhabi Economic Vision 2030. Because
competitiveness is an overarching theme, which
touches on all aspects of an economy from the
macro to the micro level, it is useful to establish
a framework for assessing those challenges
which remain the biggest priorities for the region.
It is through a competitiveness framework
that policymakers can effectively identify and
evaluate the gaps in competitiveness, and target
recommendations and the most crucial points
for investment. This framework is unique to Abu
Dhabi in that the challenges represent those areas
where the Emirate falls behind select international
benchmarks, providing the rational for further
investigation into how policymakers can improve
the conditions for bolstered economic activity.
The accompanying recommendations are
also specific to the Emirate, as they take into
consideration the numerous ongoing and planned
initiatives for the region by the public sector, and
provide insight into those areas which require
further consideration.
The Regional Competitiveness Index provides
a useful starting point for measuring the overall
landscape of Abu Dhabi, its sub-regions and its
sectors using nearly fifty economic indicators
measuring inputs, outputs and outcomes of
competitiveness. Using the findings from the RCI,
the Competiveness Assessment Framework was
developed by clustering the greatest challenges
into three groups, which represent the main
drivers of competitiveness. Each of these drivers
evaluates competitiveness performance at a
different level, starting with the individual or
worker level, followed by the firm level and then
the aggregate economic profile.
THE COMPETITIVENESS
ASSESSMENT
FRAMEWORK FOR
ABU DHABI AND
ITS SUB-REGIONS
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Skills Gaps
Labor Force
Participation
Entrepren-
eurship
Firm Growth Innovation
Diversificat-
ion
Regional
Disparities
Human Capital
Manpower and Skills
Development Programs
Businesses
Comprehensive
Business
Support Services
Business
Development
Incentives
Economic Structure
Driving Diversified
Investments at the
Regional Level
C
h
a
l
l
e
n
g
e
s
R
e
c
o
m
m
e
n
d
a
t
i
o
n
s
D
r
i
v
e
r
s
The first driver, Human Capital, measures the
capacity of the labor force, and its composition
in terms of skill, education, labor productivity,
and levels of participation by women, youths and
Nationals. This driver is based on the premise that
as Abu Dhabi seeks to transition to a knowledge-
based economy, its stock of skilled human capital
should act as the main engine for growth. The
second driver is Businesses, which takes into
account competitiveness by the firms in the
Emirate. This driver is measured by business
start-up rates, firm-level investment and growth,
and business innovation. Because businesses
are the conduit for economic performance,
evaluating Abu Dhabi’s ability to start, grow, and
sustain high value-added businesses is essential
for improving competitiveness. Finally, the third
driver of competitiveness is Economic Structure,
which takes into consideration the economic
disparities between Abu Dhabi’s sub-regions, as
well as diversification of the economy. This driver
is built on the notion that a region with most of its
economic activity concentrated in one city and one
sector cannot remain competitive in the long run.
Therefore, recommendations in Economic Structure
are solely focused on driving investment into the
Eastern and Western regions of the Emirate, and
furthermore into those strategic sectors prioritized in
the Economic Vision 2030.
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
15 14
The first element of the competitiveness framework
is human capital, which is characterized by the
education, skill level, characteristics and overall
dynamism of Abu Dhabi’s workforce. Not only
does human capital reflect the actual labor force,
but the potential or prospect stock of employees
and entrepreneurs, taking into account the
incentive structure that determines total labor
force participation. In terms of human capital, the
largest differentiator between resource-based and
knowledge-based economies is that the former
depends primarily on its natural resources to fuel
development, while a knowledge economy depends
on its most competitive asset—its people—to drive
growth and innovation. The human capital of an
economy is its greatest strength as it defines the
potential for higher value-added goods and services
and the capitalization of new ideas. The core tools
to transition to a knowledge-based economy are
education, skills development, and institutions
focused on harnessing knowledge transfer.
Inclusivity and equality of opportunity are also
important measures of human capital potential,
as a competitive economy should leverage talent
from as many sources as possible, and not just the
dominant classes of society.
The GCC countries have attracted a wealth of
skilled and unskilled labor into their economies,
largely as a result of the ambitious pace of
industrialization. While four decades have seen
tremendous physical and financial growth in the
Emirate of Abu Dhabi, developing a local workforce
with the skills to drive their economy forward takes
generations of investment. The current state of
the local workforce is still largely driven by foreign
expatriate workers, concentrated in the petroleum
and construction related industries. A stark set of
challenges have arisen, centered around providing
adequate preparation and opportunities for local
citizens, women, and youths to transition into the
private sector. To address these challenges, the
Abu Dhabi government has set ambitious targets to
cultivate the opportunities available for its citizens,
unveiling numerous educational and skill-building
plans to improve competitiveness.
Skill Development
The central measure of a competitive economy’s
human capital is the skill-level of its workforce.
There is no quick solution for developing and
attracting high skilled-workers, entrepreneurs, and
innovators, and different competitive economies
have pursued unique ways of increasing the skill
levels of their workforce. Generally speaking, many
competitive economies such as Singapore take
a two-pronged approach to increasing the skill
capacity of their economy.
The first, and more immediate approach, is to
provide numerous incentives to attract experienced
professionals from abroad to join the domestic
labor force. By providing financial incentives
to private companies, ensuring a multitude of
job opportunities for expatriates, setting up a
favorable tax regime, and providing numerous
support services for high skilled foreign workers,
HUMAN CAPITAL
governments have been able to drive forth
ambitious development goals. The GCC has relied
heavily in the past on this method, starting in the
oil and gas industry in the seventies and then
more recently in a host of other industries such as
finance, insurance and other professional services.
This top down approach has its merits, mainly
in that clustering high-skilled professionals has
reverberations throughout other aspects of the
economy. More importantly, ensuring a steady
inflow of high-skilled workers allows for human
capital development to keep pace with the rapid
pace of physical infrastructure spending. Abu Dhabi
has attracted numerous foreign workers into its
economy, but the majority of them have largely
been in low-skilled sectors such as construction
or low-value-added sectors. According to the
Statistics Centre of Abu Dhabi (SCAD), the labor
force in Abu Dhabi was estimated to be over 1.4
million in 2011, out of which 130,000 or 9.1% are
UAE nationals and the rest, more than 1.3 million
workers are non-nationals
10
. While an influx of
foreign workers benefits an industrializing economy
through the availability of affordable imported labor,
the focus now must shift to attracting high skilled
experienced professionals who are capable of
transitioning Abu Dhabi into a knowledge economy.
Currently, Abu Dhabi falls behind other resource
rich economies in the ratio of high-skilled to
low-skilled labor, which is a result of rapid and
continuous physical development over the past
four decades. Labor is largely in infrastructure
related industries, as the Emirate modernizes its
transportation and urban landscape. The number of
managers per 1,000 employees provides a sense
of the skill level of an economy and the industries
it attracts. Innovative or high skilled sectors
such as professional services are characterized
by a stronger manager to employee ratio, while
low value-added sectors such as construction,
demonstrate the opposite trend. Transitioning into
“The number of managers per 1000 employees provides some
indication of the concentration of knowledge workers in an
economy. Managers, professionals and high-end technical
workers are a vital part of the knowledge production process.
There is increasing recognition of the role played by these
workers as a source of innovation and whose responsibility it is
to stimulate investment and growth. These workers include the
‘creative class’ of employees whose value is specifically their
intelligence…Managers are usually the employees that find
efficient ways of working with new technology, and are a vital
stimulus in the diffusion of such technologies. Their importance
is recognized by the fact these workers not only provide the
highest value-added to an economy but also receive the highest
level of financial remuneration.”
Professor Robert Huggins,
World Knowledge Competitiveness Index
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Abu Dhabi
0
40
80
120
160
20
60
100
140
180
Alberta, Canada Norway Singapore
Number of Managers Per 1,000 Population (2011)*
*The year stated in each graph with regional benchmarks is the year for
Abu Dhabi’s data
10
SCAD Statistical Yearbook 2012
17 16
a knowledge economy will require investment into
attracting highly skilled minds to the region. As is
mentioned in the following section on Businesses,
providing visas, seed capital, and support services
for entrepreneurs are all effective ways of attracting
fresh talent and skills into the region.
Ultimately, the goal of a competitive economy is
not to solely rely on importing skill into the region,
but rather to develop the capacity of the local labor
force. The second and long-term approach to
improving human capital is to ensure that National
citizens have the support and resources available
to excel and become active participants in their
economy. As identified in the Economic Vision
2030, cultivating the skills and knowledge-base of
Emiratis is one of the most urgent priorities of Abu
Dhabi: “Human capital will be enhanced through
the improvement of education, training, and other
methods to improve both the employability of
Nationals and the productivity and competitiveness
of the workforce in general.”
Improving employability also means preparing and
incentivizing local citizens to actively participate
in the private sector. Currently, the private sector
accounts for nearly 4% of total employment of
Emirati workforce in Abu Dhabi, according the
Abu Dhabi Tawteen Council (ADTC).
11
Of the
local citizens who do choose a career in the
private sector, few are in high-skilled professional
services and key knowledge industries, as most
local businesses are in wholesale retail and trade.
Around 84 % of Emirati-owned businesses in Abu
Dhabi are in the trade sector, whereas professional
services only account for 3.1%
12
.
At a sub-regional level, Al Gharbia faces the biggest
challenges in providing its local citizens with enough
opportunities for specialized and high-level skill
development. The Western Region Development
Council has begun to address this by pairing with
universities to provide education and career fairs, and
the Abu Dhabi Vocational and Educational Training
Institute (ADVETI) has invested in skill-building for
al Gharbia residents by providing practical training
courses and workshops based on the German
Vocational Education System. These initiatives are
commendable, and necessary to grow the human
capital skill base in Al Gharbia. Increased investment
in specific skills training for target industries should
remain a key priority going forward.
The Singapore Workforce Skills Qualifications
(WSQ) is a national credentialing system. It
trains, develops, assesses and recognizes
individuals for the key competencies that
companies look for in potential employees.
Objectives of WSQ:
• Supports the economic development of Singapore
• Ensures that workers are equipped with transferrable
skills to enhance labor market flexibility
• Enhances productivity of workers
Key features of WSQ:
• An occupational and competency-based system
designed to build industry-specific skills
• Assessment and certification are based on ability
to demonstrate the industry’s required skills
• Accessible to all workers and professionals
as WSQ’s entry criteria include skills and
knowledge and not formal qualifications
Key benefits of WSQ:
• Career path planning and assistance
for entry into a new industry
• Skills upgrading and career advancement
through clear progression pathways
• Improved performance management
systems and training programs
Sources: Ministry of Manpower Singapore; Singapore
Workforce Development Agency: International Seminar
on “National Qualification Framework (NQF): Policies and
Strategies”, 2011
The Competitiveness Assessment
Framework for Abu Dhabi and its Sub-Regions — Human Capital
11
Abu Dhabi Tawteen Council: http://www.abudhabi.ae/egovPoolPortal _ WAR/appmanager/ADeGP/Citizen? _ nfpb=true& _
pageLabel=p _ citizen _ en _ homepage _ hidenav&did=254196&lang=en
12
Business Licenses in Abu Dhabi, Abu Dhabi Department of Economic Development (2012)
planning process to introduce a PhD program. As
expanded upon later, establishing more formal
research and development labs and advanced
degree programs are integral steps to increasing
levels of innovation for the Emirate.
At a regional level, Al Ain leads the Emirate in
educational achievement due to the presence of
United Arab Emirates University, which is one of
the largest and most prestigious universities of
the region. Its presence has allowed for a higher
concentration of jobs in knowledge services,
and has succeeded in attracting larger numbers
of women into the workforce. The Emirate has
struggled to attract university graduates, with
just under 10% of Nationals holding university
degrees.
15
This is particularly notable in the
Western Region, which lacks the presence of
higher educational institutes. Without a major
technical or petrochemical university devoted to
exploiting the region’s vast reserves of oil and gas,
most students have to leave the region for Abu
Dhabi City or Al Ain to pursue a higher education.
More importantly, the region has not been able to
provide enough high skilled jobs for graduates to
attract them to work and set up businesses in Al
Gharbia upon graduation.
Attracting high-skilled Emirati’s to work in the
private sector in Al Gharbia has been a challenge
for the region, with the petroleum industry being
an exception. Efforts to increase local participation
in the private sector in Al Gharbia are mainly
driven by the WRDC in collaboration with different
governmental agencies. The WRDC signed an
MoU with the Abu Dhabi Chamber of Commerce
and Industry (ADCCI) aiming to attract the private
sector to the region as well as “involving and
training the local community and ensuring that
they have the capability to play an effective role
in the process”
13
. There are ongoing efforts to
provide job opportunities to talented locals in Al
Gharbia, of note are the Emiratization programs by
the Western Region Municipality and Al Gharbia
Hospitals. While public sector positions can
improve the employment outlook for the region,
pairing high-skilled private sector training programs
with internships and job opportunities in al Gharbia
will have the greatest effect on the region’s human
capital competitiveness.
Education
While Abu Dhabi fares well on basic measures of
educational attainment, such as its high literacy
rate (92%), or enrollment rates (Secondary
education enrollment rates are 88%
14
), one of
the biggest areas for improvement is in higher
education, where the Emirate needs to focus on
growing the number of highly qualified university
graduates. Because a highly educated population
is essential for any economy looking to diversify
into value-added and knowledge industries,
improving the quality and offerings of universities in
the region should be a key priority going forward.
Recent partnerships with esteemed international
universities such as Paris-Sorbonne University,
INSEAD and New York University bode well for the
educational outlook of the Emirate.
Doctoral programs, which are closely linked with
a region’s knowledge output (such as patent
registry, published journal articles, and research
and development), are still relatively new to the
GCC and are thus quite limited in their offerings.
Currently three universities offer PhD programs in
Abu Dhabi and two more universities are in the
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
13
The Western Region Development Council (2008) – http://www.wrdc.ae/ar/text/news-d.aspx? _ id=66
14
SCAD Statistical Yearbook 2012
15
Strategy Plan 2013 – 2017, WRDC(2012) – SCAD 2009
Abu Dhabi City Western Region Al Ain
9.70%
9.71%
9.72%
9.73%
9.74%
9.75%
9.76%
9.77%
% Of Population with University Degrees (Nationals-10
Years and Over) (2011)
Source: SCADStatistical Yearbook 2012
19 18
as well as the availability of jobs in knowledge
services have attracted local women into the
workforce. Because Al Gharbia’s economy is still
centered around the petroleum industry, which has
been traditionally male dominated, women in the
Western Region face a shortage of desirable jobs.
In Al Ain, the Ain Al Mustaqbal initiative launched
by the Abu Dhabi Tawteen Council has started
encouraging female employment by providing
female job seekers with career needs assessments
and by identifying available job opportunities.
Overall, unemployment of Nationals is a concern
for the region, and particularly Al Ain where
unemployment is the highest among Nationals.
To address this challenge, the Abu Dhabi Tawteen
Council (ADTC) and other public sector entities
have tried to increase Emiratization levels in Abu
Dhabi. Ultimately, in order to meet this objective,
private sector job skills training and increased
assistance to young entrepreneurs is necessary
to attract Nationals into the labor force in higher
numbers. Expanding the local pool of labor and
talent and providing them with job opportunities
will require additional support services for
businesses and job-seekers alike.
Improvement areas
Labor profiling, mapping and skills
training
As the public sector positions itself as a provider
of training and skills development for Nationals, it
is essential to target programs to meet the specific
needs of Abu Dhabi and its sub-regions. This first
requires building up a robust base of intelligence
covering the local labor force at the sub-regional
and sector level. Developing detailed labor force
profiles for Al Ain, Al Gharbia and Abu Dhabi city
will provide both businesses and policymakers with
valuable information on the specific composition
as well as needs of the region’s workforce.
Profiles detailing education, skills, experience,
specialization, gender, visa status and other key
attributes can then be mapped against business
Labor Force Participation
In addition to providing skills training and
educational opportunities for the current labor force,
a top priority for the Emirate should be encouraging
new entrants into the workforce. At current levels,
female participation is extremely low for the region,
a trend that is mirrored throughout the GCC.
Females account for only 15% of the labor force
16
,
and a primary incentive for the Emirate should be
the potential untapped pool of human resources
available if more women were encouraged to join
the workforce. Part of the reasoning behind this
low number can be explained by the influx of male
laborers in construction and infrastructure related
industries, where there are few jobs available
or desirable for women. But even controlling for
foreign labor, female participation still lags behind
international resource-abundant benchmarks.
Ensuring that there are enough desirable
employment opportunities for females will help
improve labor force participation rates for Nationals
and diversify the composition of the workforce.
At the sub-regional landscape, both Al Ain and
Abu Dhabi City have provided job opportunities
for women, largely in education and the public
sector. The prevalence of schools and universities,
The Competitiveness Assessment
Framework for Abu Dhabi and its Sub-Regions — Human Capital
16
SCAD Statistical Yearbook (2012)
Western Region Abu Dhabi City Al Ain
0
5
10
15
20
25
Female Labor Force as % of Total Labor Force (2011)
Source: SCADStatistical Yearbook 2012
Petroleum Institute in the Western
Region
The Western Region, which boasts the largest
wealth of oil and gas reserves of the UAE, does
not yet have a university or campus focused on
petroleum products. The natural solution would
be to open a branch of the Petroleum Institute in
Al Gharbia, which could act as a hub for initiatives
and activities in the Western Region. By offering
skills and education opportunities as well as
business and cluster incubation services around
petrochemicals, the Institute could take an active
role in developing the Western Region.
activities, investment, and training opportunities.
Identifying the most prevalent gaps will allow for
training programs tailored for the specific needs of
each region and its priority industries.
Internship programs
To encourage participation in the private sector,
the public sector should work in conjunction with
private companies in the three regions to offer
formal internship programs for local students. By
organizing and subsidizing internship programs,
the government can help incentivize students to
consider positions in the private sector, while also
providing them with valuable training.
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
21 20
Competitiveness Success Story
The Competitiveness Assessment
Framework for Abu Dhabi and its Sub-Regions — Human Capital
UAE University
Building a Home-Grown Research Infrastructure
The Al Ain based United Arab Emirates University was established in 1976 as the
first truly national research university in the UAE. UAEU consists of nine colleges
focused on the following areas: Humanities and Social Sciences; Science;
Education; Business and Economics; Law; Food and Agriculture; Engineering;
Medicine and Health Sciences; and Information Technology. In 2009, UAEU
became the first national institution in the UAE to offer a PhD program.
Enrollment in the university has increased from 502 students during the 1978-
79 academic year to 13,075 students registered during the 2011-2012 academic
year.
UAEU’s emergence as one of the leading universities in the world is reflected
in its 2012 designation by (QS) World University rankings as one of the top 50
universities in the world that were established within the past 50 years. Moreover,
during the past 10 years, UAEU’s research faculty members have received over
AED 230 million in research funding. Specifically, research groups at UAEU
support a number of industries and companies such as Total, Global Foundries,
Mubadala and Strata. Such partnerships help these firms to grow further and
develop new products while students benefit by having access to internship
opportunities offered by these companies.
Also, the university has established a number of training programs by
collaborating with a variety of companies. For example, Mubadala Aerospace has
signed an AED 4.9 million agreement with UAEU to train Emirati technicians to
work at Strata’s aircraft composite production facility. This program will introduce
around 100 Emirati employees to Strata by early 2015.
Part of UAEU is the Emirates Center for Innovation and Entrepreneurship, which
was established in 2008. It provides training as well as mentoring and serves as
an incubator to facilitate new start-up businesses and commercialize technology
initiatives and business ideas.
Source: UAE University; Mubadala
Competitiveness Success Story
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Abu Dhabi Education Council (ADEC) — New School Model Equipping
Young Emiratis with the Tools to Build a Vibrant Knowledge Economy
The New School Model (NSM) was rolled out by ADEC initially in schools ranging
from KG1 to Grade 3 in 2010 and is planned to be implemented in all ADEC
schools by 2016. The NSM will address existing challenges in Abu Dhabi’s
public school system to drive concrete and specific improvements in education
delivery. It is a comprehensive foundation for learning that will facilitate the
delivery of desired student outcomes by improving key elements of the overall
educational experience: teaching quality, learning environment, school leadership,
and parental involvement. Within this model, a new curriculum and new teaching
methods will be introduced in order to develop creative, independent-thinking
students who are problem-solvers.
Key elements of the NSM include:
• Improving teaching quality
• Creating a student-focused learning environment
• Developing Arabic and English language abilities; improving
critical thinking, problem solving, and abstract and quantitative
reasoning skills; and applying rigorous pedagogical tools
• Standardizing the pedagogy and resources across all ADEC schools
• Improving school facilities and resources
The education reform is projected to impact more than 700 schools, 330, 000
students and 20, 000 teachers by the time that NSM is fully implemented. During
its first phase of roll out, the NSM is expected to involve 177 schools, 38,000
students and 4,000 teachers.
A central element of NSM will be a greater focus on improving the quality of
Science, Technology, Engineering and Mathematics (STEM) education and
increasing the number of students who study science-related subjects. This will
be achieved through curriculum reform, content development, and creating a path
to STEM-related higher education, employment and entrepreneurship.
Through NSM, ADEC expects that 70 per cent of students graduating from Grade
12 will not need bridge programs by 2018 in order to enter universities, whereas
currently nine out of ten students entering some of the largest federal institutions
require a bridge program.
Source: Abu Dhabi Education Council (ADEC); Abu Dhabi Government, www.abudhabi.ae; www.
khaleejtimes.com
23 22
Following Human Capital, Businesses comprise the
second driver of the Competitiveness Assessment
Framework. The strength and performance of a
regional economy is measured by the activity of its
businesses, including the environmental conditions
that enable businesses to grow and prosper.
This driver measures the entire value chain of
doing business, starting with entrepreneurship—
how advantageous and feasible it is to start a
business—to firm growth, financing, and the sale of
goods and services.
Entrepreneurship levels measure the attractiveness
of the region as a place to start a business, which is
a direct reflection of the supporting conditions such
as laws, regulations, and administrative barriers.
Once a business has been formed, firm growth
requires capital investment. Of particular interest is
business investment and capitalization, as a highly
competitive economy should not only have sufficient
liquidity, but numerous avenues by which to invest
in new business ideas. Firm growth is analyzed by
investment, financing, and venture capital activity
as well as by exports and actual revenue growth
of goods and services. Finally, the business driver
of competitiveness is evaluated by innovation, or
a business’s ability to create differentiated and
specialized goods and services. While there are large
gaps in comparable data measuring knowledge and
innovation of businesses, patent registration, R&D
activity and other intellectual property production
measure the competitiveness through the
commercialization of ideas.
Entrepreneurship
A highly competitive region is one where
entrepreneurs can capitalize on their ideas by
starting new businesses, raising capital, and
selling their goods and services in the marketplace.
Creating a ‘culture of entrepreneurship’ is an
important concept for competitive economies, as
it shows the region’s ability to remain dynamic by
meeting consumer demands with new business
offerings. An entrepreneurial society also suggests
that a region is willing to absorb a certain amount
of risk in order to heighten the chances of
producing new businesses that can transform the
competitive landscape. Because start-ups have
a relatively low success rate, the idea is that for
every handful of business failures, there will be one
stand-out product or service that will have strong
market potential. Even in Silicon Valley California—
the global leader in technology and home to the
largest number of startup companies per annum—
the business success rate for new start-ups is just
8%.
17
The goal of a highly competitive region is to
foster high levels of entrepreneurship, and support
those businesses with strong market potential to
increase the success-rate of new businesses.
BUSINESSES
Entrepreneurship has been growing in the GCC
substantially over the past decade, with the MENA
region witnessing a 28% growth in the number of
venture capital and SME deals executed in 2011
over 2010.
18
The government of Abu Dhabi has
made entrepreneurship a priority for the Emirate,
with a goal of becoming “a sustainable, diversified,
high-value added economy that encourages
enterprises and entrepreneurship.”
19
Creating
the ideal conditions for entrepreneurs has been a
challenge for the region, as reflected by business
start-up rates, which in Abu Dhabi are less than
half of what they are in Singapore. Business start-
ups and micro-enterprises can act as remedies
to help allay unemployment concerns for youths
and Nationals in the region, which is why effective
policies and initiatives for business start-ups could
have reverberations throughout the economy.
Because business start-ups are small by nature,
administrative barriers that require substantial
payments, time, and personnel disproportionately
affect new businesses. To address this issue, the
Abu Dhabi Department of Economic Development
(ADDED) has spearheaded information gathering
and cost-benefit analysis studies on impediments
to doing business in the region. They have seen
some early success such as merging inspection
procedures and waiving a waste management fee
for new businesses. Reducing additional costs and
procedures for new businesses would remove some
of the barriers prohibiting entrepreneurs from taking
their business plans to market. With the opening
of the Abu Dhabi Business Center, which will
streamline licensing and business processes, the
Emirate should see improvements in the climate for
starting and registering new businesses.
Entrepreneurship is not necessarily synonymous
with innovation, and one of the other challenges
for the region’s start-ups is providing goods and
services that are unique to the marketplace.
General retail and trade shops which are low
growth, low skilled, and low technology activities
are still the most prevalent choice among start-
ups in Abu Dhabi. While new firms benefit the
economy by increasing employment and business
activity, the priority should be encouraging
entrepreneurs in key knowledge and skilled
sectors. Supporting start-ups around clusters that
contribute to the general knowledge, technology
and innovative output should be the key emphasis
of public sector efforts in this arena.
In Al Gharbia, micro and small businesses
account for 80% of Emirati-owned SMEs, the
majority which are male-owned trade and retail
businesses (See Al Gharbia SME Chart). Improving
competitiveness at the sub-regional level will require
substantial investment in bringing high-skills,
technology, and financing into the Western Region.
Lack of access to cutting edge universities and
technology, as well as distance from the capital city
has limited the opportunities for Western Region
entrepreneurs. Low female participation in the
labor force also has ramifications for female-owned
businesses, which are roughly a quarter of total
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Abu Dhabi Norway Singapore
0
2
4
6
8
10
12
New Firm Generation – Number of New Firms Per 1,000
Population (2012)
18
MENA Private Equity Association 2012 Report
19
Abu Dhabi Economic Vision 2030
17
Deloitte U.S Research
25 24
SMEs for the region. WRDC has started a “Women
in Technology” skill-building program to address this
issue, but increased funding and targeted business
services such as incubators focusing on start-ups
in knowledge sectors or female entrepreneurship in
the Western Region are necessary to improve the
business climate in Al Gharbia.
In Al Ain, international companies make up 1%
of the total businesses, while local SMEs account
for almost 70%. Like the Western Region, most
of these small businesses operate in low-skilled
sectors such as retail and trade, with a large
percentage also in the construction industry.
This suggests a huge potential for increased
entrepreneurial activity in the Eastern Region,
particularly given the strong numbers of university
graduates as well as the high unemployment rate
for the region. More robust programs to encourage
graduates in Al Ain to start businesses in key
knowledge sectors could impact the region’s
competitive landscape substantially.
One way of driving entrepreneurship in priority
sectors and regions is to provide incentives for
global entrepreneurs to start their businesses in the
Emirate. By offering a fast-track visa, seed capital,
and business support services to entrepreneurs in
specific fields, Abu Dhabi can promote the growth
and cluster development of key sectors. Providing
support services to entrepreneurs at all stages of
the business value chain can also improve the
sophistication and success-rate of new businesses.
Business incubators provide an ideal environment
for both local and global entrepreneurs, as they
facilitate all start-up activities and promote the
growth and capitalization of new ideas.
Source: WRDC database of active National
entrepreneurs in Al Gharbia (input from
TAMM, DED licensing databases); total
number ~280,
The Competitiveness Assessment
Framework for Abu Dhabi and its Sub-Regions — Business
Micro and Small
Businesses
Medium
Businesses
Female
Owned SMEs
Male
Owned SMEs
Services
Trade and Retail
Contracting
Transportation
Manufacturing
Mixed Businesses
Oil and Gas Services
Other
81%
19%
78%
22%
Active National Entrepreneurs In Al Gharbia
Al Gharbia SME’s by Sector
Al Gharbia SMEs by Gender
The Global Entrepreneur Program is offered by UK
Trade & Investment, a government department
that helps UK-based companies succeed in the
global economy and assists overseas companies to
invest in the UK. The GEP mission is to attract the
world’s best sustainable, early-stage companies and
entrepreneurs to set up their global headquarters in
the UK.
The GEP program is aimed at overseas based
entrepreneurs and early stage businesses that are
considering relocating their business to the UK.
Sample Services
• Provides an “entrepreneurs visa” for individuals
looking to come to the UK to set up their business
• Connects entrepreneurs with investors,
human resources and strategic partners
• Extended period for business registration
Sample Program
Springboard is a mentorship-led accelerator program
for start-ups, providing seed capital, office space and a
“smart-community” with mentors and other entrepreneurs.
It is an intensive 13 week program based at Google
Campus in London and ideaSpace in Cambridge.
Impact
The program has helped over 200 entrepreneurs and early
stage companies to establish in the UK since 2009 and
it has raised over US$200 million worth of investment
capital.
Source: www.ukti.gov.uk
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Mining and Quarrying
Education
Information and
communication
Insurance and
financial services
Real estate
Professional activities
(scientific & technical)
Hospitality and food
Light Manufacturing
Other
Construction
Wholesale and
retail trade
Education
Information and
communication
Insurance and
financial services
Mining and Quarrying
Real estate
Hospitality and food
Professional activities
(scientific & technical)
Light Manufacturing
Other
Wholesale and
retail trade
Construction
Education
Information and
communication
Mining and Quarrying
Light Manufacturing
Hospitality and food
Real estate
Insurance and
financial services
Professional activities
(scientific & technical)
Other
Construction
Wholesale and
retail trade
Business Licenses by Sector: Al Ain (2012)
Business Licenses by Sector: Abu Dhabi City (2012)
Business Licenses by Sector: Al Gharbia (2012)
Sources: Abu Dhabi Department of Economic Development, 2012
27 26
Firm Growth:
Abu Dhabi has made concerted efforts over the
past decade to improve the climate for businesses,
and has identified Small to Medium Enterprises
(SMEs) as one of the engines for economic growth.
Of the 300,000 enterprises in the UAE, 94% are
SMEs, and these businesses contribute 60% to
GDP and 84% to employment.
20
This presents
an opportunity to increase the economic output of
these businesses, where the public sector has a
significant role to play in shaping the environment
in which they operate. Improving competitiveness
at the firm level requires attention to how small
businesses receive financing and connect with
other businesses and customers.
The first step of supporting growth for small
businesses in Abu Dhabi is improving access to
finance. Currently, most lending activity comes
from the public sector, as local banks and private
investors are hesitant to take on significant
risk from small businesses. In response to the
need for additional business financing, the Abu
Dhabi government launched the Khalifa Fund for
Enterprise Development in 2007, which consists
of a 2 billion AED fund with the aim “To fuel
an entrepreneurial culture, drive innovation and
sustainable growth of Emirati SMEs that contribute
to the social and economic development of
Abu Dhabi, by providing access to services and
financing, and by facilitating an SME-friendly
environment”
21
. Lending to small businesses is not
exclusive to the Khalifa Fund, and small firms in
specific sectors such as media and technology can
also take advantage of lending programs through
Economic Free Zones.
Direct public sector loans to SME’s can allow firms
to invest in adequate human and physical capital
and help them increase their reach outside their
locale. But the public sector can also encourage the
private sector to take on a larger role in business
financing by reducing risks to lenders and hence
encouraging greater levels of financial investment.
Bank loans, private equity buy-outs, venture capital
activity and private sector angel investors are still
low in the region, which means there are still
questions about the risk profile and perceived return
on investment for small businesses in Abu Dhabi.
Benchmark Case Study:
Financial Accounting for Small Businesses in the EU
The 2008 Small Business Act for Europe recognizes the
central role of SME’s in the EU economy and puts into
place a comprehensive SME policy framework for the
EU. Part of this new initiative was ensuring that SME’s
have the capacity to comply with international financial
reporting standards.
The initiative had three components:
Accounting guide for SME’s
The ‘Accounting guide for SME’s’ contributes to
the development of good accounting practices for
European SME’s which are subject to an unnecessary
high administrative burden at a national level. It also
provides stakeholders with information about current
good accounting practices in Europe. This is particularly
beneficial to European SME’s which are not covered by
harmonized EU accounting rules.
Study on accounting requirements for SME’s
The study provided recommendations on possible future
accounting requirements for SMEs such as complying
with the International Accounting Standards (IAS) and
International Financial Reporting Standards (IFRS) which
were adopted by the EU in 2002.
Accounting for small enterprises - Recommendations and
good practices
This study provided recommendations and practices for
how governments can assist SME’s to produce financial
records
Benefits of the Small Business Act:
• Facilitates SMEs’ access to funding
• Adapts public policy tools to SME needs
• Creates an entrepreneurial environment
Source: European Commission
The Competitiveness Assessment
Framework for Abu Dhabi and its Sub-Regions — Business
One explanation for this is the lack of financial
transparency and accounting information for small
businesses. Because Abu Dhabi does not tax
corporations, private businesses are not required
to keep financial records or go through a regular
auditing cycle. Hiring accountants to produce
financial records can be expensive and time
consuming for SMEs, so they are much more likely
to have gaps in financial information.
This has numerous ramifications for firm growth,
as banks are less likely to lend to small businesses
with no financial records, as is the same for other
potential investors, joint venture partners, private
equity and venture capital firms, and export
partners. Capacity building and policy support
around financial transparency is necessary to
improve the outlook for small businesses to receive
private sector financing.
The venture capital appetite in the Emirate is still
modest, partially due to the level of post-investment
services needed after initial capital investments
22
.
Similarly, private equity spending is low compared
with international benchmarks, albeit higher than
other GCC regions. By funding post-investment
services through government sponsored business
incubators, the public sector can work with private
Benchmark Case Study:
Venture Capital Funds in Singapore
The Singapore government has been encouraging venture
capital investments and activities since the 1990s. It has
rolled out several initiatives to enable start-ups to gain
access to funding. These funding initiatives include cash
grants, government backed equity financing schemes,
business incubator schemes, debt financing schemes, and
tax incentives:
Government-aided equity financing schemes (Business
Angels Fund (BAF) Scheme)
The Business Angels Fund (BAF) Scheme is an equity
investment scheme where SPRING SEEDS Capital, a
subsidiary of government agency SPRING Singapore,
co-invests in growth-oriented, innovative Singapore-
based start-ups along with pre-approved business angels
matching dollar-for-dollar up to a maximum of S$1.5
million
Cash grants (ACE Start-ups Scheme):
ACE Start-ups Scheme is a financial assistance scheme
where ACE (Action Community for Entrepreneurship) will
match S$7 to every S$3 raised by an entrepreneur for up
to S$50,000
Business incubator schemes (Incubator Development
Program):
The Incubator Development Program that is administered
by SPRING Singapore provides up-to 70% grant support to
incubators and venture accelerators who actively introduce
programs that help nurture start-ups, hire incubator
managers, train staff and provide shared services/
equipment for start-ups
Debt financing schemes (Micro-Loan Program):
Participating banks and financial institutions will lend
eligible Singaporean companies loans of up-to S$100,000
for their daily operations or for automating and upgrading
factory and equipment
Source: Singapore Government
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Singapore Norway Alberta,
Canada
Abu Dhabi
0
100
200
300
400
500
600
700
Per Capita Private Equity Investment (2011) (USD)
20
SME – UAE Magazine-Abu Dhabi Commercial Bank (ADCB)
21
Khalifa Fund- http://www.khalifafund.gov.ae/En/AboutUs/Pages/Overview.aspx
22
IKED 2010 Report: Towards Innovation Policy in Abu Dhabi: Indicators, Benchmarking, and Natural Resource Rich Economies
29 28
Innovation
Knowledge-based economies are distinguished
by their ability to commercialize innovative
ideas, products and service offerings. Firm-level
innovation impacts a region’s competitiveness
as it allows the economy to compete in a global
marketplace through ideas as opposed to low labor
costs or natural resources alone. Innovation varies
greatly between industries and regions, and thus is
difficult to measure categorically, but the research
and development activities of firms and academic
institutions are useful indicators. Likewise, patent
production and intellectual property trends indicate
the region’s emphasis on protecting the value of
new ideas and products. Business innovation
often comes in the form of service or product
improvements rather than breakthroughs, so one
means of looking at a region’s innovative capacity is
the use of advanced technology as well.
Abu Dhabi has made substantial investments in
improving its innovative capacity, particularly in the
field of Science, Technology and Information (STI).
Through the Technology Development Committee
(TDC), the public sector has channeled funds into
improving the Emirate’s technological and innovative
capacity. The Takamul program helps in raising
awareness of protecting intellectual property, patent
applications and filing, which are low in the region
compared to international benchmarks. In Alberta
and Norway, businesses have leveraged the region’s
natural resource advantages and filed patents for
innovations in oil and gas extraction. According to
NIPO and Capital IQ, in 2012 ExxonMobil filed 749
patents in Norway, while Statoil filed 677
24
. Abu
Dhabi should use its expertise and knowledge in
natural resources as a starting point for increased
patent production, and then broaden to other
industries where it has specific expertise.
One means of improving patent production and
supporting innovation in Abu Dhabi is to increase
the number of doctoral programs and labs in the
region, and cluster them with local industries to
promote industry innovation.
Ensuring that international businesses bring
technology and innovation to the region is also
important for local firms that work throughout their
supply chain. The Emirate has strengthened its
intellectual property laws to incentivize businesses
with sensitive intellectual content to do business in
the region, and patent, trademark and copyright laws
were updated in 2002 to protect intellectual property.
firms on encouraging SME lending. These services
should include capacity building and financial
advisory as well as regular operational expertise.
There are ample opportunities in Abu Dhabi and
the GCC region for the government to work with
the private sector to encourage the provision of
private sector funding mechanisms. According to
the World Bank, “SME bank lending in the MENA
accounts for less than 8% of total lending. In the
Gulf Cooperation Council (GCC) states, it is dismally
low at 2%. Lack of access to capital is often cited
as one of the key constraints to the scaling up of
SMEs in the region. Yet, this gap also represents an
opportunity for private equity and venture capital
firms to provide the financial and strategic support
that such firms need”
23
. Developing specific private
equity and venture capital funds for Abu Dhabi’s
three regions would improve the overall SME
financing landscape.
Lastly, firm growth is closely associated with
the business environment and infrastructure of
a region. Abu Dhabi has focused on providing
Economic Free Zones and establishing business
clusters to help foster industry linkages between
companies operating in the region. Twofour54
and KIZAD are examples of free zones that work
to attract the best and brightest companies in
their various sectors. The zone tenants range from
internationally established companies to start-ups,
where the smaller firms have access to mentoring
and support services. Zones provide numerous
services for smaller companies, but only a fraction
of total small businesses can reap the benefits of
economic zones due to their highly selective nature.
Connecting small businesses with adjacent
companies in their sector or value chain can help
improve firm growth by overcoming information
barriers. Industry linkages and clusters should not
be exclusive to Economic Free Zones, and ADDED
has started to address this issue by providing
industry linkage and market intelligence services to
select companies, and has recently announced the
establishment of an Export Promotion Agency to
facilitate in this field. Developing detailed industry,
sector and regional cluster maps to businesses can
break down some of the information barriers that
prevent industry linkages as well.
The Competitiveness Assessment
Framework for Abu Dhabi and its Sub-Regions — Business
Improvement areas
In order to improve the business climate in
the region, Abu Dhabi needs to increase the
availability and sophistication of support services
and development incentives for businesses.
This includes ensuring that lack of financing or
information barriers do not prohibit entrepreneurs
and good ideas from going to market. While the
public sector has committed funds to increasing
finance, further development could come in public
private partnerships, where the public sector can
fund initiatives operated by the private sector.
This should especially be utilized in business
training and capacity building, incubator services,
investment and venture capital funds, and IP
funding—which are all arenas where private sector
dynamism and expertise can be best utilized by
local companies.
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Singapore Norway Alberta,
Canada
Abu Dhabi
0
100
200
300
400
500
600
Number of Patents Registered Per 1 Million
Population (2009)
Rank Country Petroleum
Engineering
Geophysics Petroleum
Geology
Total
1 United States 56 240 31 327
2 Japan 8 51 1 60
3 Netherlands 2 31 1 34
4 United Kingdom 2 25 0 27
5 Germany 1 21 1 23
6 France 0 19 2 21
7 Canada 1 14 4 19
8 Italy 1 6 0 7
9 Norway 0 4 0 4
10 Australia 0 3 0 3
10 Russia 0 3 0 3
10 Ukraine 0 3 0 3
13 Brazil 0 2 0 2
13 China 0 2 0 2
Oil and Gas Patents (2002-2006)
25
23
MENA Private Equity Association 2012 Report
24
Harvard Business School, Microeconomics of Competitiveness, Norway: Oil and Gas cluster: A Story of Achieving Success
Through Supplier Development, 2012
25
Kingdom of Saudi Arabia Ministry of Economy and Planning, Strategic Priorities for Oil and Gas Technology Program
31 30
Business Incubators
Business Incubators help small companies
and entrepreneurs with the potential to offer
differentiated and specialized products and
services succeed in the marketplace. The business
incubator is set up to assist with every aspect of
business services and offer the entire value-chain of
support for its tenants.
An incubator should house numerous businesses
services available under one roof and set the
conditions for potential growth. Once the culture
of business incubators is adopted in the Emirate,
specialized and sophisticated incubators can
emerge around priority industries and specific
services such as technology adoption.
The public sector should work in tandem with
industry leaders and economic zones to promulgate
the use of incubators throughout the Emirate and
its three regions. Rather than establishing wholesale
public sector incubators that act as funding units,
which might detract from the dynamism of private
sector business service offerings, one option
could be for the public sector to design and fund
incubators, but turn them to the private sector
to operate. This would allow the public sector to
drive the initiative while the private sector ensures
market-driven achievements.
Benchmark Case Study: Technology Incubation
Scheme in Singapore
The Technology Incubation Scheme (TIS) is part of the
National Framework for Innovation & Enterprise (NFIE),
which was developed in 2008 with a $360 million budget
to advance R&D-based innovation in Singapore. Through
this scheme the Singapore government co-invests together
with incubators in Singapore-based high-tech startups to
support an innovative and an entrepreneurial economy.
Under the TIS, the National Research Foundation (NRF)
offers up-to 85% co-funding in each start-up company
in the incubator, up to a maximum of S$500,000. The
incubator is required to invest the remaining amount of at
least 15%. NRF and the incubator will take equity stakes
in the company in proportion to their investments. It
also provides start-ups with management guidance and
mentorship.
Impact
• 31 start-ups have benefited from seven investors
or technology incubators since 2009
• Incubators include successful Plug and Play
Accelerator from Silicon Valley and incubators
set up by internet entrepreneurs
Source: www.nrf.gov.sg
Facilitating business start-ups Access to angel investors or venture capital
Networking and industry linkages Comprehensive business training programs
Marketing and branding support Providing advisory boards and mentors
Accounting and financial management support Management team identification
Access to finance such as bank loans,
loan funds and guarantee programs
Acquiring, incorporating and maximizing technology
Help with business plan writing presentation skills Commercialization assistance
Higher education linkages and resources Help with regulatory compliance
Links to strategic partners Intellectual property management and patent filing
Access to industry information and expertise Attainment of necessary licenses and certificates
Export promotion and international industry linkages Providing office space and facilities
The Competitiveness Assessment
Framework for Abu Dhabi and its Sub-Regions — Business
Incubator services can include:
Financial Accounting Capacity Building
Transparency of financial accounts at the firm level
is essential for bank loans, joint ventures, private
equity and other investment, and for Abu Dhabi’s
firms to do business with other firms internationally.
To improve the current competitive landscape for
start-ups and SME’s, Abu Dhabi should encourage
accounting capacity building for small businesses,
to eventually move toward International Financial
Reporting Standards. The public sector should
continue supporting training and capacity building
in this field and enforce regular auditing.
Three mechanisms for capacity building are:
• Providing assistance and training to businesses
on accounting and financial record-keeping
• Supporting and enforcing a transition
to adherence of International
Financial Reporting Standards
• Working with banks to increase available finance
for companies who report financial results or
maintain a regular audit cycle. Mechanisms
include small firm loan guarantee schemes.
International Entrepreneurs Program
To grow the culture of entrepreneurship, Abu Dhabi
needs to cultivate and foster both local and global
entrepreneurs. This program would be aimed at
attracting entrepreneurs in target industries and
sectors to come establish operations in Abu Dhabi.
The program would seek and identify entrepreneurs
from around the world in knowledge industries, and
provide them with services such as:
• Expedited “entrepreneurs visa”;
• Services providing potential partners and clients;
• Extended period for business registration;
• Incubator services: seed capital, office
space and university support and access
Benchmark Case Study: Finance for Business North
East program
A £125m holding fund with investments from the European
Investment Bank, European Regional Development Fund
and One North East (ONE).
• A VC fund established with UK Government support
• Managed by six different fund management companies
which range from not-for-profit to intellectual
property commercialization organizations
• The funds are targeted at start-ups and growing
companies across sectors and stages of development.
• Proof of Concept Fund- the £15 million fund helps
companies at seed stage in the technology sector
and is managed by Northstar Ventures (a UK based
venture capital firm with £80m under management)
• Technology Fund - the £25 million fund supports
technology firms at any stage of their development
and is managed by IP Group (one of the UK’s leading
intellectual property commercialization companies)
• Accelerator Fund - the £20 million fund invests
in high growth early stage businesses and
is managed by Northstar Ventures
• Growth Fund- the £20 million fund assists
mature companies and is managed by NEL Fund
Managers (an independent fund manager)
• Growth Plus Fund - the £20 million fund targets
businesses looking for development and growth funding
and is managed by FW Capital (a fund management
company part of the Finance Wales Group, the
largest investment group of its type in the UK)
• Angel Fund- the £7.5 million fund invests in start-ups and
existing businesses with growth potential and is managed
by Rivers Capital Partners (an independent fund manager)
• Microloan Fund - the £5 million fund supports
the creation of new enterprises and the growth
of existing micro and small businesses and is
managed by Entrust (a not-for-profit organization)
Sources: www.northeastfinance.org; The North East
Business and Innovation Centre: Growth Finance Still
Available For North East SMEs, 2013
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
33 32
Abu Dhabi Venture Capital Fund
Venture Capital funds have recently been
introduced into the region, with Khalifa Fund
spearheading a number of SME financing
programs, but there is no Abu-Dhabi specific
venture capital firm/fund that is managed by the
private sector and focused solely on the Emirate.
Public-private partnership Venture Capital funds can
be set up to invest in priority sectors in the three
regions, with large funds going specifically to Al Ain
and Al Gharbia. The funds would be designed, built
and capitalized by the public sector, and managed
and operated by seasoned finance professionals
in the private sector. Investments must be made
on a commercial basis, where the business has
promising growth potential. These funds should
align with the efforts of business incubators in the
region.
The goal of an Abu Dhabi Venture Capital fund is to
drive funds efficiently into target sectors (currently
real estate is the primary market for investment),
and into businesses operating in the sub-regions
of Abu Dhabi. This should improve the new firm
generation rate as well as firm growth.
Doing Business Assessments
The public sector has taken numerous steps to
reduce administrative barriers and support the
private sector throughout the Emirate, but there
are still notable challenges that remain around
administrative costs and procedures. ADDED
should continue to reduce these bottlenecks by
evaluating the impact of administrative barriers on
businesses, including: registration and licensing
procedures (time and complexity); hiring and
mobilizing labor; receiving finance and loans; and
connecting with other businesses and industries
through support service programs or cluster
development initiatives. Particular focus should be
paid on the disparity of doing business between the
three regions.
Improvements should include
• Eliminating unnecessary or unessential fees;
Combining or streamlining fees to reduce separate
payments; Reducing fees that are onerous to
new businesses; Ensuring a valid businesses
case justifying the need for existing fees
• Streamlining or eliminating unnecessary
procedures; Reducing the turnaround
time for procedures; Reducing the
complexity of procedures
• Guiding businesses through all
business procedures including permits,
contracts, licenses and adherence
The final result will be a restructuring of business
processes in order to increase competitiveness
where needed.
The Competitiveness Assessment
Framework for Abu Dhabi and its Sub-Regions — Business
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
35 34
twofour54 — Creating a Support Ecosystem for Emerging
Entrepreneurs in the Media Industry
twofour54 — also known as the Abu Dhabi Media Zone Authority – is an initiative
by the Abu Dhabi Government to support the development of world-class Arabic
media and entertainment content, and to position Abu Dhabi as a regional center
of excellence in content creation across a range of media platforms including
broadcast, film, music, digital media, gaming and publishing.
The business philosophy of twofour54 is the creation of a nurturing ecosystem
that provides the tools, infrastructure and support to promising companies and
organizations in the Arab world to create high quality content. To achieve this,
twofour54 has developed three key business pillars and a supporting business
enabler.
Business Pillars
• tadreeb (the training academy) - Supporting young talent to
become successful via collaboration with leading international media
companies to provide courses for media professionals as well as
college graduates with majors in media-related subjects.
• ibtikar (innovation and support) - A creative lab facility that
supports Arabic content development and media initiatives.
• intaj (state-of-the-art production facilities) - Provides modern production
facilities including studios, equipment and technical support for
television and film production, along with post-production.
Business Enabler
• tawasol (one stop-shop). Provides a number of support services
related to business start-ups including government services;
customs clearance; flight arrangements and others.
Currently, there are approximately 160 companies based at twofour54 including
CNN, the Financial times and Sky News Arabia. Also, all training offered at
the training academy is vocational helping trainees to develop practical skills
and apply them in the workplace. To date, twofour54 has trained over 3,000
delegates.
The twofour54 model has emerged as an important local benchmark for a
business incubator and the lessons learned to date have direct relevance for
future business incubators that may be developed for other priority sectors in the
Emirate.
Source: twofour54; TheNational
Competitiveness Success Story
The Competitiveness Assessment
Framework for Abu Dhabi and its Sub-Regions — Business
Lessons for Abu Dhabi and the UAE
International leading practice has identified a number of policies successfully
implemented by countries to improve access to finance for SMEs. Based on the
key challenges identified in the UAE context, these policies are directly relevant to
Abu Dhabi Emirate and the UAE. Examples include:
• Reforming the legal and regulatory environment. Illustrative examples include
simplifying business start-up requirements and accounting procedures.
• Identifying policy interventions for the SME finance sector as a whole. Demand-
side interventions (SMEs) include capacity building programs in areas
such as financial management and accounting. Supply-side interventions
(banks) include creation of collateral registries and credit bureaus.
• Direct government intervention in the SME finance sector to support increased
SME lending. Although there is no consensus on the scope of government
involvement in the SME finance sector, a number of governments provide loan
guarantees and directed credit in an effort to stimulate the SME sector.
The following table summarizes some of the most important interventions by
governments to improve access to finance for SMEs.
Establish a sound policy
framework for the financial
sector
Strengthen the
institutional
infrastructure
Build the information
infrastructure
• Liberalize interest rates
• Promote competition
• Promulgate supportive
regulations regarding
SME banking, leasing,
factoring and equity
• Reduce and rationalize
direct public sector
intervention
• Improve the legal and
judicial frameworks
• Support relevant
training and technical
assistance for
interested financial
institutions
• Provide or facilitate
initial financial
support (equity
infusion, product
development,
risk mitigation
methodologies)
• Promote accounting
standards
• Invest in and
promote credit
bureaus and
registries
• Invest in technology
Evaluate performance and incorporate lessons learned
Sources:
Beck, Demirguc-Kunt and Martinez Pereira, Bank Financing for SMEs Around the World: Drivers,
Obstacles, Business Models and Lending Practices. Washington, DC World Bank, 2008 – cited in IFC SME
Banking Knowledge Guide
Malhotra, Chen et al., Expanding Access to Finance: Good Practices and Policies for Micro, Small and
Medium Enterprises. World Bank, August 2006
Key Success Factors for Increasing Access to Finance for SMEs
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
37 36
Along with Human Capital and Businesses,
the third driver of competitiveness is Economic
Structure. This driver shows an aggregate view
of the economic activity of a region, taking into
consideration the diversification of sectors as well
as the geographic location of investment and
business activity. Economic Structure reflects the
contribution of various sectors to the economy’s
GDP, as well as labor productivity, employment,
and wages at the sector level. More importantly,
the attractiveness of an economy can be measured
by the levels of foreign investment into these
sectors, as this indicates which industries have a
comparative advantage in Abu Dhabi over other
regions. Economic Structure also covers the flows
of economic activity into geographical regions,
mainly comparing the development of sub-regions
as competitive locations relative to the capital
city. The structure of an economy gives a longer-
term outlook on competitiveness, measuring the
sustainability of the region and its ability to generate
wealth and maintain or grow standards of living.
Diversification
Abu Dhabi’s economic structure has been marked
by a heavy reliance on oil and gas to generate
wealth for the region. This issue is at the forefront
of the government’s agenda, as it has stipulated
diversification of the economy as one of the three
crucial priorities looking into 2030. Long-term
sustainable diversification will require expanding
the private sector, and particularly growing the
economic output and contribution of key industries
within the Emirate. The presence of hydrocarbons
has allowed Abu Dhabi to make significant
infrastructural investments and large-scale
improvements to competitiveness over the past
decade. The government has devoted its resources
to building a world-class sea port, airport, and
communications network as well as commercial,
industrial, and residential real estate developments.
Like other resource-abundant regions in the GCC,
heavy investment in infrastructure and industry
projects has allowed the Emirate to attract laborers,
ECONOMIC STRUCTURE
“A sustainable economy will be built primarily through diversification,
which is proven to reduce the volatility of economic growth.
Diversification means not only broadening the number of economic
sectors taking part in economic activity, but also enlarging the
enterprise base, encouraging entrepreneurs, small businesses and
Foreign Direct Investment (FDI), as well as developing National
Champion enterprises to act as economic anchors.”
Abu Dhabi Economic Vision 2030
businesses and investors into its economy in just
a few decades. But to meet the Emirate’s goals of
transitioning from a resource-based to a knowledge-
based economy, diversifying into high skill high
value-added sectors remains the biggest challenge.
Currently Abu Dhabi boasts one of the strongest
GDP per capita rates in the world, and Emirati
nationals enjoy high standards of living relative to
benchmark and global regions. But once GDP is
controlled for oil and gas contribution, the remaining
sectors combined amount to roughly 40% of
the economy, which heightens the importance
of diversification for the Emirate. Growing the
non-oil sectors of the economy—particularly
the high-skilled goods and services provided
by the private sector—is essential for long-term
sustainability as Abu Dhabi plans for a future less
dependent on hydrocarbons. This circumstance
is further heightened in Al Gharbia, where oil and
gas account for 90% of the region’s GDP. While
continuous investment and development of the oil
and gas sector is necessary so that it remains a
long-term source of wealth for the region, upstream
products are less labor intensive and cannot provide
employment opportunities for the next generation of
jobseekers in the Emirate.
The current economic structure is such that most
GDP contribution comes from sectors more prone
to volatility, which also do not provide high levels
of employment. Currently the public sector and
retail and trade service sectors employ the most
nationals, while construction and low-skilled
activities employ a majority of foreign laborers.
These sectors are not high-contributors to GDP
relative to employment, and do not represent high
potential for exports or value-added goods and
services. Alternatively, the oil and gas sector is
the top contributor to GDP at 60%, but employs
less than 15% of the population. Diversifying the
economy will entail moving into sectors that provide
robust contribution to GDP, high value-add, as well
as employment opportunities for Nationals. Abu
Dhabi is well positioned to use its natural resource
advantages to fuel adjacent industries which have
higher value-added output per worker input.
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Total GDP Inclusive of Oil & Gas Sector Total GDP Exlusive of Oil & Gas Sector
Total GDP Mining, oil and gas
Norway Alberta, Canada Singapore Abu Dhabi
0
50
100
150
200
250
300
350
400
450
GDP Inclusive and Exclusive of Oil & Gas Sectors (2011)
(US$ Billions)
Oil, gas and oil
products exports
Non-oil exports
97%
3%
Abu Dhabi Exports, Oil vs Non-Oil (2011)
Norway Alberta, Canada Singapore Abu Dhabi
0
50
100
150
200
250
300
350
400
450
Oil & Gas Contribution to GDP (2011) (US$ Billions)
Source: SCADStatistical Yearbook 2012
39 38
The Competitiveness Assessment
Framework for Abu Dhabi and its Sub-Regions — Economic Structure
Manufacturing
One of the target industries for diversification is
high-tech manufacturing, mainly in the downstream
chemicals and petrochemicals sector. Currently
manufacturing only accounts for 5% of Abu Dhabi’s
economy, which is low for a resource-abundant
and well capitalized region. Of this percentage,
however, nearly half of Abu Dhabi’s manufacturing
is in high-tech industry, which has promising
implications for expanding the base into specialized
manufactured goods. Abu Dhabi’s natural advantage
in manufacturing is in the petrochemicals sector,
where it can benefit from local feedstock over Asian
countries which rely on imports. Chemicals and
plastics account for nearly 40% of the value added
output in Abu Dhabi’s manufacturing sector, which
means that after inputs and intermediate goods are
subtracted, chemicals contribute the most per unit of
any manufacturing activity. Playing to its competitive
advantage in chemicals will provide Abu Dhabi with a
strong industrial base, increased exports and high-
skilled jobs.
Currently, Abu Dhabi’s chemicals sector contributes
nearly 60% to manufacturing output, and employs
hundreds of Emiratis in high skilled jobs.
26
The
petrochemicals industry alone accounts for about
2% of the industrial workforce in the whole of
UAE, with job creation growing double digits
throughout the GCC.
27
As production moves
further downstream into plastics and specialized
petrochemicals, production becomes more labor
intensive and requires more high-skilled workers.
Providing high-skilled manufacturing jobs for
Emirati’s is a priority of the government, so ensuring
adequate education and training in this sector
is necessary for structural improvements in the
economy.
One of the key successes of Abu Dhabi’s
diversification efforts has been the establishment
and development of Economic Free Zones (or
Oil and Gas Knowledge
Services
Manufacturing Other
Services
Other
Production
0
20
40
60
80
Abu Dhabi’s GDP and Employment Shares (2011) (%)
GDP Employment
* Data is from 2011 for Norway, Abu Dhabi, Singapore, and 2010 for Alberta
Abu Dhabi Norway Alberta, Canada Singapore
Manufacturing Share of GDP (%)
*
0
5
10
15
20
25
Chemicals and plastics and related
products
Structural metal products except
machinery and equipment
Non-metallic mineral products (except oil)
Repair and installation of
machinery,equipment and other
manufacturing
Machinery, equipment and devices
Food, beverages and tobacco
Manufacture of basic metal
Textiles, garments and leather products
Wood and wood products
Furniture
Paper, printing, publishing and
reproduction media
Abu Dhabi Value Added of Manufacturing Activity (2010)
Source: SCADStatistical
Yearbook 2012
Source: SCADStatistical Yearbook 2012
Special Economic Zones) which offer dedicated
support services and favorable regulations to the
clusters and industrial cities within their premise.
There are currently four zones in Abu Dhabi
which have clustered adjacent industrial activities
such as manufacturing, agricultural processing,
chemicals, construction materials, technology, and
environmental industries. In order to attract larger
investments to Al-Ain, Zones Corp has established
the Al-Ain Industrial City which promotes
manufacturing production and industry linkages in
the region.
28
As Abu Dhabi develops its strategic sectors,
enhancing cluster infrastructure is necessary to
encourage business and industry collaboration.
Clusters are important for industrial development
as they can connect companies to one another
as well as to government agencies, research and
institutions, universities and other resources. Firms
operating in clusters tend to be more productive,
highly innovative and well-paying in comparison
to their peers that are more geographically
isolated with fewer linkages to other firms. Cluster
development constitutes a centerpiece of Abu
Dhabi’s long-term economic development strategy.
Foreign Direct Investment
One indicator of competitiveness at the sector
level is foreign direct investment flows into the
region from abroad. A sector’s ability to attract
strong levels of foreign investment bodes well for
its long-term sustainability, as it signals perceptions
about the growth potential and dynamism of the
industries within it. Increasing foreign investment
into long-term strategic sectors that are less volatile
than hydrocarbons and real estate is a top priority
for the Emirate. As a transitioning economy, Abu
Dhabi has been able to attract strong levels of
foreign investment. A large percentage (over $4b)
of this investment in Abu Dhabi is in the real estate
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Benchmark Case Study: Attraction of Foreign
Investment in Singapore
Foreign Direct Investment (FDI) in Singapore rose by 4.9%
from $620.3 billion in 2010 to $650.9 billion in 2011.
Positive factors which help Singapore attract foreign
investment include:
• Singapore’s Global Investors Program (GIP): This is
a program for high net worth individuals who need to
invest at least USD 2 million to get qualified under this
scheme. Under the GIP, investors are given priority status
and can obtain Permanent Residency. Also, investors
have different options for investing into industries such
as biomedical sciences, clean energy and media
• Double Taxation Avoidance Agreements: Companies
benefit from Singapore’s network of over 50
comprehensive Double Taxation Avoidance Agreements
• Existence of free trade agreements: Singapore has
entered into 35 Investment Guarantee Agreements
• Singapore incorporation: It can be achieved in 24 hours
• Favorable taxation for foreign investors: Low corporate
and personal income tax rates and lack of capital
gains tax, dividend tax and inheritance tax
Singapore provides extensive incentives to promote
investment in priority sectors.
These incentives include:
• Up to 200% super deduction for major investments
• Graduate incentives by region, with higher incentives
allowed in regions, which have the highest unemployment
• Free or low cost of land and infrastructure development
both within and outside of development zones
Sources: Contact Singapore: Global Investor Program;
Singapore Economic Development Board; Deloitte
Research Analysis; Department of Statistics Singapore
26
Borouge Petrochemical manufacturer currently employs 650 nationals Abu Dhabi has plans to expand this number in the coming two
years , Source:http://www.thenational.ae/thenationalconversation/industry-insights/energy/petrochemical-expansion-to-fuel-quality-
jobs-for-the-uae
27
Gulf Petrochemicals and Chemical Association
28
Zones Corp the Higher Corporation for Specialized Economic Zones in Abu Dhabi
http://www.zonescorp.com/En/Zones/default.aspx
41 40
sector, which still highlights the dominance of
physical capital and infrastructure spending in the
region. While the real estate sector has seen strong
growth over the past five years, it is a far more
volatile sector than high-tech manufacturing or
professional services.
The Competitiveness Assessment
Framework for Abu Dhabi and its Sub-Regions — Economic Structure
Alberta,
Canada
Norway Abu Dhabi Singapore
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Per Capita Foreign Direct Investment
(2009) (USD)
Real estate
Finance and insurance
Utilities
Manufacturing
Mining, oil and gas
Construction
Information & communication
Transportation & warehousing
Wholesale trade
Healthcare & social assistance
Education services
Accomodation & food services
0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000
Abu Dhabi FDI Flows (2009) (USD Millions)
Source: SCADStatistical Yearbook 2012
investment in oil and gas extraction, the public
sector only accounts for 10%
31
of total fixed
capital formation. This is due to the large amounts
of private sector investment into new assets by
businesses in these mature economies. Ideally, Abu
Dhabi’s efforts to grow and enhance the private
sector will decrease the dependency on public
sector funds to propel economic investment in key
sectors.
Abu Dhabi’s Department of Economic Development
has published a series of new initiatives aimed
at bolstering the private sector, with the goals of
raising the contribution of the non-oil sector from
the 2005 level of 40% of the Abu Dhabi economy
to 64% by 2030. This includes increasing
government procurement contracts to the private
sector by 10% and establishing an Export
Promotion Agency.
Overview of Select Sectors
Currently, mining and quarrying and construction
account for more than two thirds of Abu Dhabi’s
economy. In order to encourage diversification,
the government has identified 12 strategic sectors
in which to target future investment, which
include tourism, healthcare, education, financial
services and telecom services. Expanding the
role of these strategic sectors in the economy
will require comprehensive support services for
foreign investors. Neighboring Gulf regions have
attracted strong investment through lease and
utility incentives and other support services such as
one-stop investment promotion shops. In order to
drive investment into its target sectors and reduce
the prevalence of construction and other low
value-added sectors, Abu Dhabi needs to consider
a robust offering of support services to investors.
Below is an overview of the performance of some
of Abu Dhabi’s target sectors:
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Mining and quarrying (includes crude oil and natural gas)
Public administration and defence; compulsory social security
Manufacturing
Electricity, gas, and water supply; waste management
Real estate
Transportation and storage
Construction
Financial and insurance
Administrative and support services
Wholesale and retail trade; repair of motor vehicles and
motorcycles
Accommodation and food services
Information and communication
Education
Professional, scientific and technical
Human health and social work
Activities of households as employers
0 10,000 20,000 30,000 40,000 60,000
Gross Fixed Capital Formation by Economic Activity (2011) (Million AED)
50,000
Source: SCADStatistical Yearbook 2012
Another relevant measure for Abu Dhabi’s industries
is gross fixed capital formation. Gross fixed capital
formation measures how much new value added
into a sector is invested rather than consumed.
This includes acquisitions of new fixed assets
by businesses, households and the government,
as well as new value added to assets by the
productive activity of a sector.
29
This indicator is
relevant for Abu Dhabi’s economic structure as it
measures the level of capital investment by each
sector into itself, and can be a measure of its
potential for growth, production, dynamism and
sustainability. Oil and gas and the public sector
contribute the highest amount of fixed capital
formation at just under AED 50b each, accounting
for 50%
30
of all fixed capital investment, while
the ICT and professional, scientific and technical
sectors combined amount to under 2%. While
competitive resource-abundant economies such
as Canada and Norway have similar levels of
29
OECD – http://stats.oecd.org/glossary/detail.asp?ID=1173
30
SCAD 2010
31
Statistics Norway 2012
43 42
Source: World Bank 2009
in specialized medical fields. While FDI is relatively
low in healthcare, privatization could increase its
attractiveness for global investors and improve
healthcare competitiveness for the Emirate.
ICT
The UAE has invested heavily in its information
and communications technology sector, and
boasts one of the strongest ICT infrastructures
in the Middle East. Abu Dhabi has consistently
ranked among the top performers in international
telecommunication competitiveness indices
largely due to a strong infrastructure, and high
mobile and internet penetration ratios. In terms of
mobile phone subscribers, broadband capabilities,
secure servers and internet hosts, the sector has
shown strong growth. The number of mobile
cellular subscriptions increased to 200% and
internet subscribers increased to 23% in 2011
38
.
Research by Ericson and the World Bank shows
that investing in broadband capabilities is directly
correlated with GDP growth, and while Abu Dhabi
is still below mature economies like Singapore and
Norway, it is competitive relative to GCC neighbors.
Similarly, FDI is still low in the ICT sector relative to
other benchmarks, but fares well within the GCC.
The sector grew at a moderate rate of approximately
4.8 % year-on-year between 2005 and 2011
39
,
indicative of a mature sector. It is dominated by two
carriers, Etisalat and Du which controls the vast
majority of the market.
Finance and Insurance
Abu Dhabi has seen strong growth in the finance
and insurance sector over the past few years,
largely due to the growth of Takaful, a form of
Islamic insurance. The sector was the second
largest recipient of FDI after real estate in 2009,
attracting more than AED 6b in investment.
32
Still,
investment in this sector is relatively low. This
sector shows promising potential for the Emirate, as
it weathered the financial crisis with an 8% average
growth rate between 2005-2011.
33
As a high-
skill knowledge industry, finance and insurance is
associated with high wages
34
, though still below oil
and gas and the public sector.
Healthcare and Education
Due to large-scale strategic investments by the
public sector in education and healthcare, both
sectors have demonstrated compelling growth
in employment numbers. While Emiratization
is lower in the healthcare sector at 6.4%
35
, the
growth of the education sector has increased the
number of knowledge-based jobs for Emiratis and
particularly women. Still, the majority of the 80
percent year-on-year growth in education services
between 2008 and 2011
36
can be attributed to
the recruitment of foreign teachers and educational
workers into the expanded program offerings of
schools and universities.
Employment in healthcare grew by 52% year-
on-year for the same period
37
, and was matched
by double digit annual GDP growth for six years
(2005-2011), making it the second fastest growing
sector after construction. The healthcare industry
has benefited from a number of recent partnerships
with foreign private healthcare providers such
as Cleveland Clinic and Johns Hopkins, which
have been brought in to run public hospitals and
facilitate transition towards a private health care
model for Abu Dhabi. As these facilities open for
business, the Emirate can attract medical tourists,
and increase the level of research and development
The Competitiveness Assessment
Framework for Abu Dhabi and its Sub-Regions — Economic Structure
Abu Dhabi Top Sectors by GDP, 2011 %
Mining and Quarrying 58.5
Construction 10.1
Manufacturing 5
Finance and Insurance 4.8
Real Estate 3.8
Tourism
The tourism sector
40
showed a compound annual
growth rate of 7.15%
41
year-on-year between 2005
and 2011, which bodes well for the Emirate given
the global slowdown in tourism since the financial
crisis. Abu Dhabi has invested substantially in its
tourism sector, and has further plans to increase
tourists to the Eastern and Western regions, as Abu
Dhabi City still hosts the majority of tourists in the
region. Abu Dhabi Tourism Authority has recently
opened international offices in the UK, France,
Germany, Italy, China and Australia in its efforts to
attract increased numbers of tourists from target
countries . Employment for the sector grew at a rate
of 7.5% year-on-year
42
, at a faster pace than GDP
mainly due to new hotels and theme parks coming
online. Foreign investment for the sector in Abu
Dhabi was AED 4 million in 2009, which is one
area that has high growth potential going forward.
Regional Disparities
The Abu Dhabi Economic Vision 2030 highlights
investment and development of the Emirate’s sub-
regions as one of its key goals: “The simultaneous
development of the Regions to keep pace with that
of the Capital is also an important policy priority
in order to achieve an Emirate-wide distribution
of economic activity and associated benefits.”
43
Improving the competitiveness of the Emirate as a
whole will require substantial investment into Abu
Dhabi’s Eastern and Western regions. Currently,
Abu Dhabi city is the center for most investment
and non-oil economic activity. Relative to Abu
Dhabi City, both Al Ain and Al Gharbia have low
levels of non-oil economic output, and have faced
challenges in attracting labor, businesses and
financing into their strategic sectors.
Current standards of living for Emiratis, as
measured by earnings, are highest in Abu Dhabi.
This is largely due to the concentration of high-
paying public sector jobs, which employ more than
60% of Emiratis in Abu Dhabi.
44
Emiratization
levels are also high in the oil and gas sector, which
accounts for higher earnings in Al Gharbia relative
to Al Ain.
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Fixed Mobile Internet Broadband
0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
% Rise in Economic Growth with 10% Increase in
Broadband Penetration
Low-Middle Income Economies High Income Economies
Alberta, Canada Norway
0
50
100
150
200
250
300
350
450
400
500
Abu Dhabi Singapore
Broadband Access per 1,000 Population (2009)
32
SCAD Statistical Yearbook 2010 (Data from 2009)
33
Compound Annual Growth Rate calculated using SCAD data
34
(Average monthly salary was AED. 19033)
35
HAAD 2011
36
SCAD Statistical Yearbook 2012
37
Employment CAGR calculated using SCAD data for years
2008-2011, and is inclusive of healthcare and social work
38
SCAD Statistical Yearbook 2012 (data from 2011)
39
CAGR calculated using SCAD data for information and
communication
40
Tourism numbers are inclusive of hotels and restaurants
41
CAGR calculated using SCAD data
42
Employment CAGR calculated using SCAD data
43
Abu Dhabi Economic Vision 2030
44
SCAD 2011
Source: SCADStatistical Yearbook 2012
45 44
46
Currently, there is a lack of investment and
export data available for Al Ain and Al Gharbia,
which prevents a robust assessment of the
economic activity at the sub-regional level. The
Western Region Development Council (WRDC)
has, however, worked with public and private
sector stakeholders in improving the investment
climate of the region through a number of new
initiatives. These include infrastructure and tourism
development as well as industrial initiatives.
Landmark projects include future plans for the
development of the Etihad Rail network to connect
residents to other regions, the development of
a nuclear facility in the Western Region and the
building of Shams 1, which will be the largest
concentrated solar power plant in the world. Some
of the other key WRDC initiatives are supporting
higher education and vocational educational
institutions, implementation of the Al Gharbia
Economic Development strategy in target sectors,
and the creation of new programs for SMEs in
target sectors.
45
Benchmark Case Study: U.S Cluster Mapping
The U.S Cluster Mapping project aims to provide
policymakers and development practitioners across
America with rich data and tools for understanding
industry clusters in every region of the country, together
with tool kits and case studies to assist in formulating
economic development strategies. In addition, the project
contributes to the development of active cluster initiatives
throughout the country.
Coverage and Size:
• 41 clusters currently, with plans to map the entire U.S.
Key Data Elements:
• Each region’s clusters include specialization,
employment, wages, job creation, patents
• Comparisons of clusters across the U.S.
• Overall regional economic performance
(performance indicators, patents, jobs, wages)
• Characteristics of cluster initiatives
Method:
• Clusters are defined by creating a grouping of
standard industry codes, using employment linkages
across geographies. Underlying data source is the
Census Bureau’s County Business Patterns.
Source: mvp.clustermapping.us
The Competitiveness Assessment
Framework for Abu Dhabi and its Sub-Regions — Economic Structure
Al Ain Western Region Abu Dhabi City
0
10,000
20,000
30,000
40,000
50,000
60,000
Annual Average Per Capita Earnings (2007) (AED)
Source: SCADHousehold Expenditure and Income
Survey 2007/2008
Improvement areas
Improving the outlook of Abu Dhabi’s economic
structure will entail driving targeted investment into
key sectors of the economy and into the Eastern
and Western regions. This requires setting up
investment incentives, services, programs and
councils, increasing information availability and
branding the Eastern and Western regions as
desirable places to invest.
Cluster Mapping
Developing Abu Dhabi’s clusters can improve the
competitiveness of the region by encouraging
industry linkages and specialized business activity.
Harvard University professor Michael Porter
describes clusters as “a different way of dividing
the economy than is embodied in conventional
industrial classification systems which are based
primarily on product type and similarities in
production”
46
Developing specific cluster maps
for target sectors and geographical regions, would
help policymakers and businesses with intelligence
about the areas and industries in which they do
business. Cluster maps should provide guidance
on targeted investment, government programs, and
areas for business expansion.
Objectives of Cluster Mapping:
• To define and describe clusters across
the Emirate (to understand how Abu
Dhabi’s economy is structured, and
where its specializations lie)
• To define supply chain linkages (upstream
and downstream linkages)
• To identify gaps in clusters (i.e. missing linkages)
• To facilitate informed discussions with policy-
makers, cluster practitioners, and industry
leaders around cluster development initiatives
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Several cluster initiatives are currently underway in
Abu Dhabi, including the following:
KIZAD
The Khalifa Industrial Zone – Abu Dhabi (KIZAD) seeks
to attract world-class companies, and to establish global
industry best practices in terms of zone operations.
KIZAD’s core objectives are job creation and foreign
investment attraction. KIZAD expects to contribute to the
creation of 100,000 jobs in Abu Dhabi. In addition, it is
projected to contribute approximately 15% of the Emirate’s
non-oil GDP. KIZAD estimates that between 60% to 80%
of the goods manufactured within its premises will be
exported.
Masdar City
Masdar City is an industry cluster for renewable energy
and clean technologies. It is intended to be a dynamic,
entrepreneurial environment that attracts world-class
talent, financial entities, entrepreneurs, companies and
service providers that are focused on renewable and
cleantech industry. The objective is to create a community
where cutting-edge research and development, pilot
projects, and technology testing will occur.
Sky City – Abu Dhabi Airports Company
Skycity will be the first Airport Free Zone in Abu Dhabi
– a comprehensive Business Park that intends to attract
diversified private sector investments in a variety of
sectors including aviation, aerospace, airport services,
cargo, freight and logistics sectors.
45
WRDC Strategy 2012-2016 Executive Summary
46
Porter, Michael E. 2004. Methodological note based on an excerpt and adaptation of text from “The economic performance of
regions”. Cambridge, MA: Cluster Mapping Project, Harvard University
47 46
The Competitiveness Assessment
Framework for Abu Dhabi and its Sub-Regions — Economic Structure
ZonesCorp
Creating a Platform for Industrial Development in Abu Dhabi
ZonesCorp develops, operates and administers specialized economic zones
throughout Abu Dhabi Emirate. It was established in 2004 to support growth of
the industrial sector and create a diversified economic base in the Emirate of
Abu Dhabi and the wider UAE. One of the principal mechanisms through which
it achieves this goal is applying a public-private partnership (PPP) management
structure approach and leveraging resources from the ZonesCorp Infrastructure
Investment Fund. This fund was established to invest in ZonesCorp-
commissioned infrastructure-related projects in the UAE.
Currently, ZonesCorp manages a number of industrial zones including ICAD and
Al Ain Industrial City. Additional zones being developed or planned include a
Construction and Building Materials Zones, additional Worker Residential Cities
and an Automobile Industry Zone.
ZonesCorp plays an integral role into diversifying Abu Dhabi’s economy away
from oil related sectors, as the Emirate continues to focus on transitioning into a
knowledge-based economy. Specifically, ZonesCorp has successfully leveraged
Abu Dhabi’s industrial resources by attracting local and international investors to
the industrial zones. $5 billion worth of manufacturing investments were made by
projects managed by ZonesCorp, representing almost 10% of Abu Dhabi’s GDP.
To date, ZonesCorp has attracted over 600 companies in the industrial cities and
has granted over 1,000 industrial licenses within its industrial zones, which are
worth approximately $13 billion.
Source: ZonesCorp; Arabianbusiness.com
Competitiveness Success Story
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Western Region Development Council
Creating a Model for Sustainable Economic Development in Al Gharbia
The Western Region Development Council (WRDC) started in 2006, and works
with relevant government entities within Abu Dhabi Emirate to improve social
development, education, healthcare, and infrastructure for the Western Region.
The WRDC is organized under 4 divisions: 1) Regional Development; 2) Investment
Promotion and Public Relations; 3) Strategy & Finance; 4) Support Services:
• Regional Development. Partners with local government entities
and companies to improve infrastructure, healthcare, education,
government and other services for the region.
• Investment Promotion and Public Relations. Increases awareness of
the region to promote tourism and attract investment. The unit also
supports initiatives related to business environment improvement.
• Strategy and Finance. Manages strategy development for WRDC,
including the preparation of annual, 5-Year and 10-Year Development
Plans and budgets; key performance indicators (KPIs); benchmarking;
finance and accounting; and financial forecasting.
• Support Services. Supports WRDC units and oversees other
internal WRDC functions such as human resource management,
procurement processing and other administrative activities.
Some examples of how WRDC has impacted the competitiveness of the Western
Region include the following:
• WRDC Scholarship Program providing top performing
students with higher education opportunities
• Establishment of the Estishara Scheme offering technical
assistance to developers in Al Gharbia
• Etihad Railway project worth $ 11 billion estimated to be completed by 2018
WRDC serves as the principal institutional catalyst for driving the competitiveness
agenda forward in the Western Region. By regularly engaging partners in the local
government and the private sector, it can leverage a broader range of resources that
are essential for the successful delivery of key competitiveness initiatives.
Source: Western Region Development Council; WRDC Strategy Plan 2013 - 2017
Competitiveness Success Story
49 48
The Competitiveness Assessment
Framework for Abu Dhabi and its Sub-Regions — Economic Structure
Mubadala Aerospace
Building a Global Aviation and Aerospace Hub in Al Ain
Mubadala Aerospace is developing Al Ain as a global aerospace hub, in tandem
with Abu Dhabi Emirate’s long-term economic diversification and industrialization
strategy. To achieve this, Mubadala Aerospace has entered into a number of
strategic partnerships with global aviation and aerospace companies to develop a
world class technology and manufacturing base.
• EADS/Airbus. Mubadala has entered into a Master Supply
Agreement with the European aerospace group EADS / Airbus
to develop an aircraft composites manufacturing base.
• General Electric (GE). Mubadala has entered into a framework agreement
with GE to collaborate in a range of areas including maintenance repair and
overhaul services for GE aircraft engines operating in the Middle East.
• FACC . Mubadala has formed an industrial partnership and entered into
a supplier agreement with FACC AG of Austria, one of the leading global
companies involved in the design, development and production of advanced
composite components and systems for the aviation sector. Major
FACC clients include Boeing, Airbus, Bombardier and Embraer.
Building a highly-skilled cadre of Emirati nationals to support the sector is
another core objective. Mubadala has launched a number of education and
training programs, including a pilot training academy, to prepare young Emiratis
to fill the 10,000 jobs in the aviation/aerospace sector that are projected by
2030. It is expected that the aerospace hub will contribute 1% of the Emirate’s
GDP.
Abu Dhabi’s plan to build an industrial cluster for the aerospace sector in Al Ain
plays a key role in growing high value-added businesses and diversifying the
economy. Through partnerships with international firms at the cluster and an
investment of around AED 37 billion from the Abu Dhabi government, this project
will attract foreign investment and encourage global companies to open offices in
the aviation cluster.
Source: Mubadala Aerospace; TheNational
Competitiveness Success Story
51 50
1,310,300
9.76 %
7.5 %
10 % 6.8 % 17.8 %
2.57 %
12.40
18%
Nationals
% Population with University Degrees
(Nationals -10 yrs & over)
Illiteracy Rate
Unemployed Nationals as a
%of National Labor Force
Total Unemployed
National Males
Total Unemployed
National Females
Unemployed as
% of Labor Force
Students per Teacher
ABU DHABI CITY
P
O
P
U
L
A
T
I
O
N
L
A
B
O
R
F
O
R
C
E
U
N
E
M
P
L
O
Y
M
E
N
T
E
D
U
C
A
T
I
O
N
82%
Non-Nationals
8%
Nationals
92%
Non-Nationals
68%
15.8%
Female Labor Force
Participation
53,076 AED
46,075 AED
2.86 64.27
573,355 AED
Annual Avg. Per Capita
Earnings – Nationals
Annual Avg. Per Capita
Earnings – Non-Nationals
NewFirmGeneration
per 1,000Population
Total Firms per
1,000Population
GDP Per
Employee
Population Based
E
A
R
N
I
N
G
S
B
U
S
I
N
E
S
S
E
S
L
A
B
O
R
P
R
O
D
U
C
T
I
V
I
T
Y
Business Licenses by Sector
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Education
Information and
communication
Mining and Quarrying
Light Manufacturing
Hospitality and food
Real estate
Insurance and
financial services
Professional activities
(scientific & technical)
Other
Construction
Wholesale and
retail trade
6%
International
Companies
15%
Other
44%
Individual
34%
Limited Liability
Type of Business Licenses
Sources: SCADStatistical Yearbook 2012; Abu Dhabi Department of Economic Development; SCAD: Household
Expenditure and Income Survey 2007/2008
53 52
225,700
85%
9.72 %
7.7%
9 % 5.2 % 27.8 %
0.87 %
8.80
11%
Nationals
% Population with University Degrees
(Nationals -10 yrs & over)
Illiteracy Rate
Unemployed Nationals as a
%of National Labor Force
Total Unemployed
National Males
Total Unemployed
National Females
Unemployed as
% of Labor Force
Students per Teacher
AL GHARBIA
P
O
P
U
L
A
T
I
O
N
L
A
B
O
R
F
O
R
C
E
U
N
E
M
P
L
O
Y
M
E
N
T
E
D
U
C
A
T
I
O
N
89%
Non-Nationals
5%
Nationals
95%
Non-Nationals
3.7 %
Female Labor Force
Participation
41,560 AED
30,187 AED
2.66 58.04
451,772 AED
Annual Avg. Per Capita
Earnings – Nationals
Annual Avg. Per Capita
Earnings – Non-Nationals
NewFirmGeneration
per 1,000Population
Total Firms per
1,000Population
GDP Per
Employee
Population Based
E
A
R
N
I
N
G
S
B
U
S
I
N
E
S
S
E
S
L
A
B
O
R
P
R
O
D
U
C
T
I
V
I
T
Y
Business Licenses by Sector
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
1%
International
Companies
3%
Other
74%
Individual
22%
Limited Liability
Type of Business Licenses
Education
Information and
communication
Insurance and
financial services
Mining and Quarrying
Real estate
Hospitality and food
Professional activities
(scientific & technical)
Light Manufacturing
Other
Wholesale and
retail trade
Construction
Sources: SCADStatistical Yearbook 2012; Abu Dhabi Department of Economic Development; SCAD: Household
Expenditure and Income Survey 2007/2008
55 54
584,800
62%
9.76 %
7.3 %
15 % 8.3 % 31.2 %
4.4 %
10.20
31%
Nationals
% Population with University Degrees
(Nationals -10 yrs & over)
Illiteracy Rate
Unemployed Nationals as a
%of National Labor Force
Total Unemployed
National Males
Total Unemployed
National Females
Unemployed as
% of Labor Force
Students per Teacher
AL AIN
P
O
P
U
L
A
T
I
O
N
L
A
B
O
R
F
O
R
C
E
U
N
E
M
P
L
O
Y
M
E
N
T
E
D
U
C
A
T
I
O
N
69%
Non-Nationals
14%
Nationals
86%
Non-Nationals
19.4 %
Female Labor Force
Participation
33,333 AED
21,650 AED
2.37 49.26
645,520 AED
Annual Avg. Per Capita
Earnings – Nationals
Annual Avg. Per Capita
Earnings – Non-Nationals
NewFirmGeneration
per 1,000Population
Total Firms per
1,000Population
GDP Per
Employee
Population Based
E
A
R
N
I
N
G
S
B
U
S
I
N
E
S
S
E
S
L
A
B
O
R
P
R
O
D
U
C
T
I
V
I
T
Y
Business Licenses by Sector
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Type of Business Licenses
Mining and Quarrying
Education
Information and
communication
Insurance and
financial services
Real estate
Professional activities
(scientific & technical)
Hospitality and food
Light Manufacturing
Other
Construction
Wholesale and
retail trade
1%
International
Companies
9%
Other
69%
Individual
21%
Limited Liability
Sources: SCADStatistical Yearbook 2012; Abu Dhabi Department of Economic Development; SCAD: Household
Expenditure and Income Survey 2007/2008
57 56
Going forward, the goal is for this report to be
published biennially to track Abu Dhabi’s ongoing
improvements and progress towards enhancing
competitiveness. This will include updates on
new public and private sector initiatives as well
as the outcome of the specific challenges and
recommendations currently identified. As more
data becomes available for Abu Dhabi and its
sub-regions, the report can provide additional
disaggregated competitiveness intelligence and
analysis to better serve the needs of COADs
stakeholders.
This first report paves the way for an informed
discussion about regional competitiveness in Abu
Dhabi, with the hopes that these efforts will lead to
an improved environment for the people, businesses,
and regions of the Emirate.
Key objectives going forward
1. Update the model and report every
other year to track the Emirate’s
progress, successes and emerging
challenges in competitiveness
2. Enhance data collection efforts for more
robust intelligence and reporting on
competitiveness issues
3. Work with stakeholders in both the
public and private sector to ensure that
key challenges are being addressed
Improving Abu Dhabi’s economic competitiveness
requires a detailed understanding of both the
current state of play in the Emirate as well as the
future state model that is outlined in the Abu Dhabi
Economic Vision 2030. Since competitiveness
cuts across all dimensions of an economy from the
micro to the macro levels, the Abu Dhabi-specific
competitiveness framework described in this report
will enable policy makers to identify the principal
competitiveness challenges in the Emirate and
its sub-regions; define priorities for intervention;
and design and implement targeted policies and
initiatives to address these priorities.
The improvement areas highlighted in the report
should contribute to enhancing competitiveness
under each of the key drivers, Human Capital,
Businesses, and Economic Structure, but will also
have dependencies to others. They will not operate
in isolation, instead contributing to the overall
competitiveness landscape. To facilitate this, it is
vital that stakeholders work together and are aligned
in their aims and objectives. While COAD can
work to align initiatives, stakeholders across Abu
Dhabi will have a key role their implementation and
contribution to improving competitiveness.
GOING FORWARD
59 58
The model provides a logical framework through
which to examine the factors that are driving regional
competitiveness in Abu Dhabi. The main purpose of
this model is to understand the relationship between
the principal determinants of competitiveness and
integrate them to explain what accounts for the
competitiveness of a region. Inputs are the types
of capital needed to generate economic outputs of
competitiveness. Outputs measure the performance
of the region. Over time, these outputs form the
basis for long-term competitiveness outcomes, such
as rising incomes and a high standard of living which
shape the overall competitiveness of a region.
Since competitiveness is a “self-reinforcing
process”, current inputs of competitiveness
produce future outputs of competitiveness, which
subsequently become inputs for a new cycle of the
competitiveness process.
The Model – Regional Competitiveness
Index (RCI) and Sub-Regional Index -
Rationale
The foundational Abu Dhabi Regional and Sub-
Regional Competitiveness Index consists of
three building blocks which constitute the core
elements of competitiveness. These three building
blocks, Competitiveness Inputs, Competitiveness
Outputs and Competitiveness Outcomes, contain
socio-economic variables that measure regional
competitiveness. These blocks are framed by a
set of Competitiveness Enablers, which are the key
conditions that affect the business environment and
drive the competitiveness of an economy.
ANNEX
Key Determinants Competitiveness
Competitiveness
Inputs Human
Capital
Physical
Capital
Financial
Capital
GDP growth
Trade
volume
Market structure
New firm
generation
Productivity
Knowledge
output
Long-term improvements in living standards
Competitiveness
Outputs
Enablers
Competitiveness
Outcomes
Financial Capital
Financial capital measures the investment and
accessibility of money that is put to economic use.
48
It consists of business loans, investments, risk
capital, specialized finance and other sources of
funding to promote innovation and economic growth
in an economy. If such funds are not available,
innovation and investment can be hampered. For
example, data on R&D spending in OECD countries
reveals a strong correlation with productivity levels.
Competitiveness Outputs
Outputs are the measures of economic activity and
performance (i.e., rising GDP, growth in trade and
improvements in factor productivity indicating the
well-being of the economy). They result when inputs
are put to economic use. Increasing knowledge
output - such as patent registration and publication
of journal articles - demonstrates that innovation is
taking place, while new firm generation suggests a
healthy entrepreneurial culture and robust markets.
Competitiveness Inputs
Inputs are factors of production that produce goods
and services and drive economic activity. Inputs are
not an end to themselves; they provide the means to
achieve outputs and long-term outcomes. Measured
on their own, inputs provide limited useful insights
on the economic performance of a country unless
they are linked to an analysis of outputs.
Competitiveness Inputs consist of human, physical
and financial capital and are the necessary
“feedstock” of economic growth.
Human Capital
Human capital measures the skills, knowledge,
and competencies of an individual that enable
them to generate economic wealth.
47
Extensive
global research reveals a strong positive correlation
between human capital advances and economic
growth. OECD countries have invested heavily
in education and training, resulting in significant
improvements in the skill and education levels of
their workforces. This has resulted in rising GDP
growth, increased labor productivity, increased
knowledge output in the form of patents and new
inventions, and a growing number of enterprises.
Physical Capital
Physical capital includes natural resource
endowments, machinery, and physical infrastructure
such as transportation and ICT infrastructure. Major
investments in IT, software and communications
equipment have resulted in rising labor productivity
throughout the most competitive regions, which has
subsequently resulted in higher growth levels and
increased competitiveness.
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Competitiveness Inputs
Human Capital
Physical Capital
Financial Capital
Competitiveness Outputs
GDP growth
New firm generation
Trade volume
Productivity
Market structure
Knowledge output
47
OECD definition
48
The Economist’s definition
61 60
Competitiveness Outcomes
Outcomes are the long-term results of
competitiveness. They are defined by sustainably
rising living standards that result from improvements
in productivity. Rising living standards are
associated with rising real incomes and decreasing
unemployment levels over the long-term.
Competitiveness Enablers
Enablers are the conditions and factors
that determine the perceived potential for
competitiveness, by creating a favorable business
environment for firms at the macro and micro-
levels. Regions with a sound business enabling
environment that facilitates economic development
are likely to increase their competitive advantage by
attracting investment, skills and talent.
Illustrative examples include: effective rule of law
which facilitates commercial activity; ease of doing
business; government initiatives; and ultimately,
the perceptions of businesses and individuals in a
particular region.
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Competitiveness Outcomes
Long-term improvements
in living standards
Below are the assumptions and calculations of all proxies used in the RCI model:
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Disclaimer
• This report has been prepared using information and data from sources listed throughout this report. This information
is believed to be accurate at the time that this report was developed
• Recommendations on improving the competitiveness of the Abu Dhabi Emirate are based on findings from extensive desktop
research as well as stakeholder workshops and individual interviews conducted with various ADDED – COAD stakeholders
• Proxies were used for indicators where data was not readily available for Abu Dhabi, which involved complex
calculations and assumptions
Indicator Calculation Assumption
Broadband access per
1,000 population
(Total UAE broadband) x (ratio of Abu Dhabi GDP) / Abu Dhabi
population
Function of the share of Abu Dhabi’s
GDP
Per capita private equity investment (Total private equity investment in UAE) x (ratio of financial firms in
Abu Dhabi) / Abu Dhabi population
Function of the distribution of
financial firms in Abu Dhabi
No. Of patents registered per one
million inhabitants
(Total patents in UAE) x (ratio of universities in Abu Dhabi) / Abu
Dhabi population
Function of the distribution of
universities in Abu Dhabi
Regional gdp (AED) – population
based
(Total Abu Dhabi GDP) x (ratio of regional population) Function of the ratio of each regions
population
Labor productivity (AED) –
population based
(Population –based GDP) / employment Function of the ratio of each regions
population
63 62
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Indicator Definition
Annual average gross earnings Gross annual income is the amount of money that someone receives from his/her rendered services or sold
goods before any annual deductions, such as taxes are taken out. This is an indicator of the standard of living in a
country since high incomes are associated with high standards of living
Broadband access per 1,000
population
Number of inhabitants who have broadband access per 1,000 of the total population
Exports Exports are the sales of goods or services made to another country
Female labor force participation Female labor force participation rate is the number of females ages 15 and older that is economically active: all
females who supply labor for the production of goods and services during a specified period
Gross domestic product The gross domestic product (GDP) is a measure of a country's overall economic output. It is the market value of
all final goods and services made within the borders of a country in a year. High per capita GDP is an indicator of
high standards or living
Gross fixed capital formation Gross fixed capital formation includes land improvements; plant, machinery, and equipment purchases; and the
construction of roads, railways
Gross value added A productivity metric that measures the difference between output and intermediate consumption. Gross value
added provides a dollar value for the amount of goods and services that have been produced, less the cost of all
inputs and raw materials that are directly attributable to that production
New firm generation New businesses registered in the calendar year as a ratio of population
Number of managers per 1,000
population
Measures level of skilled workforce
Number of patents per 1,000,000
population
A government authority to an individual or organization conferring a right or title, esp. the sole right to make,
use, or sell some invention. In this case it’s calculated per 1,000,000 population of a country
Per capita foreign direct investment (FDI) is the movement of capital across national frontiers in a manner that grants the investor control over
the acquired asset. Firms that use FDI are known as multinational enterprises
Per capita private equity investment Money invested in private firms as a proportion of population - indicates access to finance, which affects the
competitiveness of firms
Percentage of population with
university degrees
All the inhabitants of a particular town, area, or country with a university degree; indicator of skill level
Unemployment rate The percentage of the work force that is unemployed at any given date
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Regional Benchmark Data Sources:
Region Broadband
Access
Per 1,000
Population
No. of
Managers
Per 1,000
Population
Per Capita
Private
Equity
Foreign
Direct
Investment
Per Capita
New Firm
Generation
– No. of
New Firms
Per 1,000
Population
No. of
Patents
Registered
Per 1
Million Pop-
ulation
Gdp Inclu-
sive And
Exclusive of
Oil &Gas
Sectors
Oil &Gas
Contribu-
tion to Gdp
Manu-
facturing
Share of
GDP %
Abu Dhabi World Bank,
SCAD
Yearbook
2012
DED
Economic
Planning
Division 2011
World Bank
2008, UAE
Stats Office,
CBUAE
Annual
Report 2011,
Gulf Venture
Capital
Association
DED
Economic
Planning
Division
2009
Abu Dhabi
Department
of Economic
Development
World Bank
2009, World
Intellectual
Property
Organization
(WIPO) 2009
SCAD
Statistical
Yearbook
2012
SCAD
Statistical
Yearbook
2012
SCAD
Statistical
Yearbook
2012
Singapore Statistics
Singapore,
World Bank
2009
Statistics
Singapore,
Ministry of
Manpower
2010
Statistics
Singapore
(2010),
McKinsey &
Co. (2011)
World Bank
2010
Singapore
Statistical
Yearbook
2012
Statistics
Singapore,
WIPO2009
Singapore
Statistical
Yearbook2012
Singapore
Statistical
Yearbook2012
Singapore
Statistical
Yearbook
2012
Norway Eurostat,
World Bank
2009
Statistics
Norway 2010
Eurostat,
European
Venture
Capital
Association
2010
World Bank
2011
Statistics
Norway 2012
Eurostat,
WIPO 2009
Norway
Statistics
2011
Norway
Statistics
2011
Statistics
Norway 2011
Alberta,
Canada
Statistics
Canada,
World Bank
2009
Statistics
Canada,
2011
OECD Stats,
Canada’s
Venture
Capital
and P.E.
Association,
Stats Canada,
Thomson
Reuters,
2010
World Bank
2010
N/A Statistics
Canada,
WIPO, 2009
Statistics
Canada,
2011
Statistics
Canada,
2011
Statistics
Canada,
2011
65 64
doc_114577437.pdf
Competitiveness in Abu Dhabi is about creating the sustainable environment that enables the Emirates enterprises and its people to realize their full productive potential.
Abu Dhabi Competitiveness Report
Improving the Competitiveness of
the Emirate of Abu Dhabi
Competitiveness in Abu Dhabi
is about creating the sustainable
environment that enables the
Emirate’s enterprises and its
people to realize their full
productive potential
CONTENTS
FOREWORD 4
ACKNOWLEDGMENTS 5
COAD AND THE MISSION TO IMPROVE COMPETITIVENESS 6
EXECUTIVE SUMMARY 8
BACKGROUND 11
THE COMPETITIVENESS ASSESSMENT FRAMEWORK FOR ABU DHABI AND ITS SUB-REGIONS 14
HUMAN CAPITAL 16
BUSINESSES 24
ECONOMIC STRUCTURE 38
ABU DHABI CITY 52
AL GHARBIA 54
AL AIN 56
GOING FORWARD 58
ANNEX 60
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
3 2
4
As the United Arab Emirates enters its 42nd year of
existence, it is a timely opportunity to reflect on our
country’s extraordinary journey since 1971. Our
nation was blessed with a wise and compassionate
founding father – HH Sheikh Zayed Bin Sultan Al
Nahyan - who laid the groundwork for what the
UAE has become today: one of the world’s leading
economies and a bastion of peace, stability and
security.
Our visionary President, HH Sheikh Khalifa Bin
Zayed Al Nahyan, is continuing to build on this
solid foundation to propel the UAE forward as
one of the world’s most competitive economies.
Abu Dhabi Emirate – the largest Emirate in the
federation – is particularly well-positioned to be the
catalyst for this effort. The Abu Dhabi Vision 2030
– developed under the sage guidance of HH Sheikh
Mohammed Bin Zayed Al Nahyan, the Crown
Prince of Abu Dhabi, Deputy Supreme Commander
of the Armed Forces and Chairman of the Executive
Council - is setting the stage for the transformation
of Abu Dhabi into a diversified, highly-innovative
economy that will generate significant employment
opportunities and long-term growth.
This report benefitted from the support and contribution of numerous stakeholders.
Special thanks go to the following individuals and organizations:
Abu Dhabi Department of Economic Development
Abu Dhabi Chamber of Commerce and Industry
Abu Dhabi Council for Economic Development
Abu Dhabi Technology Development Committee
Abu Dhabi Tourism Authority
Al Ain Municipality
Khalifa Fund for Enterprise Development
National Bureau of Statistics
Statistics Center Abu Dhabi
The Western Region Development Council
Dr. Robert Huggins, Professor at Cardiff University,
UK and co-founder of the World Knowledge
Competitiveness Index
Dr. Yusuf Mansur, former CEO of the Jordan
Agency for Economic Development
Chairman, Abu Dhabi Department of
Economic Development
His Excellency Nasser Ahmed Alsowaidi
As the lead entity responsible for delivering the
economic agenda of Abu Dhabi, the Department
of Economic Development has made balanced
regional development a top priority. Toward
that end, there is a strong interest in applying an
evidence-based approach to pinpoint– at a regional
level – the principal competitiveness-related
strengths, challenges and opportunities in Abu
Dhabi City and the Eastern and Western Regions.
These findings will then be used to design and
implement a policy agenda to generate sustained
economic growth in all regions of the Emirate.
The inaugural Abu Dhabi Competitiveness Report,
prepared by the Competitiveness Office of Abu
Dhabi (COAD), is the culmination of several months
of dedicated effort by a team of DED staff members
and key stakeholders. The report is informed by a
rigorous regional competitiveness index – the first
of its kind in the GCC region - that will serve as the
principal tool to measure the Emirate’s progress in
achieving the goal outlined in Abu Dhabi Economic
Vision 2030 “to build a sustainable economy that
ensures a balanced social and regional economic
development approach that brings benefits to all.”
The publication of the Abu Dhabi Competitiveness
Report will accelerate efforts to create a competitive
knowledge-based economy that benefits all of the
citizens of Abu Dhabi Emirate and its three regions.
We look forward to working with our stakeholders,
both public and private as well as Emirate-level and
federal, to ensure that the recommendations in this
report become reality.
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
FOREWORD ACKNOWLEDGMENTS
5 4
Internationally, “A nation’s competitiveness is the
degree to which a country can, under free and fair
market conditions, produce goods and services
which meet the test of international markets, while
simultaneously maintaining and expanding the real
incomes of its people over the long term.”
1
In the
context of Abu Dhabi, improving competitiveness
is about creating the sustainable environment that
enables the Emirate’s enterprises and its people to
realize their full productive potential. This entails
providing the conditions for the Emirate’s workforce,
businesses, sectors and regions to excel in both
local and global markets. The leadership of Abu
Dhabi has prioritized competitiveness as one of the
key objectives to building a sustainable economy for
the future, as defined in the Abu Dhabi Economic
Vision 2030.
With this goal in mind, the Competitiveness Office
of Abu Dhabi was launched in 2011 under the
Abu Dhabi Department of Economic Development
(ADDED), the lead entity responsible for delivering
the economic development strategy outlined in the
Abu Dhabi Economic Vision 2030.
The Competitiveness Office of Abu Dhabi
(COAD) Vision and Mission
Vision: Work in collaboration with stakeholders
to implement the best thinking in the field of
Competitiveness to support the people and
enterprises of Abu Dhabi in reaching their full
productive potential.
Mission: Enhance the global Competitiveness of
Abu Dhabi, its enterprises, and private businesses
by advocating policies, leading initiatives, and
creating a shared understanding and awareness
among its stakeholders.
COAD AND THE MISSION TO
IMPROVE COMPETITIVENESS
Abu Dhabi Economic Vision
“Abu Dhabi as a sustainable, diversified, high-value added economy
that encourages enterprises and entrepreneurship and well integrated
in the global economy leading to better opportunities for all”
1
The Organisation for Economic Co-operation and Development
7 6
The Emirate of Abu Dhabi has witnessed
transformative growth over the past forty years,
driven primarily by the ambitious economic agenda
of its leadership. The government of Abu Dhabi has
used the region’s natural resources to drive forward
social and economic developments, changing the
economic landscape of the Emirate and its position
internationally. By positioning itself as a hub for
businesses, visitors and investors, Abu Dhabi has
opened up its economy to the world, aiming to
attract premier talent from abroad while growing
the indigenous capacity of its population. It is
in this context that Abu Dhabi has increased its
competitive outlook and positioned itself on a track
for long-term sustainable growth.
Enhancing the competitiveness and productivity
of the Emirate is one of the key objectives
of the government, as articulated in the Abu
Dhabi Economic Vision 2030. It is under this
mandate that the Competitiveness Office of
Abu Dhabi (COAD) is carrying out its mission
to “enhance the global competitiveness of Abu
Dhabi, its enterprises, and private businesses
by developing policies, leading initiatives, and
creating a shared understanding and awareness
among its stakeholders.” The first Competitiveness
Report of Abu Dhabi represents an effort to
realize this mission by evaluating the drivers of
competitiveness, and then assessing Abu Dhabi’s
performance in a global context.
The Competitiveness Report serves five main
functions:
• Measure the competitiveness of Abu Dhabi
and its three main regions: Abu Dhabi City, Al
Ain, and Al Gharbia (The Western Region)
• Benchmark Abu Dhabi and its sub-regions
against other international comparative regions
• Highlight the key challenges and successes of
the Emirate from a competitiveness perspective
• Offer recommendations aimed at addressing
these challenges and improving the
competitive landscape going forward
• Align Abu Dhabi government initiatives toward
the Abu Dhabi competitiveness agenda
One unique feature of the Competitiveness Report
is the focus on Abu Dhabi’s sub-regions as key
sources of insight to the collective performance
of the Emirate. This report answers the question
“why regional competitiveness?” and provides the
rationale for a more granular analysis of economic
data beyond the national level. Understanding the
drivers of competitiveness from a regional and
even sub-regional perspective is critical as it allows
governments, businesses, and individuals to target
investments and provide specific solutions for
improvement.
To measure the performance of Abu Dhabi
and its sub-regions, COAD developed a
regional competitiveness model that measures
competitiveness of the Emirate against select
benchmark regions. Each benchmark was
chosen for its relevance to Abu Dhabi, either
due to its location and development parallels; its
success transitioning from a resource-based to a
knowledge-based economy, or as a leader in global
competitiveness. Each benchmark was measured
using almost 50 economic indicators, divided into
Inputs, Outputs, and Outcomes. The model also
takes into consideration Enablers, which are the
supporting conditions and qualitative factors that
impact competitiveness.
EXECUTIVE SUMMARY
Because a region’s economic competitiveness is
closely linked to its comparative advantage and
specialization within industries, in addition to
regions, the Report analyzes sector-specific data.
Target sector data provides relevant information
about which industries are contributing the most
to economic output, job creation, wages, worker
productivity and foreign investment. Providing
sector-level analysis ultimately allows for a more
disaggregated view of the economy and its
associated gaps and potential growth areas.
The Report takes an in-depth look at the results of
the model and the current competitive landscape
of the Emirate. The data findings are grouped into
the most pertinent areas for improvement, and
presented in the Competitiveness Assessment
Framework. This framework structures Abu
Dhabi’s specific challenges and suggested
recommendations under the three drivers of
competitiveness.
The first driver is Human Capital, which evaluates
the education, skill level, characteristics and overall
dynamism of Abu Dhabi’s workforce. While there
have been numerous educational reforms and
training initiatives put in place in recent years, key
challenges remain around skill building, higher
education and female labor force participation in
Al Gharbia. Al Ain has seen numerous successes
in the education field, but still faces difficulties
creating enough jobs and meaningful employment
opportunities for its local population, particularly for
its youth.
The second driver is Businesses, which examines
the entire value chain of doing business, beginning
with start-ups, then growth, financing, and the sale
of goods and services. The three areas examined
for business competitiveness in Abu Dhabi are
entrepreneurship, firm growth, and innovation.
While numerous initiatives have been established
by the government to increase the financing and
support services available to businesses, challenges
still remain for small enterprises seeking to enter
and compete in the marketplace.
The third, and final driver, is the Economic Structure
of Abu Dhabi and its regions. This driver provides a
longer-term outlook on competitiveness, measuring
the economy’s sustainability and its capacity to
generate wealth and maintain or increase standards
of living. This driver provides an aggregate view
of the economic activity of a region, taking into
consideration the diversification of sectors as well
as the geographic location of investment and
business activity. The main challenges discussed
in this section are diversification away from oil
and gas and into high value-added or knowledge
sectors, as well as reducing the regional disparities
between Al Gharbia, Al Ain and Abu Dhabi’s capital
city. Improving the incentives for private sector
investment is an essential element in improving
Abu Dhabi’s economic structure.
Competitiveness
Inputs
Increase
Diversification
Enlarge the
Enterprise Base
Enhance
Competitiveness
Key Determinants of Regional Competitiveness
The Abu Dhabi Economic Vision 2030
The Emirate of Abu Dhabi Policy
Agenda 2007
Competitiveness
Outputs
Competitiveness Enablers
Competitiveness
Outcomes
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
9 8
Regional Competitiveness Model
Competitiveness
Inputs
Human
capital
Physical
capital
Financial
capital
GDP growth
Trade
volume
Market structure
New firm
generation
Productivity
Knowledge
output
Long-term improvements in living standards
Competitiveness
Outputs
Enablers
Competitiveness
Outcomes
Competitiveness inputs are
the underlying drivers of
economic performance
Competitiveness outputs
are the measures of
economic performance
Competitiveness outcomes
are the long-term impacts of
economic performance
Enablers are the conditions and/or qualitative factors that
have an impact on the competitiveness of the economy
Finally, specific recommendations are provided for
each challenge, as well as case studies on how
benchmark regions improved competitiveness in
these relevant areas. In many instances, Abu Dhabi
has set global examples which can be considered
competitiveness success stories. These include
the Western Region Development Council’s work
to attract investment into Al Gharbia; industrial
improvements from the development of Free Zones;
and the Abu Dhabi Education Council’s New School
Model to improve the quality of education across
the Emirate. These success stories are interspersed
throughout the report to highlight some of the
Emirate’s competitiveness achievements to date.
Going forward, the objective is for this report to be
published biennially to track Abu Dhabi’s ongoing
improvements and progress towards enhancing
competitiveness. This will include updates on
new public and private sector initiatives as well
as the outcome of the specific challenges and
recommendations currently identified. As more
data becomes available for Abu Dhabi and its
sub-regions, the report can provide additional
disaggregated competitiveness intelligence and
analysis to better serve the needs of COAD’s
stakeholders. This first report paves the way for an
informed discussion about regional competitiveness
in Abu Dhabi, with the hopes that these efforts will
lead to an improved environment for the people,
businesses, and regions of the Emirate.
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
BACKGROUND
The past five years have ushered in tremendous
change for Abu Dhabi, as the Emirate has emerged
from the global financial crisis with robust growth
figures and sweeping changes to its economic
landscape. Much of this change has been driven
in large by the Emirate’s public sector, which has
taken on a number of reforms and committed
significant investment capital into its infrastructure,
institutions and local economy. In 2008 the
Emirate released the Abu Dhabi Economic Vision
2030, which provides a detailed strategic plan to
position the region toward long-term sustainable
growth. The government has used the Vision as
the guiding framework to increase Abu Dhabi’s
competitiveness on both a local and global scale.
Much of the initial investment by the public sector
and closely allied development arms such as
Mubadala has been in revamping the physical
landscape and infrastructure of the Emirate. This
includes the development of entire business and
residential clusters, hospitals, roads, and what will
become the one of world’s largest seaports and
petrochemical manufacturing plants. These recent
large-scale infrastructure investments are intended
to lay the groundwork for the Emirate’s transition
away from its dependence on oil production and
towards a knowledge-based economy. With public-
sector driven investments in cutting-edge physical
capital, the Emirate’s leadership envisages the
continued growth of new and adjacent industries.
The 2030 Vision has also sparked the increase of
public sector offerings for businesses. Government
entities such as the Khalifa Fund for Enterprise
Development, a two billion dirham entity aimed at
bolstering small businesses, and the Department
of Economic Development are driving the growth
of private sector enterprises throughout the region
by improving the business environment. Economic
zones with favorable regulatory systems such as
KIZAD and Masdar City have sprung up throughout
the Emirate to drive regional and foreign investment,
mostly in manufacturing and industrial sectors. The
focus on industrial zones, combined with an already
advantageous tax regime, is testament to the
government’s efforts at opening up the Emirate as a
hub for international trade and business.
While early investments were characterized by
large infrastructure projects, the government of Abu
Dhabi is now trying to ensure that its citizens have
the opportunities to succeed in the rapidly changing
economy. Efforts to ‘Emiratize’ sectors, or increase
the number of National citizens in the workforce
have been taken up by the public sector, most
notably the Abu Dhabi Tawteen Council. Increasing
Emiritization requires focused programs and
investments in education, skill development and
training. Training its workforce for high skilled-jobs,
and ensuring that the types of knowledge-based
sectors and industries exist for the local workforce
is the biggest challenge the Emirate currently faces.
As most of the economic activity is driven by the
public sector, this is also the career of choice for
most Emiratis (at least six out of ten Nationals in
Abu Dhabi)
2
. Building a robust private sector and
providing ample opportunities for citizens to excel in
private industries is one of the primary objectives for
Abu Dhabi.
Strong physical development and investment have
impacted the competitiveness of the Emirate by
attracting high levels of trade, commerce, business
activity and an inflow of expatriate workers into
the region. Improving competitiveness for Abu
Dhabi’s next stage will entail further development of
businesses and labor force, so that the Emirate is
an attractive place to do business going forward.
2
SCAD Statistical Yearbook 2012 (2011 data)
11 10
Why regional competitiveness?
While most competitiveness indices provide useful
insight into the economic performance of a country,
granular data at the regional level is necessary
to drive targeted policy and program initiatives.
Evaluating Abu Dhabi not only at the regional
level, but also looking into the key challenges
and successes at the sub-regional level will allow
for more tailored solutions for the people and
businesses in each part of the Emirate.
Regional competitiveness is generally defined as the
capacity of a sub-national economy to attract and
maintain firms with stable or rising market shares
in an activity, while maintaining stable or increasing
standards of living for those who participate in it
3
.
This definition implies a number of guiding
principles in terms of determining regional
competitiveness:
• Regional competitiveness should not only lead to
increasing market share in a particular industry,
but it should also raise or at least maintain the
standard of living in that region, since increasing
the well-being of the population should be
the ultimate goal of all competitive activity.
• Regional competitiveness is determined
by the presence of conditions that enable
firms to compete and generate value.
• Although a region’s competitiveness
is linked to its economic performance,
measurement must also incorporate the
“assets” of the local business environment.
• Regional competitiveness occurs only when
sustainable growth is achieved at wages
that enhance overall standards of living.
4
• A key factor in achieving such growth
is the presence of innovative firms that
ultimately generate new jobs.
• Competitiveness is likely to vary across geographic
space, with regions developing at different
rates depending on their drivers of growth.
Regions that compete solely on the basis of low
wages, low-skilled labor, and low taxes alone will
not be positioned for long-term growth as they will
be at a distinct competitive disadvantage compared
to regions that compete on the basis of higher skills
and higher wages.
Human capital, innovative capacity and the
quality of physical infrastructure all impact the
competitiveness of a sector. These assets in turn
help to attract innovative and creative people which
give a region its competitive advantage. In other
words, competitiveness is increasingly concerned
with creativity, knowledge, and environmental
conditions, rather than being based purely on
accumulated wealth.
Measuring competitiveness at a regional level
provides a better mechanism for governments
to target programs and initiatives, improving
social welfare and economic outcomes where
the greatest gaps exist. There is an emerging
consensus internationally that regions constitute the
new focus of foreign direct investment attraction
strategies; moreover, concentration of R&D and
knowledge transfer at a regional level facilitates the
development of industrial and service clusters that
can have a transformative impact on a country’s
economy. Illustrative examples include the high
tech clusters in Silicon Valley, California and Route
57 in Boston.
Certain regions in a country have specific attributes
that will make them more likely destinations for
investment. Some regions may be more resource
rich than others; other regions may include large
urban centers versus more rural, agrarian areas.
By focusing on competitiveness at a regional level,
governments can better design and implement
programs that can reduce regional disparities.
5
They
can also develop initiatives to encourage foreign
and domestic investment and entrepreneurship
in regions that may be competitive in certain
sectors and promote industry linkages and cluster
development where they are most feasible.
3
Storper, M. (1997) The Regional World: Territorial Development in a Global Economy. Guilford, New York. The definition of
competitiveness equates with the ‘high road of regional competition’, where regions compete by achieving high levels of innovation,
upgrading and growth, rather than the ‘low road competition’ associated with promoting the lower costs of labor, land or capital.
4
Paul Krugman (2003), a renowned skeptic of the competitiveness concept, has in more recent years suggested that the competitiveness
of a region is based on its ability to provide sufficiently attractive wages and/or employment prospects and a return on capital.
5
Huggins, Robert. A Regional Perspective on Competitiveness. Presentation to Competitiveness Office of Abu Dhabi, 6 November 2012
Benchmarks – Overview and
Rationale
In order to better assess Abu Dhabi’s competitive
positioning on an international scale, select
benchmarks were compared across numerous
competitiveness indicators. These benchmarks
provide useful insight into Abu Dhabi’s standing as
they have distinct characteristics that are relevant
to Abu Dhabi’s current economic profile or they are
well aligned with its medium-to-long term strategy
for improving competitiveness. Alberta, Canada,
Norway and Singapore were used as benchmarks
in this report.
The main criteria considered were as follows:
Petroleum abundant
Extensive downstream industry
development
Diversified, knowledge-based economy
High standards of living
Global competitiveness leader
High percentage of foreign labor
High levels of government investment and
wealth per capita
Successful in attracting high levels of
foreign investment and joint ventures
Skilled human capital base
The Norwegian economy is one of the most
competitive and prosperous economies in the world
and its citizens enjoy a high standard of living. Like
Abu Dhabi, Norway is a resource abundant country
with the largest oil and gas reserves in Europe.
These energy resources have played a critical
role in accelerating Norway’s economic growth.
However, Norway has largely diversified away from
oil and gas into the services sector with a focus on
healthcare, social and financial services. Currently,
the oil and gas sector contributes approximately
20% to the country’s GDP.
6
Furthermore, the
government has played an active role in creating an
enabling environment to enhance competitiveness
and generate sustainable economic growth.
Although Singapore has limited natural resources,
it has retained the top rankings in numerous
international competitiveness indices due to
a highly skilled and productive labor force, a
business-friendly environment, and the presence
of several high-technology industries. It is one of
the world’s most favorable business environments
due to a consistent and transparent regulatory
framework, streamlined business processes, and
low personal and corporate tax rates. Similar to Abu
Dhabi, Singapore has relied on an expatriate labor
force to meet the demands of its growing economy.
Singapore’s employment pass scheme has allowed
high caliber foreign workers to obtain jobs and long-
term residency in the country. Due to its limited
natural resources, Singapore focused on developing
its knowledge-based and high technology sectors
early on by drawing on a highly skilled pool of
foreign scientists and workers. During the initial
period following independence, the government
assumed a lead role in developing and driving an
industrial strategy that enabled the city state to
become highly competitive. Singapore applies a
hybrid approach, using both interventionist and free
market strategies to develop its economy.
Alberta, a Canadian province, is another
benchmark for Abu Dhabi. It ranked second after
Norway on the Index of Economic Well-being in
2010. Like Abu Dhabi, it is an oil-rich region
containing the world’s third largest reserves of oil
sands.
7
For the most part, growth in the province
has been driven by exploitation of the oil and gas
reserves; however, Alberta has diversified into the
financial, business services and manufacturing
sectors. Currently, the oil and gas sector contributes
approximately 27% to GDP.
8
As Alberta continues
to exploit its energy resources, it is doing so in an
environmentally responsible manner by setting
emission reduction targets for industries and
regularly monitoring air quality throughout the
year
9
. Alberta has developed a business-friendly
reputation due to its lower than average tax rates
and higher than average standard of living.
Comparisons of Abu Dhabi’s competitiveness with
the aforementioned benchmarks will highlight the
Emirate’s comparative strengths as well as the
opportunities for improvement.
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
6
Statistics Norway, 2011
7
Alberta Energy, http://www.energy.alberta.ca/ourbusiness/oilsands.asp
8
Statistics Canada, 2011
9
Alberta Enterprise and Advanced Education, “Highlights of Alberta Economy, 2012”, 2012
13 12
Improving the overall economic competitiveness of
Abu Dhabi requires a comprehensive assessment
of where the Emirate currently stands, and how
it is driving towards the strategy as set out in
the Abu Dhabi Economic Vision 2030. Because
competitiveness is an overarching theme, which
touches on all aspects of an economy from the
macro to the micro level, it is useful to establish
a framework for assessing those challenges
which remain the biggest priorities for the region.
It is through a competitiveness framework
that policymakers can effectively identify and
evaluate the gaps in competitiveness, and target
recommendations and the most crucial points
for investment. This framework is unique to Abu
Dhabi in that the challenges represent those areas
where the Emirate falls behind select international
benchmarks, providing the rational for further
investigation into how policymakers can improve
the conditions for bolstered economic activity.
The accompanying recommendations are
also specific to the Emirate, as they take into
consideration the numerous ongoing and planned
initiatives for the region by the public sector, and
provide insight into those areas which require
further consideration.
The Regional Competitiveness Index provides
a useful starting point for measuring the overall
landscape of Abu Dhabi, its sub-regions and its
sectors using nearly fifty economic indicators
measuring inputs, outputs and outcomes of
competitiveness. Using the findings from the RCI,
the Competiveness Assessment Framework was
developed by clustering the greatest challenges
into three groups, which represent the main
drivers of competitiveness. Each of these drivers
evaluates competitiveness performance at a
different level, starting with the individual or
worker level, followed by the firm level and then
the aggregate economic profile.
THE COMPETITIVENESS
ASSESSMENT
FRAMEWORK FOR
ABU DHABI AND
ITS SUB-REGIONS
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Skills Gaps
Labor Force
Participation
Entrepren-
eurship
Firm Growth Innovation
Diversificat-
ion
Regional
Disparities
Human Capital
Manpower and Skills
Development Programs
Businesses
Comprehensive
Business
Support Services
Business
Development
Incentives
Economic Structure
Driving Diversified
Investments at the
Regional Level
C
h
a
l
l
e
n
g
e
s
R
e
c
o
m
m
e
n
d
a
t
i
o
n
s
D
r
i
v
e
r
s
The first driver, Human Capital, measures the
capacity of the labor force, and its composition
in terms of skill, education, labor productivity,
and levels of participation by women, youths and
Nationals. This driver is based on the premise that
as Abu Dhabi seeks to transition to a knowledge-
based economy, its stock of skilled human capital
should act as the main engine for growth. The
second driver is Businesses, which takes into
account competitiveness by the firms in the
Emirate. This driver is measured by business
start-up rates, firm-level investment and growth,
and business innovation. Because businesses
are the conduit for economic performance,
evaluating Abu Dhabi’s ability to start, grow, and
sustain high value-added businesses is essential
for improving competitiveness. Finally, the third
driver of competitiveness is Economic Structure,
which takes into consideration the economic
disparities between Abu Dhabi’s sub-regions, as
well as diversification of the economy. This driver
is built on the notion that a region with most of its
economic activity concentrated in one city and one
sector cannot remain competitive in the long run.
Therefore, recommendations in Economic Structure
are solely focused on driving investment into the
Eastern and Western regions of the Emirate, and
furthermore into those strategic sectors prioritized in
the Economic Vision 2030.
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
15 14
The first element of the competitiveness framework
is human capital, which is characterized by the
education, skill level, characteristics and overall
dynamism of Abu Dhabi’s workforce. Not only
does human capital reflect the actual labor force,
but the potential or prospect stock of employees
and entrepreneurs, taking into account the
incentive structure that determines total labor
force participation. In terms of human capital, the
largest differentiator between resource-based and
knowledge-based economies is that the former
depends primarily on its natural resources to fuel
development, while a knowledge economy depends
on its most competitive asset—its people—to drive
growth and innovation. The human capital of an
economy is its greatest strength as it defines the
potential for higher value-added goods and services
and the capitalization of new ideas. The core tools
to transition to a knowledge-based economy are
education, skills development, and institutions
focused on harnessing knowledge transfer.
Inclusivity and equality of opportunity are also
important measures of human capital potential,
as a competitive economy should leverage talent
from as many sources as possible, and not just the
dominant classes of society.
The GCC countries have attracted a wealth of
skilled and unskilled labor into their economies,
largely as a result of the ambitious pace of
industrialization. While four decades have seen
tremendous physical and financial growth in the
Emirate of Abu Dhabi, developing a local workforce
with the skills to drive their economy forward takes
generations of investment. The current state of
the local workforce is still largely driven by foreign
expatriate workers, concentrated in the petroleum
and construction related industries. A stark set of
challenges have arisen, centered around providing
adequate preparation and opportunities for local
citizens, women, and youths to transition into the
private sector. To address these challenges, the
Abu Dhabi government has set ambitious targets to
cultivate the opportunities available for its citizens,
unveiling numerous educational and skill-building
plans to improve competitiveness.
Skill Development
The central measure of a competitive economy’s
human capital is the skill-level of its workforce.
There is no quick solution for developing and
attracting high skilled-workers, entrepreneurs, and
innovators, and different competitive economies
have pursued unique ways of increasing the skill
levels of their workforce. Generally speaking, many
competitive economies such as Singapore take
a two-pronged approach to increasing the skill
capacity of their economy.
The first, and more immediate approach, is to
provide numerous incentives to attract experienced
professionals from abroad to join the domestic
labor force. By providing financial incentives
to private companies, ensuring a multitude of
job opportunities for expatriates, setting up a
favorable tax regime, and providing numerous
support services for high skilled foreign workers,
HUMAN CAPITAL
governments have been able to drive forth
ambitious development goals. The GCC has relied
heavily in the past on this method, starting in the
oil and gas industry in the seventies and then
more recently in a host of other industries such as
finance, insurance and other professional services.
This top down approach has its merits, mainly
in that clustering high-skilled professionals has
reverberations throughout other aspects of the
economy. More importantly, ensuring a steady
inflow of high-skilled workers allows for human
capital development to keep pace with the rapid
pace of physical infrastructure spending. Abu Dhabi
has attracted numerous foreign workers into its
economy, but the majority of them have largely
been in low-skilled sectors such as construction
or low-value-added sectors. According to the
Statistics Centre of Abu Dhabi (SCAD), the labor
force in Abu Dhabi was estimated to be over 1.4
million in 2011, out of which 130,000 or 9.1% are
UAE nationals and the rest, more than 1.3 million
workers are non-nationals
10
. While an influx of
foreign workers benefits an industrializing economy
through the availability of affordable imported labor,
the focus now must shift to attracting high skilled
experienced professionals who are capable of
transitioning Abu Dhabi into a knowledge economy.
Currently, Abu Dhabi falls behind other resource
rich economies in the ratio of high-skilled to
low-skilled labor, which is a result of rapid and
continuous physical development over the past
four decades. Labor is largely in infrastructure
related industries, as the Emirate modernizes its
transportation and urban landscape. The number of
managers per 1,000 employees provides a sense
of the skill level of an economy and the industries
it attracts. Innovative or high skilled sectors
such as professional services are characterized
by a stronger manager to employee ratio, while
low value-added sectors such as construction,
demonstrate the opposite trend. Transitioning into
“The number of managers per 1000 employees provides some
indication of the concentration of knowledge workers in an
economy. Managers, professionals and high-end technical
workers are a vital part of the knowledge production process.
There is increasing recognition of the role played by these
workers as a source of innovation and whose responsibility it is
to stimulate investment and growth. These workers include the
‘creative class’ of employees whose value is specifically their
intelligence…Managers are usually the employees that find
efficient ways of working with new technology, and are a vital
stimulus in the diffusion of such technologies. Their importance
is recognized by the fact these workers not only provide the
highest value-added to an economy but also receive the highest
level of financial remuneration.”
Professor Robert Huggins,
World Knowledge Competitiveness Index
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Abu Dhabi
0
40
80
120
160
20
60
100
140
180
Alberta, Canada Norway Singapore
Number of Managers Per 1,000 Population (2011)*
*The year stated in each graph with regional benchmarks is the year for
Abu Dhabi’s data
10
SCAD Statistical Yearbook 2012
17 16
a knowledge economy will require investment into
attracting highly skilled minds to the region. As is
mentioned in the following section on Businesses,
providing visas, seed capital, and support services
for entrepreneurs are all effective ways of attracting
fresh talent and skills into the region.
Ultimately, the goal of a competitive economy is
not to solely rely on importing skill into the region,
but rather to develop the capacity of the local labor
force. The second and long-term approach to
improving human capital is to ensure that National
citizens have the support and resources available
to excel and become active participants in their
economy. As identified in the Economic Vision
2030, cultivating the skills and knowledge-base of
Emiratis is one of the most urgent priorities of Abu
Dhabi: “Human capital will be enhanced through
the improvement of education, training, and other
methods to improve both the employability of
Nationals and the productivity and competitiveness
of the workforce in general.”
Improving employability also means preparing and
incentivizing local citizens to actively participate
in the private sector. Currently, the private sector
accounts for nearly 4% of total employment of
Emirati workforce in Abu Dhabi, according the
Abu Dhabi Tawteen Council (ADTC).
11
Of the
local citizens who do choose a career in the
private sector, few are in high-skilled professional
services and key knowledge industries, as most
local businesses are in wholesale retail and trade.
Around 84 % of Emirati-owned businesses in Abu
Dhabi are in the trade sector, whereas professional
services only account for 3.1%
12
.
At a sub-regional level, Al Gharbia faces the biggest
challenges in providing its local citizens with enough
opportunities for specialized and high-level skill
development. The Western Region Development
Council has begun to address this by pairing with
universities to provide education and career fairs, and
the Abu Dhabi Vocational and Educational Training
Institute (ADVETI) has invested in skill-building for
al Gharbia residents by providing practical training
courses and workshops based on the German
Vocational Education System. These initiatives are
commendable, and necessary to grow the human
capital skill base in Al Gharbia. Increased investment
in specific skills training for target industries should
remain a key priority going forward.
The Singapore Workforce Skills Qualifications
(WSQ) is a national credentialing system. It
trains, develops, assesses and recognizes
individuals for the key competencies that
companies look for in potential employees.
Objectives of WSQ:
• Supports the economic development of Singapore
• Ensures that workers are equipped with transferrable
skills to enhance labor market flexibility
• Enhances productivity of workers
Key features of WSQ:
• An occupational and competency-based system
designed to build industry-specific skills
• Assessment and certification are based on ability
to demonstrate the industry’s required skills
• Accessible to all workers and professionals
as WSQ’s entry criteria include skills and
knowledge and not formal qualifications
Key benefits of WSQ:
• Career path planning and assistance
for entry into a new industry
• Skills upgrading and career advancement
through clear progression pathways
• Improved performance management
systems and training programs
Sources: Ministry of Manpower Singapore; Singapore
Workforce Development Agency: International Seminar
on “National Qualification Framework (NQF): Policies and
Strategies”, 2011
The Competitiveness Assessment
Framework for Abu Dhabi and its Sub-Regions — Human Capital
11
Abu Dhabi Tawteen Council: http://www.abudhabi.ae/egovPoolPortal _ WAR/appmanager/ADeGP/Citizen? _ nfpb=true& _
pageLabel=p _ citizen _ en _ homepage _ hidenav&did=254196&lang=en
12
Business Licenses in Abu Dhabi, Abu Dhabi Department of Economic Development (2012)
planning process to introduce a PhD program. As
expanded upon later, establishing more formal
research and development labs and advanced
degree programs are integral steps to increasing
levels of innovation for the Emirate.
At a regional level, Al Ain leads the Emirate in
educational achievement due to the presence of
United Arab Emirates University, which is one of
the largest and most prestigious universities of
the region. Its presence has allowed for a higher
concentration of jobs in knowledge services,
and has succeeded in attracting larger numbers
of women into the workforce. The Emirate has
struggled to attract university graduates, with
just under 10% of Nationals holding university
degrees.
15
This is particularly notable in the
Western Region, which lacks the presence of
higher educational institutes. Without a major
technical or petrochemical university devoted to
exploiting the region’s vast reserves of oil and gas,
most students have to leave the region for Abu
Dhabi City or Al Ain to pursue a higher education.
More importantly, the region has not been able to
provide enough high skilled jobs for graduates to
attract them to work and set up businesses in Al
Gharbia upon graduation.
Attracting high-skilled Emirati’s to work in the
private sector in Al Gharbia has been a challenge
for the region, with the petroleum industry being
an exception. Efforts to increase local participation
in the private sector in Al Gharbia are mainly
driven by the WRDC in collaboration with different
governmental agencies. The WRDC signed an
MoU with the Abu Dhabi Chamber of Commerce
and Industry (ADCCI) aiming to attract the private
sector to the region as well as “involving and
training the local community and ensuring that
they have the capability to play an effective role
in the process”
13
. There are ongoing efforts to
provide job opportunities to talented locals in Al
Gharbia, of note are the Emiratization programs by
the Western Region Municipality and Al Gharbia
Hospitals. While public sector positions can
improve the employment outlook for the region,
pairing high-skilled private sector training programs
with internships and job opportunities in al Gharbia
will have the greatest effect on the region’s human
capital competitiveness.
Education
While Abu Dhabi fares well on basic measures of
educational attainment, such as its high literacy
rate (92%), or enrollment rates (Secondary
education enrollment rates are 88%
14
), one of
the biggest areas for improvement is in higher
education, where the Emirate needs to focus on
growing the number of highly qualified university
graduates. Because a highly educated population
is essential for any economy looking to diversify
into value-added and knowledge industries,
improving the quality and offerings of universities in
the region should be a key priority going forward.
Recent partnerships with esteemed international
universities such as Paris-Sorbonne University,
INSEAD and New York University bode well for the
educational outlook of the Emirate.
Doctoral programs, which are closely linked with
a region’s knowledge output (such as patent
registry, published journal articles, and research
and development), are still relatively new to the
GCC and are thus quite limited in their offerings.
Currently three universities offer PhD programs in
Abu Dhabi and two more universities are in the
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
13
The Western Region Development Council (2008) – http://www.wrdc.ae/ar/text/news-d.aspx? _ id=66
14
SCAD Statistical Yearbook 2012
15
Strategy Plan 2013 – 2017, WRDC(2012) – SCAD 2009
Abu Dhabi City Western Region Al Ain
9.70%
9.71%
9.72%
9.73%
9.74%
9.75%
9.76%
9.77%
% Of Population with University Degrees (Nationals-10
Years and Over) (2011)
Source: SCADStatistical Yearbook 2012
19 18
as well as the availability of jobs in knowledge
services have attracted local women into the
workforce. Because Al Gharbia’s economy is still
centered around the petroleum industry, which has
been traditionally male dominated, women in the
Western Region face a shortage of desirable jobs.
In Al Ain, the Ain Al Mustaqbal initiative launched
by the Abu Dhabi Tawteen Council has started
encouraging female employment by providing
female job seekers with career needs assessments
and by identifying available job opportunities.
Overall, unemployment of Nationals is a concern
for the region, and particularly Al Ain where
unemployment is the highest among Nationals.
To address this challenge, the Abu Dhabi Tawteen
Council (ADTC) and other public sector entities
have tried to increase Emiratization levels in Abu
Dhabi. Ultimately, in order to meet this objective,
private sector job skills training and increased
assistance to young entrepreneurs is necessary
to attract Nationals into the labor force in higher
numbers. Expanding the local pool of labor and
talent and providing them with job opportunities
will require additional support services for
businesses and job-seekers alike.
Improvement areas
Labor profiling, mapping and skills
training
As the public sector positions itself as a provider
of training and skills development for Nationals, it
is essential to target programs to meet the specific
needs of Abu Dhabi and its sub-regions. This first
requires building up a robust base of intelligence
covering the local labor force at the sub-regional
and sector level. Developing detailed labor force
profiles for Al Ain, Al Gharbia and Abu Dhabi city
will provide both businesses and policymakers with
valuable information on the specific composition
as well as needs of the region’s workforce.
Profiles detailing education, skills, experience,
specialization, gender, visa status and other key
attributes can then be mapped against business
Labor Force Participation
In addition to providing skills training and
educational opportunities for the current labor force,
a top priority for the Emirate should be encouraging
new entrants into the workforce. At current levels,
female participation is extremely low for the region,
a trend that is mirrored throughout the GCC.
Females account for only 15% of the labor force
16
,
and a primary incentive for the Emirate should be
the potential untapped pool of human resources
available if more women were encouraged to join
the workforce. Part of the reasoning behind this
low number can be explained by the influx of male
laborers in construction and infrastructure related
industries, where there are few jobs available
or desirable for women. But even controlling for
foreign labor, female participation still lags behind
international resource-abundant benchmarks.
Ensuring that there are enough desirable
employment opportunities for females will help
improve labor force participation rates for Nationals
and diversify the composition of the workforce.
At the sub-regional landscape, both Al Ain and
Abu Dhabi City have provided job opportunities
for women, largely in education and the public
sector. The prevalence of schools and universities,
The Competitiveness Assessment
Framework for Abu Dhabi and its Sub-Regions — Human Capital
16
SCAD Statistical Yearbook (2012)
Western Region Abu Dhabi City Al Ain
0
5
10
15
20
25
Female Labor Force as % of Total Labor Force (2011)
Source: SCADStatistical Yearbook 2012
Petroleum Institute in the Western
Region
The Western Region, which boasts the largest
wealth of oil and gas reserves of the UAE, does
not yet have a university or campus focused on
petroleum products. The natural solution would
be to open a branch of the Petroleum Institute in
Al Gharbia, which could act as a hub for initiatives
and activities in the Western Region. By offering
skills and education opportunities as well as
business and cluster incubation services around
petrochemicals, the Institute could take an active
role in developing the Western Region.
activities, investment, and training opportunities.
Identifying the most prevalent gaps will allow for
training programs tailored for the specific needs of
each region and its priority industries.
Internship programs
To encourage participation in the private sector,
the public sector should work in conjunction with
private companies in the three regions to offer
formal internship programs for local students. By
organizing and subsidizing internship programs,
the government can help incentivize students to
consider positions in the private sector, while also
providing them with valuable training.
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
21 20
Competitiveness Success Story
The Competitiveness Assessment
Framework for Abu Dhabi and its Sub-Regions — Human Capital
UAE University
Building a Home-Grown Research Infrastructure
The Al Ain based United Arab Emirates University was established in 1976 as the
first truly national research university in the UAE. UAEU consists of nine colleges
focused on the following areas: Humanities and Social Sciences; Science;
Education; Business and Economics; Law; Food and Agriculture; Engineering;
Medicine and Health Sciences; and Information Technology. In 2009, UAEU
became the first national institution in the UAE to offer a PhD program.
Enrollment in the university has increased from 502 students during the 1978-
79 academic year to 13,075 students registered during the 2011-2012 academic
year.
UAEU’s emergence as one of the leading universities in the world is reflected
in its 2012 designation by (QS) World University rankings as one of the top 50
universities in the world that were established within the past 50 years. Moreover,
during the past 10 years, UAEU’s research faculty members have received over
AED 230 million in research funding. Specifically, research groups at UAEU
support a number of industries and companies such as Total, Global Foundries,
Mubadala and Strata. Such partnerships help these firms to grow further and
develop new products while students benefit by having access to internship
opportunities offered by these companies.
Also, the university has established a number of training programs by
collaborating with a variety of companies. For example, Mubadala Aerospace has
signed an AED 4.9 million agreement with UAEU to train Emirati technicians to
work at Strata’s aircraft composite production facility. This program will introduce
around 100 Emirati employees to Strata by early 2015.
Part of UAEU is the Emirates Center for Innovation and Entrepreneurship, which
was established in 2008. It provides training as well as mentoring and serves as
an incubator to facilitate new start-up businesses and commercialize technology
initiatives and business ideas.
Source: UAE University; Mubadala
Competitiveness Success Story
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Abu Dhabi Education Council (ADEC) — New School Model Equipping
Young Emiratis with the Tools to Build a Vibrant Knowledge Economy
The New School Model (NSM) was rolled out by ADEC initially in schools ranging
from KG1 to Grade 3 in 2010 and is planned to be implemented in all ADEC
schools by 2016. The NSM will address existing challenges in Abu Dhabi’s
public school system to drive concrete and specific improvements in education
delivery. It is a comprehensive foundation for learning that will facilitate the
delivery of desired student outcomes by improving key elements of the overall
educational experience: teaching quality, learning environment, school leadership,
and parental involvement. Within this model, a new curriculum and new teaching
methods will be introduced in order to develop creative, independent-thinking
students who are problem-solvers.
Key elements of the NSM include:
• Improving teaching quality
• Creating a student-focused learning environment
• Developing Arabic and English language abilities; improving
critical thinking, problem solving, and abstract and quantitative
reasoning skills; and applying rigorous pedagogical tools
• Standardizing the pedagogy and resources across all ADEC schools
• Improving school facilities and resources
The education reform is projected to impact more than 700 schools, 330, 000
students and 20, 000 teachers by the time that NSM is fully implemented. During
its first phase of roll out, the NSM is expected to involve 177 schools, 38,000
students and 4,000 teachers.
A central element of NSM will be a greater focus on improving the quality of
Science, Technology, Engineering and Mathematics (STEM) education and
increasing the number of students who study science-related subjects. This will
be achieved through curriculum reform, content development, and creating a path
to STEM-related higher education, employment and entrepreneurship.
Through NSM, ADEC expects that 70 per cent of students graduating from Grade
12 will not need bridge programs by 2018 in order to enter universities, whereas
currently nine out of ten students entering some of the largest federal institutions
require a bridge program.
Source: Abu Dhabi Education Council (ADEC); Abu Dhabi Government, www.abudhabi.ae; www.
khaleejtimes.com
23 22
Following Human Capital, Businesses comprise the
second driver of the Competitiveness Assessment
Framework. The strength and performance of a
regional economy is measured by the activity of its
businesses, including the environmental conditions
that enable businesses to grow and prosper.
This driver measures the entire value chain of
doing business, starting with entrepreneurship—
how advantageous and feasible it is to start a
business—to firm growth, financing, and the sale of
goods and services.
Entrepreneurship levels measure the attractiveness
of the region as a place to start a business, which is
a direct reflection of the supporting conditions such
as laws, regulations, and administrative barriers.
Once a business has been formed, firm growth
requires capital investment. Of particular interest is
business investment and capitalization, as a highly
competitive economy should not only have sufficient
liquidity, but numerous avenues by which to invest
in new business ideas. Firm growth is analyzed by
investment, financing, and venture capital activity
as well as by exports and actual revenue growth
of goods and services. Finally, the business driver
of competitiveness is evaluated by innovation, or
a business’s ability to create differentiated and
specialized goods and services. While there are large
gaps in comparable data measuring knowledge and
innovation of businesses, patent registration, R&D
activity and other intellectual property production
measure the competitiveness through the
commercialization of ideas.
Entrepreneurship
A highly competitive region is one where
entrepreneurs can capitalize on their ideas by
starting new businesses, raising capital, and
selling their goods and services in the marketplace.
Creating a ‘culture of entrepreneurship’ is an
important concept for competitive economies, as
it shows the region’s ability to remain dynamic by
meeting consumer demands with new business
offerings. An entrepreneurial society also suggests
that a region is willing to absorb a certain amount
of risk in order to heighten the chances of
producing new businesses that can transform the
competitive landscape. Because start-ups have
a relatively low success rate, the idea is that for
every handful of business failures, there will be one
stand-out product or service that will have strong
market potential. Even in Silicon Valley California—
the global leader in technology and home to the
largest number of startup companies per annum—
the business success rate for new start-ups is just
8%.
17
The goal of a highly competitive region is to
foster high levels of entrepreneurship, and support
those businesses with strong market potential to
increase the success-rate of new businesses.
BUSINESSES
Entrepreneurship has been growing in the GCC
substantially over the past decade, with the MENA
region witnessing a 28% growth in the number of
venture capital and SME deals executed in 2011
over 2010.
18
The government of Abu Dhabi has
made entrepreneurship a priority for the Emirate,
with a goal of becoming “a sustainable, diversified,
high-value added economy that encourages
enterprises and entrepreneurship.”
19
Creating
the ideal conditions for entrepreneurs has been a
challenge for the region, as reflected by business
start-up rates, which in Abu Dhabi are less than
half of what they are in Singapore. Business start-
ups and micro-enterprises can act as remedies
to help allay unemployment concerns for youths
and Nationals in the region, which is why effective
policies and initiatives for business start-ups could
have reverberations throughout the economy.
Because business start-ups are small by nature,
administrative barriers that require substantial
payments, time, and personnel disproportionately
affect new businesses. To address this issue, the
Abu Dhabi Department of Economic Development
(ADDED) has spearheaded information gathering
and cost-benefit analysis studies on impediments
to doing business in the region. They have seen
some early success such as merging inspection
procedures and waiving a waste management fee
for new businesses. Reducing additional costs and
procedures for new businesses would remove some
of the barriers prohibiting entrepreneurs from taking
their business plans to market. With the opening
of the Abu Dhabi Business Center, which will
streamline licensing and business processes, the
Emirate should see improvements in the climate for
starting and registering new businesses.
Entrepreneurship is not necessarily synonymous
with innovation, and one of the other challenges
for the region’s start-ups is providing goods and
services that are unique to the marketplace.
General retail and trade shops which are low
growth, low skilled, and low technology activities
are still the most prevalent choice among start-
ups in Abu Dhabi. While new firms benefit the
economy by increasing employment and business
activity, the priority should be encouraging
entrepreneurs in key knowledge and skilled
sectors. Supporting start-ups around clusters that
contribute to the general knowledge, technology
and innovative output should be the key emphasis
of public sector efforts in this arena.
In Al Gharbia, micro and small businesses
account for 80% of Emirati-owned SMEs, the
majority which are male-owned trade and retail
businesses (See Al Gharbia SME Chart). Improving
competitiveness at the sub-regional level will require
substantial investment in bringing high-skills,
technology, and financing into the Western Region.
Lack of access to cutting edge universities and
technology, as well as distance from the capital city
has limited the opportunities for Western Region
entrepreneurs. Low female participation in the
labor force also has ramifications for female-owned
businesses, which are roughly a quarter of total
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Abu Dhabi Norway Singapore
0
2
4
6
8
10
12
New Firm Generation – Number of New Firms Per 1,000
Population (2012)
18
MENA Private Equity Association 2012 Report
19
Abu Dhabi Economic Vision 2030
17
Deloitte U.S Research
25 24
SMEs for the region. WRDC has started a “Women
in Technology” skill-building program to address this
issue, but increased funding and targeted business
services such as incubators focusing on start-ups
in knowledge sectors or female entrepreneurship in
the Western Region are necessary to improve the
business climate in Al Gharbia.
In Al Ain, international companies make up 1%
of the total businesses, while local SMEs account
for almost 70%. Like the Western Region, most
of these small businesses operate in low-skilled
sectors such as retail and trade, with a large
percentage also in the construction industry.
This suggests a huge potential for increased
entrepreneurial activity in the Eastern Region,
particularly given the strong numbers of university
graduates as well as the high unemployment rate
for the region. More robust programs to encourage
graduates in Al Ain to start businesses in key
knowledge sectors could impact the region’s
competitive landscape substantially.
One way of driving entrepreneurship in priority
sectors and regions is to provide incentives for
global entrepreneurs to start their businesses in the
Emirate. By offering a fast-track visa, seed capital,
and business support services to entrepreneurs in
specific fields, Abu Dhabi can promote the growth
and cluster development of key sectors. Providing
support services to entrepreneurs at all stages of
the business value chain can also improve the
sophistication and success-rate of new businesses.
Business incubators provide an ideal environment
for both local and global entrepreneurs, as they
facilitate all start-up activities and promote the
growth and capitalization of new ideas.
Source: WRDC database of active National
entrepreneurs in Al Gharbia (input from
TAMM, DED licensing databases); total
number ~280,
The Competitiveness Assessment
Framework for Abu Dhabi and its Sub-Regions — Business
Micro and Small
Businesses
Medium
Businesses
Female
Owned SMEs
Male
Owned SMEs
Services
Trade and Retail
Contracting
Transportation
Manufacturing
Mixed Businesses
Oil and Gas Services
Other
81%
19%
78%
22%
Active National Entrepreneurs In Al Gharbia
Al Gharbia SME’s by Sector
Al Gharbia SMEs by Gender
The Global Entrepreneur Program is offered by UK
Trade & Investment, a government department
that helps UK-based companies succeed in the
global economy and assists overseas companies to
invest in the UK. The GEP mission is to attract the
world’s best sustainable, early-stage companies and
entrepreneurs to set up their global headquarters in
the UK.
The GEP program is aimed at overseas based
entrepreneurs and early stage businesses that are
considering relocating their business to the UK.
Sample Services
• Provides an “entrepreneurs visa” for individuals
looking to come to the UK to set up their business
• Connects entrepreneurs with investors,
human resources and strategic partners
• Extended period for business registration
Sample Program
Springboard is a mentorship-led accelerator program
for start-ups, providing seed capital, office space and a
“smart-community” with mentors and other entrepreneurs.
It is an intensive 13 week program based at Google
Campus in London and ideaSpace in Cambridge.
Impact
The program has helped over 200 entrepreneurs and early
stage companies to establish in the UK since 2009 and
it has raised over US$200 million worth of investment
capital.
Source: www.ukti.gov.uk
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Mining and Quarrying
Education
Information and
communication
Insurance and
financial services
Real estate
Professional activities
(scientific & technical)
Hospitality and food
Light Manufacturing
Other
Construction
Wholesale and
retail trade
Education
Information and
communication
Insurance and
financial services
Mining and Quarrying
Real estate
Hospitality and food
Professional activities
(scientific & technical)
Light Manufacturing
Other
Wholesale and
retail trade
Construction
Education
Information and
communication
Mining and Quarrying
Light Manufacturing
Hospitality and food
Real estate
Insurance and
financial services
Professional activities
(scientific & technical)
Other
Construction
Wholesale and
retail trade
Business Licenses by Sector: Al Ain (2012)
Business Licenses by Sector: Abu Dhabi City (2012)
Business Licenses by Sector: Al Gharbia (2012)
Sources: Abu Dhabi Department of Economic Development, 2012
27 26
Firm Growth:
Abu Dhabi has made concerted efforts over the
past decade to improve the climate for businesses,
and has identified Small to Medium Enterprises
(SMEs) as one of the engines for economic growth.
Of the 300,000 enterprises in the UAE, 94% are
SMEs, and these businesses contribute 60% to
GDP and 84% to employment.
20
This presents
an opportunity to increase the economic output of
these businesses, where the public sector has a
significant role to play in shaping the environment
in which they operate. Improving competitiveness
at the firm level requires attention to how small
businesses receive financing and connect with
other businesses and customers.
The first step of supporting growth for small
businesses in Abu Dhabi is improving access to
finance. Currently, most lending activity comes
from the public sector, as local banks and private
investors are hesitant to take on significant
risk from small businesses. In response to the
need for additional business financing, the Abu
Dhabi government launched the Khalifa Fund for
Enterprise Development in 2007, which consists
of a 2 billion AED fund with the aim “To fuel
an entrepreneurial culture, drive innovation and
sustainable growth of Emirati SMEs that contribute
to the social and economic development of
Abu Dhabi, by providing access to services and
financing, and by facilitating an SME-friendly
environment”
21
. Lending to small businesses is not
exclusive to the Khalifa Fund, and small firms in
specific sectors such as media and technology can
also take advantage of lending programs through
Economic Free Zones.
Direct public sector loans to SME’s can allow firms
to invest in adequate human and physical capital
and help them increase their reach outside their
locale. But the public sector can also encourage the
private sector to take on a larger role in business
financing by reducing risks to lenders and hence
encouraging greater levels of financial investment.
Bank loans, private equity buy-outs, venture capital
activity and private sector angel investors are still
low in the region, which means there are still
questions about the risk profile and perceived return
on investment for small businesses in Abu Dhabi.
Benchmark Case Study:
Financial Accounting for Small Businesses in the EU
The 2008 Small Business Act for Europe recognizes the
central role of SME’s in the EU economy and puts into
place a comprehensive SME policy framework for the
EU. Part of this new initiative was ensuring that SME’s
have the capacity to comply with international financial
reporting standards.
The initiative had three components:
Accounting guide for SME’s
The ‘Accounting guide for SME’s’ contributes to
the development of good accounting practices for
European SME’s which are subject to an unnecessary
high administrative burden at a national level. It also
provides stakeholders with information about current
good accounting practices in Europe. This is particularly
beneficial to European SME’s which are not covered by
harmonized EU accounting rules.
Study on accounting requirements for SME’s
The study provided recommendations on possible future
accounting requirements for SMEs such as complying
with the International Accounting Standards (IAS) and
International Financial Reporting Standards (IFRS) which
were adopted by the EU in 2002.
Accounting for small enterprises - Recommendations and
good practices
This study provided recommendations and practices for
how governments can assist SME’s to produce financial
records
Benefits of the Small Business Act:
• Facilitates SMEs’ access to funding
• Adapts public policy tools to SME needs
• Creates an entrepreneurial environment
Source: European Commission
The Competitiveness Assessment
Framework for Abu Dhabi and its Sub-Regions — Business
One explanation for this is the lack of financial
transparency and accounting information for small
businesses. Because Abu Dhabi does not tax
corporations, private businesses are not required
to keep financial records or go through a regular
auditing cycle. Hiring accountants to produce
financial records can be expensive and time
consuming for SMEs, so they are much more likely
to have gaps in financial information.
This has numerous ramifications for firm growth,
as banks are less likely to lend to small businesses
with no financial records, as is the same for other
potential investors, joint venture partners, private
equity and venture capital firms, and export
partners. Capacity building and policy support
around financial transparency is necessary to
improve the outlook for small businesses to receive
private sector financing.
The venture capital appetite in the Emirate is still
modest, partially due to the level of post-investment
services needed after initial capital investments
22
.
Similarly, private equity spending is low compared
with international benchmarks, albeit higher than
other GCC regions. By funding post-investment
services through government sponsored business
incubators, the public sector can work with private
Benchmark Case Study:
Venture Capital Funds in Singapore
The Singapore government has been encouraging venture
capital investments and activities since the 1990s. It has
rolled out several initiatives to enable start-ups to gain
access to funding. These funding initiatives include cash
grants, government backed equity financing schemes,
business incubator schemes, debt financing schemes, and
tax incentives:
Government-aided equity financing schemes (Business
Angels Fund (BAF) Scheme)
The Business Angels Fund (BAF) Scheme is an equity
investment scheme where SPRING SEEDS Capital, a
subsidiary of government agency SPRING Singapore,
co-invests in growth-oriented, innovative Singapore-
based start-ups along with pre-approved business angels
matching dollar-for-dollar up to a maximum of S$1.5
million
Cash grants (ACE Start-ups Scheme):
ACE Start-ups Scheme is a financial assistance scheme
where ACE (Action Community for Entrepreneurship) will
match S$7 to every S$3 raised by an entrepreneur for up
to S$50,000
Business incubator schemes (Incubator Development
Program):
The Incubator Development Program that is administered
by SPRING Singapore provides up-to 70% grant support to
incubators and venture accelerators who actively introduce
programs that help nurture start-ups, hire incubator
managers, train staff and provide shared services/
equipment for start-ups
Debt financing schemes (Micro-Loan Program):
Participating banks and financial institutions will lend
eligible Singaporean companies loans of up-to S$100,000
for their daily operations or for automating and upgrading
factory and equipment
Source: Singapore Government
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Singapore Norway Alberta,
Canada
Abu Dhabi
0
100
200
300
400
500
600
700
Per Capita Private Equity Investment (2011) (USD)
20
SME – UAE Magazine-Abu Dhabi Commercial Bank (ADCB)
21
Khalifa Fund- http://www.khalifafund.gov.ae/En/AboutUs/Pages/Overview.aspx
22
IKED 2010 Report: Towards Innovation Policy in Abu Dhabi: Indicators, Benchmarking, and Natural Resource Rich Economies
29 28
Innovation
Knowledge-based economies are distinguished
by their ability to commercialize innovative
ideas, products and service offerings. Firm-level
innovation impacts a region’s competitiveness
as it allows the economy to compete in a global
marketplace through ideas as opposed to low labor
costs or natural resources alone. Innovation varies
greatly between industries and regions, and thus is
difficult to measure categorically, but the research
and development activities of firms and academic
institutions are useful indicators. Likewise, patent
production and intellectual property trends indicate
the region’s emphasis on protecting the value of
new ideas and products. Business innovation
often comes in the form of service or product
improvements rather than breakthroughs, so one
means of looking at a region’s innovative capacity is
the use of advanced technology as well.
Abu Dhabi has made substantial investments in
improving its innovative capacity, particularly in the
field of Science, Technology and Information (STI).
Through the Technology Development Committee
(TDC), the public sector has channeled funds into
improving the Emirate’s technological and innovative
capacity. The Takamul program helps in raising
awareness of protecting intellectual property, patent
applications and filing, which are low in the region
compared to international benchmarks. In Alberta
and Norway, businesses have leveraged the region’s
natural resource advantages and filed patents for
innovations in oil and gas extraction. According to
NIPO and Capital IQ, in 2012 ExxonMobil filed 749
patents in Norway, while Statoil filed 677
24
. Abu
Dhabi should use its expertise and knowledge in
natural resources as a starting point for increased
patent production, and then broaden to other
industries where it has specific expertise.
One means of improving patent production and
supporting innovation in Abu Dhabi is to increase
the number of doctoral programs and labs in the
region, and cluster them with local industries to
promote industry innovation.
Ensuring that international businesses bring
technology and innovation to the region is also
important for local firms that work throughout their
supply chain. The Emirate has strengthened its
intellectual property laws to incentivize businesses
with sensitive intellectual content to do business in
the region, and patent, trademark and copyright laws
were updated in 2002 to protect intellectual property.
firms on encouraging SME lending. These services
should include capacity building and financial
advisory as well as regular operational expertise.
There are ample opportunities in Abu Dhabi and
the GCC region for the government to work with
the private sector to encourage the provision of
private sector funding mechanisms. According to
the World Bank, “SME bank lending in the MENA
accounts for less than 8% of total lending. In the
Gulf Cooperation Council (GCC) states, it is dismally
low at 2%. Lack of access to capital is often cited
as one of the key constraints to the scaling up of
SMEs in the region. Yet, this gap also represents an
opportunity for private equity and venture capital
firms to provide the financial and strategic support
that such firms need”
23
. Developing specific private
equity and venture capital funds for Abu Dhabi’s
three regions would improve the overall SME
financing landscape.
Lastly, firm growth is closely associated with
the business environment and infrastructure of
a region. Abu Dhabi has focused on providing
Economic Free Zones and establishing business
clusters to help foster industry linkages between
companies operating in the region. Twofour54
and KIZAD are examples of free zones that work
to attract the best and brightest companies in
their various sectors. The zone tenants range from
internationally established companies to start-ups,
where the smaller firms have access to mentoring
and support services. Zones provide numerous
services for smaller companies, but only a fraction
of total small businesses can reap the benefits of
economic zones due to their highly selective nature.
Connecting small businesses with adjacent
companies in their sector or value chain can help
improve firm growth by overcoming information
barriers. Industry linkages and clusters should not
be exclusive to Economic Free Zones, and ADDED
has started to address this issue by providing
industry linkage and market intelligence services to
select companies, and has recently announced the
establishment of an Export Promotion Agency to
facilitate in this field. Developing detailed industry,
sector and regional cluster maps to businesses can
break down some of the information barriers that
prevent industry linkages as well.
The Competitiveness Assessment
Framework for Abu Dhabi and its Sub-Regions — Business
Improvement areas
In order to improve the business climate in
the region, Abu Dhabi needs to increase the
availability and sophistication of support services
and development incentives for businesses.
This includes ensuring that lack of financing or
information barriers do not prohibit entrepreneurs
and good ideas from going to market. While the
public sector has committed funds to increasing
finance, further development could come in public
private partnerships, where the public sector can
fund initiatives operated by the private sector.
This should especially be utilized in business
training and capacity building, incubator services,
investment and venture capital funds, and IP
funding—which are all arenas where private sector
dynamism and expertise can be best utilized by
local companies.
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Singapore Norway Alberta,
Canada
Abu Dhabi
0
100
200
300
400
500
600
Number of Patents Registered Per 1 Million
Population (2009)
Rank Country Petroleum
Engineering
Geophysics Petroleum
Geology
Total
1 United States 56 240 31 327
2 Japan 8 51 1 60
3 Netherlands 2 31 1 34
4 United Kingdom 2 25 0 27
5 Germany 1 21 1 23
6 France 0 19 2 21
7 Canada 1 14 4 19
8 Italy 1 6 0 7
9 Norway 0 4 0 4
10 Australia 0 3 0 3
10 Russia 0 3 0 3
10 Ukraine 0 3 0 3
13 Brazil 0 2 0 2
13 China 0 2 0 2
Oil and Gas Patents (2002-2006)
25
23
MENA Private Equity Association 2012 Report
24
Harvard Business School, Microeconomics of Competitiveness, Norway: Oil and Gas cluster: A Story of Achieving Success
Through Supplier Development, 2012
25
Kingdom of Saudi Arabia Ministry of Economy and Planning, Strategic Priorities for Oil and Gas Technology Program
31 30
Business Incubators
Business Incubators help small companies
and entrepreneurs with the potential to offer
differentiated and specialized products and
services succeed in the marketplace. The business
incubator is set up to assist with every aspect of
business services and offer the entire value-chain of
support for its tenants.
An incubator should house numerous businesses
services available under one roof and set the
conditions for potential growth. Once the culture
of business incubators is adopted in the Emirate,
specialized and sophisticated incubators can
emerge around priority industries and specific
services such as technology adoption.
The public sector should work in tandem with
industry leaders and economic zones to promulgate
the use of incubators throughout the Emirate and
its three regions. Rather than establishing wholesale
public sector incubators that act as funding units,
which might detract from the dynamism of private
sector business service offerings, one option
could be for the public sector to design and fund
incubators, but turn them to the private sector
to operate. This would allow the public sector to
drive the initiative while the private sector ensures
market-driven achievements.
Benchmark Case Study: Technology Incubation
Scheme in Singapore
The Technology Incubation Scheme (TIS) is part of the
National Framework for Innovation & Enterprise (NFIE),
which was developed in 2008 with a $360 million budget
to advance R&D-based innovation in Singapore. Through
this scheme the Singapore government co-invests together
with incubators in Singapore-based high-tech startups to
support an innovative and an entrepreneurial economy.
Under the TIS, the National Research Foundation (NRF)
offers up-to 85% co-funding in each start-up company
in the incubator, up to a maximum of S$500,000. The
incubator is required to invest the remaining amount of at
least 15%. NRF and the incubator will take equity stakes
in the company in proportion to their investments. It
also provides start-ups with management guidance and
mentorship.
Impact
• 31 start-ups have benefited from seven investors
or technology incubators since 2009
• Incubators include successful Plug and Play
Accelerator from Silicon Valley and incubators
set up by internet entrepreneurs
Source: www.nrf.gov.sg
Facilitating business start-ups Access to angel investors or venture capital
Networking and industry linkages Comprehensive business training programs
Marketing and branding support Providing advisory boards and mentors
Accounting and financial management support Management team identification
Access to finance such as bank loans,
loan funds and guarantee programs
Acquiring, incorporating and maximizing technology
Help with business plan writing presentation skills Commercialization assistance
Higher education linkages and resources Help with regulatory compliance
Links to strategic partners Intellectual property management and patent filing
Access to industry information and expertise Attainment of necessary licenses and certificates
Export promotion and international industry linkages Providing office space and facilities
The Competitiveness Assessment
Framework for Abu Dhabi and its Sub-Regions — Business
Incubator services can include:
Financial Accounting Capacity Building
Transparency of financial accounts at the firm level
is essential for bank loans, joint ventures, private
equity and other investment, and for Abu Dhabi’s
firms to do business with other firms internationally.
To improve the current competitive landscape for
start-ups and SME’s, Abu Dhabi should encourage
accounting capacity building for small businesses,
to eventually move toward International Financial
Reporting Standards. The public sector should
continue supporting training and capacity building
in this field and enforce regular auditing.
Three mechanisms for capacity building are:
• Providing assistance and training to businesses
on accounting and financial record-keeping
• Supporting and enforcing a transition
to adherence of International
Financial Reporting Standards
• Working with banks to increase available finance
for companies who report financial results or
maintain a regular audit cycle. Mechanisms
include small firm loan guarantee schemes.
International Entrepreneurs Program
To grow the culture of entrepreneurship, Abu Dhabi
needs to cultivate and foster both local and global
entrepreneurs. This program would be aimed at
attracting entrepreneurs in target industries and
sectors to come establish operations in Abu Dhabi.
The program would seek and identify entrepreneurs
from around the world in knowledge industries, and
provide them with services such as:
• Expedited “entrepreneurs visa”;
• Services providing potential partners and clients;
• Extended period for business registration;
• Incubator services: seed capital, office
space and university support and access
Benchmark Case Study: Finance for Business North
East program
A £125m holding fund with investments from the European
Investment Bank, European Regional Development Fund
and One North East (ONE).
• A VC fund established with UK Government support
• Managed by six different fund management companies
which range from not-for-profit to intellectual
property commercialization organizations
• The funds are targeted at start-ups and growing
companies across sectors and stages of development.
• Proof of Concept Fund- the £15 million fund helps
companies at seed stage in the technology sector
and is managed by Northstar Ventures (a UK based
venture capital firm with £80m under management)
• Technology Fund - the £25 million fund supports
technology firms at any stage of their development
and is managed by IP Group (one of the UK’s leading
intellectual property commercialization companies)
• Accelerator Fund - the £20 million fund invests
in high growth early stage businesses and
is managed by Northstar Ventures
• Growth Fund- the £20 million fund assists
mature companies and is managed by NEL Fund
Managers (an independent fund manager)
• Growth Plus Fund - the £20 million fund targets
businesses looking for development and growth funding
and is managed by FW Capital (a fund management
company part of the Finance Wales Group, the
largest investment group of its type in the UK)
• Angel Fund- the £7.5 million fund invests in start-ups and
existing businesses with growth potential and is managed
by Rivers Capital Partners (an independent fund manager)
• Microloan Fund - the £5 million fund supports
the creation of new enterprises and the growth
of existing micro and small businesses and is
managed by Entrust (a not-for-profit organization)
Sources: www.northeastfinance.org; The North East
Business and Innovation Centre: Growth Finance Still
Available For North East SMEs, 2013
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
33 32
Abu Dhabi Venture Capital Fund
Venture Capital funds have recently been
introduced into the region, with Khalifa Fund
spearheading a number of SME financing
programs, but there is no Abu-Dhabi specific
venture capital firm/fund that is managed by the
private sector and focused solely on the Emirate.
Public-private partnership Venture Capital funds can
be set up to invest in priority sectors in the three
regions, with large funds going specifically to Al Ain
and Al Gharbia. The funds would be designed, built
and capitalized by the public sector, and managed
and operated by seasoned finance professionals
in the private sector. Investments must be made
on a commercial basis, where the business has
promising growth potential. These funds should
align with the efforts of business incubators in the
region.
The goal of an Abu Dhabi Venture Capital fund is to
drive funds efficiently into target sectors (currently
real estate is the primary market for investment),
and into businesses operating in the sub-regions
of Abu Dhabi. This should improve the new firm
generation rate as well as firm growth.
Doing Business Assessments
The public sector has taken numerous steps to
reduce administrative barriers and support the
private sector throughout the Emirate, but there
are still notable challenges that remain around
administrative costs and procedures. ADDED
should continue to reduce these bottlenecks by
evaluating the impact of administrative barriers on
businesses, including: registration and licensing
procedures (time and complexity); hiring and
mobilizing labor; receiving finance and loans; and
connecting with other businesses and industries
through support service programs or cluster
development initiatives. Particular focus should be
paid on the disparity of doing business between the
three regions.
Improvements should include
• Eliminating unnecessary or unessential fees;
Combining or streamlining fees to reduce separate
payments; Reducing fees that are onerous to
new businesses; Ensuring a valid businesses
case justifying the need for existing fees
• Streamlining or eliminating unnecessary
procedures; Reducing the turnaround
time for procedures; Reducing the
complexity of procedures
• Guiding businesses through all
business procedures including permits,
contracts, licenses and adherence
The final result will be a restructuring of business
processes in order to increase competitiveness
where needed.
The Competitiveness Assessment
Framework for Abu Dhabi and its Sub-Regions — Business
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
35 34
twofour54 — Creating a Support Ecosystem for Emerging
Entrepreneurs in the Media Industry
twofour54 — also known as the Abu Dhabi Media Zone Authority – is an initiative
by the Abu Dhabi Government to support the development of world-class Arabic
media and entertainment content, and to position Abu Dhabi as a regional center
of excellence in content creation across a range of media platforms including
broadcast, film, music, digital media, gaming and publishing.
The business philosophy of twofour54 is the creation of a nurturing ecosystem
that provides the tools, infrastructure and support to promising companies and
organizations in the Arab world to create high quality content. To achieve this,
twofour54 has developed three key business pillars and a supporting business
enabler.
Business Pillars
• tadreeb (the training academy) - Supporting young talent to
become successful via collaboration with leading international media
companies to provide courses for media professionals as well as
college graduates with majors in media-related subjects.
• ibtikar (innovation and support) - A creative lab facility that
supports Arabic content development and media initiatives.
• intaj (state-of-the-art production facilities) - Provides modern production
facilities including studios, equipment and technical support for
television and film production, along with post-production.
Business Enabler
• tawasol (one stop-shop). Provides a number of support services
related to business start-ups including government services;
customs clearance; flight arrangements and others.
Currently, there are approximately 160 companies based at twofour54 including
CNN, the Financial times and Sky News Arabia. Also, all training offered at
the training academy is vocational helping trainees to develop practical skills
and apply them in the workplace. To date, twofour54 has trained over 3,000
delegates.
The twofour54 model has emerged as an important local benchmark for a
business incubator and the lessons learned to date have direct relevance for
future business incubators that may be developed for other priority sectors in the
Emirate.
Source: twofour54; TheNational
Competitiveness Success Story
The Competitiveness Assessment
Framework for Abu Dhabi and its Sub-Regions — Business
Lessons for Abu Dhabi and the UAE
International leading practice has identified a number of policies successfully
implemented by countries to improve access to finance for SMEs. Based on the
key challenges identified in the UAE context, these policies are directly relevant to
Abu Dhabi Emirate and the UAE. Examples include:
• Reforming the legal and regulatory environment. Illustrative examples include
simplifying business start-up requirements and accounting procedures.
• Identifying policy interventions for the SME finance sector as a whole. Demand-
side interventions (SMEs) include capacity building programs in areas
such as financial management and accounting. Supply-side interventions
(banks) include creation of collateral registries and credit bureaus.
• Direct government intervention in the SME finance sector to support increased
SME lending. Although there is no consensus on the scope of government
involvement in the SME finance sector, a number of governments provide loan
guarantees and directed credit in an effort to stimulate the SME sector.
The following table summarizes some of the most important interventions by
governments to improve access to finance for SMEs.
Establish a sound policy
framework for the financial
sector
Strengthen the
institutional
infrastructure
Build the information
infrastructure
• Liberalize interest rates
• Promote competition
• Promulgate supportive
regulations regarding
SME banking, leasing,
factoring and equity
• Reduce and rationalize
direct public sector
intervention
• Improve the legal and
judicial frameworks
• Support relevant
training and technical
assistance for
interested financial
institutions
• Provide or facilitate
initial financial
support (equity
infusion, product
development,
risk mitigation
methodologies)
• Promote accounting
standards
• Invest in and
promote credit
bureaus and
registries
• Invest in technology
Evaluate performance and incorporate lessons learned
Sources:
Beck, Demirguc-Kunt and Martinez Pereira, Bank Financing for SMEs Around the World: Drivers,
Obstacles, Business Models and Lending Practices. Washington, DC World Bank, 2008 – cited in IFC SME
Banking Knowledge Guide
Malhotra, Chen et al., Expanding Access to Finance: Good Practices and Policies for Micro, Small and
Medium Enterprises. World Bank, August 2006
Key Success Factors for Increasing Access to Finance for SMEs
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
37 36
Along with Human Capital and Businesses,
the third driver of competitiveness is Economic
Structure. This driver shows an aggregate view
of the economic activity of a region, taking into
consideration the diversification of sectors as well
as the geographic location of investment and
business activity. Economic Structure reflects the
contribution of various sectors to the economy’s
GDP, as well as labor productivity, employment,
and wages at the sector level. More importantly,
the attractiveness of an economy can be measured
by the levels of foreign investment into these
sectors, as this indicates which industries have a
comparative advantage in Abu Dhabi over other
regions. Economic Structure also covers the flows
of economic activity into geographical regions,
mainly comparing the development of sub-regions
as competitive locations relative to the capital
city. The structure of an economy gives a longer-
term outlook on competitiveness, measuring the
sustainability of the region and its ability to generate
wealth and maintain or grow standards of living.
Diversification
Abu Dhabi’s economic structure has been marked
by a heavy reliance on oil and gas to generate
wealth for the region. This issue is at the forefront
of the government’s agenda, as it has stipulated
diversification of the economy as one of the three
crucial priorities looking into 2030. Long-term
sustainable diversification will require expanding
the private sector, and particularly growing the
economic output and contribution of key industries
within the Emirate. The presence of hydrocarbons
has allowed Abu Dhabi to make significant
infrastructural investments and large-scale
improvements to competitiveness over the past
decade. The government has devoted its resources
to building a world-class sea port, airport, and
communications network as well as commercial,
industrial, and residential real estate developments.
Like other resource-abundant regions in the GCC,
heavy investment in infrastructure and industry
projects has allowed the Emirate to attract laborers,
ECONOMIC STRUCTURE
“A sustainable economy will be built primarily through diversification,
which is proven to reduce the volatility of economic growth.
Diversification means not only broadening the number of economic
sectors taking part in economic activity, but also enlarging the
enterprise base, encouraging entrepreneurs, small businesses and
Foreign Direct Investment (FDI), as well as developing National
Champion enterprises to act as economic anchors.”
Abu Dhabi Economic Vision 2030
businesses and investors into its economy in just
a few decades. But to meet the Emirate’s goals of
transitioning from a resource-based to a knowledge-
based economy, diversifying into high skill high
value-added sectors remains the biggest challenge.
Currently Abu Dhabi boasts one of the strongest
GDP per capita rates in the world, and Emirati
nationals enjoy high standards of living relative to
benchmark and global regions. But once GDP is
controlled for oil and gas contribution, the remaining
sectors combined amount to roughly 40% of
the economy, which heightens the importance
of diversification for the Emirate. Growing the
non-oil sectors of the economy—particularly
the high-skilled goods and services provided
by the private sector—is essential for long-term
sustainability as Abu Dhabi plans for a future less
dependent on hydrocarbons. This circumstance
is further heightened in Al Gharbia, where oil and
gas account for 90% of the region’s GDP. While
continuous investment and development of the oil
and gas sector is necessary so that it remains a
long-term source of wealth for the region, upstream
products are less labor intensive and cannot provide
employment opportunities for the next generation of
jobseekers in the Emirate.
The current economic structure is such that most
GDP contribution comes from sectors more prone
to volatility, which also do not provide high levels
of employment. Currently the public sector and
retail and trade service sectors employ the most
nationals, while construction and low-skilled
activities employ a majority of foreign laborers.
These sectors are not high-contributors to GDP
relative to employment, and do not represent high
potential for exports or value-added goods and
services. Alternatively, the oil and gas sector is
the top contributor to GDP at 60%, but employs
less than 15% of the population. Diversifying the
economy will entail moving into sectors that provide
robust contribution to GDP, high value-add, as well
as employment opportunities for Nationals. Abu
Dhabi is well positioned to use its natural resource
advantages to fuel adjacent industries which have
higher value-added output per worker input.
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Total GDP Inclusive of Oil & Gas Sector Total GDP Exlusive of Oil & Gas Sector
Total GDP Mining, oil and gas
Norway Alberta, Canada Singapore Abu Dhabi
0
50
100
150
200
250
300
350
400
450
GDP Inclusive and Exclusive of Oil & Gas Sectors (2011)
(US$ Billions)
Oil, gas and oil
products exports
Non-oil exports
97%
3%
Abu Dhabi Exports, Oil vs Non-Oil (2011)
Norway Alberta, Canada Singapore Abu Dhabi
0
50
100
150
200
250
300
350
400
450
Oil & Gas Contribution to GDP (2011) (US$ Billions)
Source: SCADStatistical Yearbook 2012
39 38
The Competitiveness Assessment
Framework for Abu Dhabi and its Sub-Regions — Economic Structure
Manufacturing
One of the target industries for diversification is
high-tech manufacturing, mainly in the downstream
chemicals and petrochemicals sector. Currently
manufacturing only accounts for 5% of Abu Dhabi’s
economy, which is low for a resource-abundant
and well capitalized region. Of this percentage,
however, nearly half of Abu Dhabi’s manufacturing
is in high-tech industry, which has promising
implications for expanding the base into specialized
manufactured goods. Abu Dhabi’s natural advantage
in manufacturing is in the petrochemicals sector,
where it can benefit from local feedstock over Asian
countries which rely on imports. Chemicals and
plastics account for nearly 40% of the value added
output in Abu Dhabi’s manufacturing sector, which
means that after inputs and intermediate goods are
subtracted, chemicals contribute the most per unit of
any manufacturing activity. Playing to its competitive
advantage in chemicals will provide Abu Dhabi with a
strong industrial base, increased exports and high-
skilled jobs.
Currently, Abu Dhabi’s chemicals sector contributes
nearly 60% to manufacturing output, and employs
hundreds of Emiratis in high skilled jobs.
26
The
petrochemicals industry alone accounts for about
2% of the industrial workforce in the whole of
UAE, with job creation growing double digits
throughout the GCC.
27
As production moves
further downstream into plastics and specialized
petrochemicals, production becomes more labor
intensive and requires more high-skilled workers.
Providing high-skilled manufacturing jobs for
Emirati’s is a priority of the government, so ensuring
adequate education and training in this sector
is necessary for structural improvements in the
economy.
One of the key successes of Abu Dhabi’s
diversification efforts has been the establishment
and development of Economic Free Zones (or
Oil and Gas Knowledge
Services
Manufacturing Other
Services
Other
Production
0
20
40
60
80
Abu Dhabi’s GDP and Employment Shares (2011) (%)
GDP Employment
* Data is from 2011 for Norway, Abu Dhabi, Singapore, and 2010 for Alberta
Abu Dhabi Norway Alberta, Canada Singapore
Manufacturing Share of GDP (%)
*
0
5
10
15
20
25
Chemicals and plastics and related
products
Structural metal products except
machinery and equipment
Non-metallic mineral products (except oil)
Repair and installation of
machinery,equipment and other
manufacturing
Machinery, equipment and devices
Food, beverages and tobacco
Manufacture of basic metal
Textiles, garments and leather products
Wood and wood products
Furniture
Paper, printing, publishing and
reproduction media
Abu Dhabi Value Added of Manufacturing Activity (2010)
Source: SCADStatistical
Yearbook 2012
Source: SCADStatistical Yearbook 2012
Special Economic Zones) which offer dedicated
support services and favorable regulations to the
clusters and industrial cities within their premise.
There are currently four zones in Abu Dhabi
which have clustered adjacent industrial activities
such as manufacturing, agricultural processing,
chemicals, construction materials, technology, and
environmental industries. In order to attract larger
investments to Al-Ain, Zones Corp has established
the Al-Ain Industrial City which promotes
manufacturing production and industry linkages in
the region.
28
As Abu Dhabi develops its strategic sectors,
enhancing cluster infrastructure is necessary to
encourage business and industry collaboration.
Clusters are important for industrial development
as they can connect companies to one another
as well as to government agencies, research and
institutions, universities and other resources. Firms
operating in clusters tend to be more productive,
highly innovative and well-paying in comparison
to their peers that are more geographically
isolated with fewer linkages to other firms. Cluster
development constitutes a centerpiece of Abu
Dhabi’s long-term economic development strategy.
Foreign Direct Investment
One indicator of competitiveness at the sector
level is foreign direct investment flows into the
region from abroad. A sector’s ability to attract
strong levels of foreign investment bodes well for
its long-term sustainability, as it signals perceptions
about the growth potential and dynamism of the
industries within it. Increasing foreign investment
into long-term strategic sectors that are less volatile
than hydrocarbons and real estate is a top priority
for the Emirate. As a transitioning economy, Abu
Dhabi has been able to attract strong levels of
foreign investment. A large percentage (over $4b)
of this investment in Abu Dhabi is in the real estate
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Benchmark Case Study: Attraction of Foreign
Investment in Singapore
Foreign Direct Investment (FDI) in Singapore rose by 4.9%
from $620.3 billion in 2010 to $650.9 billion in 2011.
Positive factors which help Singapore attract foreign
investment include:
• Singapore’s Global Investors Program (GIP): This is
a program for high net worth individuals who need to
invest at least USD 2 million to get qualified under this
scheme. Under the GIP, investors are given priority status
and can obtain Permanent Residency. Also, investors
have different options for investing into industries such
as biomedical sciences, clean energy and media
• Double Taxation Avoidance Agreements: Companies
benefit from Singapore’s network of over 50
comprehensive Double Taxation Avoidance Agreements
• Existence of free trade agreements: Singapore has
entered into 35 Investment Guarantee Agreements
• Singapore incorporation: It can be achieved in 24 hours
• Favorable taxation for foreign investors: Low corporate
and personal income tax rates and lack of capital
gains tax, dividend tax and inheritance tax
Singapore provides extensive incentives to promote
investment in priority sectors.
These incentives include:
• Up to 200% super deduction for major investments
• Graduate incentives by region, with higher incentives
allowed in regions, which have the highest unemployment
• Free or low cost of land and infrastructure development
both within and outside of development zones
Sources: Contact Singapore: Global Investor Program;
Singapore Economic Development Board; Deloitte
Research Analysis; Department of Statistics Singapore
26
Borouge Petrochemical manufacturer currently employs 650 nationals Abu Dhabi has plans to expand this number in the coming two
years , Source:http://www.thenational.ae/thenationalconversation/industry-insights/energy/petrochemical-expansion-to-fuel-quality-
jobs-for-the-uae
27
Gulf Petrochemicals and Chemical Association
28
Zones Corp the Higher Corporation for Specialized Economic Zones in Abu Dhabi
http://www.zonescorp.com/En/Zones/default.aspx
41 40
sector, which still highlights the dominance of
physical capital and infrastructure spending in the
region. While the real estate sector has seen strong
growth over the past five years, it is a far more
volatile sector than high-tech manufacturing or
professional services.
The Competitiveness Assessment
Framework for Abu Dhabi and its Sub-Regions — Economic Structure
Alberta,
Canada
Norway Abu Dhabi Singapore
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Per Capita Foreign Direct Investment
(2009) (USD)
Real estate
Finance and insurance
Utilities
Manufacturing
Mining, oil and gas
Construction
Information & communication
Transportation & warehousing
Wholesale trade
Healthcare & social assistance
Education services
Accomodation & food services
0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000
Abu Dhabi FDI Flows (2009) (USD Millions)
Source: SCADStatistical Yearbook 2012
investment in oil and gas extraction, the public
sector only accounts for 10%
31
of total fixed
capital formation. This is due to the large amounts
of private sector investment into new assets by
businesses in these mature economies. Ideally, Abu
Dhabi’s efforts to grow and enhance the private
sector will decrease the dependency on public
sector funds to propel economic investment in key
sectors.
Abu Dhabi’s Department of Economic Development
has published a series of new initiatives aimed
at bolstering the private sector, with the goals of
raising the contribution of the non-oil sector from
the 2005 level of 40% of the Abu Dhabi economy
to 64% by 2030. This includes increasing
government procurement contracts to the private
sector by 10% and establishing an Export
Promotion Agency.
Overview of Select Sectors
Currently, mining and quarrying and construction
account for more than two thirds of Abu Dhabi’s
economy. In order to encourage diversification,
the government has identified 12 strategic sectors
in which to target future investment, which
include tourism, healthcare, education, financial
services and telecom services. Expanding the
role of these strategic sectors in the economy
will require comprehensive support services for
foreign investors. Neighboring Gulf regions have
attracted strong investment through lease and
utility incentives and other support services such as
one-stop investment promotion shops. In order to
drive investment into its target sectors and reduce
the prevalence of construction and other low
value-added sectors, Abu Dhabi needs to consider
a robust offering of support services to investors.
Below is an overview of the performance of some
of Abu Dhabi’s target sectors:
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Mining and quarrying (includes crude oil and natural gas)
Public administration and defence; compulsory social security
Manufacturing
Electricity, gas, and water supply; waste management
Real estate
Transportation and storage
Construction
Financial and insurance
Administrative and support services
Wholesale and retail trade; repair of motor vehicles and
motorcycles
Accommodation and food services
Information and communication
Education
Professional, scientific and technical
Human health and social work
Activities of households as employers
0 10,000 20,000 30,000 40,000 60,000
Gross Fixed Capital Formation by Economic Activity (2011) (Million AED)
50,000
Source: SCADStatistical Yearbook 2012
Another relevant measure for Abu Dhabi’s industries
is gross fixed capital formation. Gross fixed capital
formation measures how much new value added
into a sector is invested rather than consumed.
This includes acquisitions of new fixed assets
by businesses, households and the government,
as well as new value added to assets by the
productive activity of a sector.
29
This indicator is
relevant for Abu Dhabi’s economic structure as it
measures the level of capital investment by each
sector into itself, and can be a measure of its
potential for growth, production, dynamism and
sustainability. Oil and gas and the public sector
contribute the highest amount of fixed capital
formation at just under AED 50b each, accounting
for 50%
30
of all fixed capital investment, while
the ICT and professional, scientific and technical
sectors combined amount to under 2%. While
competitive resource-abundant economies such
as Canada and Norway have similar levels of
29
OECD – http://stats.oecd.org/glossary/detail.asp?ID=1173
30
SCAD 2010
31
Statistics Norway 2012
43 42
Source: World Bank 2009
in specialized medical fields. While FDI is relatively
low in healthcare, privatization could increase its
attractiveness for global investors and improve
healthcare competitiveness for the Emirate.
ICT
The UAE has invested heavily in its information
and communications technology sector, and
boasts one of the strongest ICT infrastructures
in the Middle East. Abu Dhabi has consistently
ranked among the top performers in international
telecommunication competitiveness indices
largely due to a strong infrastructure, and high
mobile and internet penetration ratios. In terms of
mobile phone subscribers, broadband capabilities,
secure servers and internet hosts, the sector has
shown strong growth. The number of mobile
cellular subscriptions increased to 200% and
internet subscribers increased to 23% in 2011
38
.
Research by Ericson and the World Bank shows
that investing in broadband capabilities is directly
correlated with GDP growth, and while Abu Dhabi
is still below mature economies like Singapore and
Norway, it is competitive relative to GCC neighbors.
Similarly, FDI is still low in the ICT sector relative to
other benchmarks, but fares well within the GCC.
The sector grew at a moderate rate of approximately
4.8 % year-on-year between 2005 and 2011
39
,
indicative of a mature sector. It is dominated by two
carriers, Etisalat and Du which controls the vast
majority of the market.
Finance and Insurance
Abu Dhabi has seen strong growth in the finance
and insurance sector over the past few years,
largely due to the growth of Takaful, a form of
Islamic insurance. The sector was the second
largest recipient of FDI after real estate in 2009,
attracting more than AED 6b in investment.
32
Still,
investment in this sector is relatively low. This
sector shows promising potential for the Emirate, as
it weathered the financial crisis with an 8% average
growth rate between 2005-2011.
33
As a high-
skill knowledge industry, finance and insurance is
associated with high wages
34
, though still below oil
and gas and the public sector.
Healthcare and Education
Due to large-scale strategic investments by the
public sector in education and healthcare, both
sectors have demonstrated compelling growth
in employment numbers. While Emiratization
is lower in the healthcare sector at 6.4%
35
, the
growth of the education sector has increased the
number of knowledge-based jobs for Emiratis and
particularly women. Still, the majority of the 80
percent year-on-year growth in education services
between 2008 and 2011
36
can be attributed to
the recruitment of foreign teachers and educational
workers into the expanded program offerings of
schools and universities.
Employment in healthcare grew by 52% year-
on-year for the same period
37
, and was matched
by double digit annual GDP growth for six years
(2005-2011), making it the second fastest growing
sector after construction. The healthcare industry
has benefited from a number of recent partnerships
with foreign private healthcare providers such
as Cleveland Clinic and Johns Hopkins, which
have been brought in to run public hospitals and
facilitate transition towards a private health care
model for Abu Dhabi. As these facilities open for
business, the Emirate can attract medical tourists,
and increase the level of research and development
The Competitiveness Assessment
Framework for Abu Dhabi and its Sub-Regions — Economic Structure
Abu Dhabi Top Sectors by GDP, 2011 %
Mining and Quarrying 58.5
Construction 10.1
Manufacturing 5
Finance and Insurance 4.8
Real Estate 3.8
Tourism
The tourism sector
40
showed a compound annual
growth rate of 7.15%
41
year-on-year between 2005
and 2011, which bodes well for the Emirate given
the global slowdown in tourism since the financial
crisis. Abu Dhabi has invested substantially in its
tourism sector, and has further plans to increase
tourists to the Eastern and Western regions, as Abu
Dhabi City still hosts the majority of tourists in the
region. Abu Dhabi Tourism Authority has recently
opened international offices in the UK, France,
Germany, Italy, China and Australia in its efforts to
attract increased numbers of tourists from target
countries . Employment for the sector grew at a rate
of 7.5% year-on-year
42
, at a faster pace than GDP
mainly due to new hotels and theme parks coming
online. Foreign investment for the sector in Abu
Dhabi was AED 4 million in 2009, which is one
area that has high growth potential going forward.
Regional Disparities
The Abu Dhabi Economic Vision 2030 highlights
investment and development of the Emirate’s sub-
regions as one of its key goals: “The simultaneous
development of the Regions to keep pace with that
of the Capital is also an important policy priority
in order to achieve an Emirate-wide distribution
of economic activity and associated benefits.”
43
Improving the competitiveness of the Emirate as a
whole will require substantial investment into Abu
Dhabi’s Eastern and Western regions. Currently,
Abu Dhabi city is the center for most investment
and non-oil economic activity. Relative to Abu
Dhabi City, both Al Ain and Al Gharbia have low
levels of non-oil economic output, and have faced
challenges in attracting labor, businesses and
financing into their strategic sectors.
Current standards of living for Emiratis, as
measured by earnings, are highest in Abu Dhabi.
This is largely due to the concentration of high-
paying public sector jobs, which employ more than
60% of Emiratis in Abu Dhabi.
44
Emiratization
levels are also high in the oil and gas sector, which
accounts for higher earnings in Al Gharbia relative
to Al Ain.
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Fixed Mobile Internet Broadband
0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
% Rise in Economic Growth with 10% Increase in
Broadband Penetration
Low-Middle Income Economies High Income Economies
Alberta, Canada Norway
0
50
100
150
200
250
300
350
450
400
500
Abu Dhabi Singapore
Broadband Access per 1,000 Population (2009)
32
SCAD Statistical Yearbook 2010 (Data from 2009)
33
Compound Annual Growth Rate calculated using SCAD data
34
(Average monthly salary was AED. 19033)
35
HAAD 2011
36
SCAD Statistical Yearbook 2012
37
Employment CAGR calculated using SCAD data for years
2008-2011, and is inclusive of healthcare and social work
38
SCAD Statistical Yearbook 2012 (data from 2011)
39
CAGR calculated using SCAD data for information and
communication
40
Tourism numbers are inclusive of hotels and restaurants
41
CAGR calculated using SCAD data
42
Employment CAGR calculated using SCAD data
43
Abu Dhabi Economic Vision 2030
44
SCAD 2011
Source: SCADStatistical Yearbook 2012
45 44
46
Currently, there is a lack of investment and
export data available for Al Ain and Al Gharbia,
which prevents a robust assessment of the
economic activity at the sub-regional level. The
Western Region Development Council (WRDC)
has, however, worked with public and private
sector stakeholders in improving the investment
climate of the region through a number of new
initiatives. These include infrastructure and tourism
development as well as industrial initiatives.
Landmark projects include future plans for the
development of the Etihad Rail network to connect
residents to other regions, the development of
a nuclear facility in the Western Region and the
building of Shams 1, which will be the largest
concentrated solar power plant in the world. Some
of the other key WRDC initiatives are supporting
higher education and vocational educational
institutions, implementation of the Al Gharbia
Economic Development strategy in target sectors,
and the creation of new programs for SMEs in
target sectors.
45
Benchmark Case Study: U.S Cluster Mapping
The U.S Cluster Mapping project aims to provide
policymakers and development practitioners across
America with rich data and tools for understanding
industry clusters in every region of the country, together
with tool kits and case studies to assist in formulating
economic development strategies. In addition, the project
contributes to the development of active cluster initiatives
throughout the country.
Coverage and Size:
• 41 clusters currently, with plans to map the entire U.S.
Key Data Elements:
• Each region’s clusters include specialization,
employment, wages, job creation, patents
• Comparisons of clusters across the U.S.
• Overall regional economic performance
(performance indicators, patents, jobs, wages)
• Characteristics of cluster initiatives
Method:
• Clusters are defined by creating a grouping of
standard industry codes, using employment linkages
across geographies. Underlying data source is the
Census Bureau’s County Business Patterns.
Source: mvp.clustermapping.us
The Competitiveness Assessment
Framework for Abu Dhabi and its Sub-Regions — Economic Structure
Al Ain Western Region Abu Dhabi City
0
10,000
20,000
30,000
40,000
50,000
60,000
Annual Average Per Capita Earnings (2007) (AED)
Source: SCADHousehold Expenditure and Income
Survey 2007/2008
Improvement areas
Improving the outlook of Abu Dhabi’s economic
structure will entail driving targeted investment into
key sectors of the economy and into the Eastern
and Western regions. This requires setting up
investment incentives, services, programs and
councils, increasing information availability and
branding the Eastern and Western regions as
desirable places to invest.
Cluster Mapping
Developing Abu Dhabi’s clusters can improve the
competitiveness of the region by encouraging
industry linkages and specialized business activity.
Harvard University professor Michael Porter
describes clusters as “a different way of dividing
the economy than is embodied in conventional
industrial classification systems which are based
primarily on product type and similarities in
production”
46
Developing specific cluster maps
for target sectors and geographical regions, would
help policymakers and businesses with intelligence
about the areas and industries in which they do
business. Cluster maps should provide guidance
on targeted investment, government programs, and
areas for business expansion.
Objectives of Cluster Mapping:
• To define and describe clusters across
the Emirate (to understand how Abu
Dhabi’s economy is structured, and
where its specializations lie)
• To define supply chain linkages (upstream
and downstream linkages)
• To identify gaps in clusters (i.e. missing linkages)
• To facilitate informed discussions with policy-
makers, cluster practitioners, and industry
leaders around cluster development initiatives
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Several cluster initiatives are currently underway in
Abu Dhabi, including the following:
KIZAD
The Khalifa Industrial Zone – Abu Dhabi (KIZAD) seeks
to attract world-class companies, and to establish global
industry best practices in terms of zone operations.
KIZAD’s core objectives are job creation and foreign
investment attraction. KIZAD expects to contribute to the
creation of 100,000 jobs in Abu Dhabi. In addition, it is
projected to contribute approximately 15% of the Emirate’s
non-oil GDP. KIZAD estimates that between 60% to 80%
of the goods manufactured within its premises will be
exported.
Masdar City
Masdar City is an industry cluster for renewable energy
and clean technologies. It is intended to be a dynamic,
entrepreneurial environment that attracts world-class
talent, financial entities, entrepreneurs, companies and
service providers that are focused on renewable and
cleantech industry. The objective is to create a community
where cutting-edge research and development, pilot
projects, and technology testing will occur.
Sky City – Abu Dhabi Airports Company
Skycity will be the first Airport Free Zone in Abu Dhabi
– a comprehensive Business Park that intends to attract
diversified private sector investments in a variety of
sectors including aviation, aerospace, airport services,
cargo, freight and logistics sectors.
45
WRDC Strategy 2012-2016 Executive Summary
46
Porter, Michael E. 2004. Methodological note based on an excerpt and adaptation of text from “The economic performance of
regions”. Cambridge, MA: Cluster Mapping Project, Harvard University
47 46
The Competitiveness Assessment
Framework for Abu Dhabi and its Sub-Regions — Economic Structure
ZonesCorp
Creating a Platform for Industrial Development in Abu Dhabi
ZonesCorp develops, operates and administers specialized economic zones
throughout Abu Dhabi Emirate. It was established in 2004 to support growth of
the industrial sector and create a diversified economic base in the Emirate of
Abu Dhabi and the wider UAE. One of the principal mechanisms through which
it achieves this goal is applying a public-private partnership (PPP) management
structure approach and leveraging resources from the ZonesCorp Infrastructure
Investment Fund. This fund was established to invest in ZonesCorp-
commissioned infrastructure-related projects in the UAE.
Currently, ZonesCorp manages a number of industrial zones including ICAD and
Al Ain Industrial City. Additional zones being developed or planned include a
Construction and Building Materials Zones, additional Worker Residential Cities
and an Automobile Industry Zone.
ZonesCorp plays an integral role into diversifying Abu Dhabi’s economy away
from oil related sectors, as the Emirate continues to focus on transitioning into a
knowledge-based economy. Specifically, ZonesCorp has successfully leveraged
Abu Dhabi’s industrial resources by attracting local and international investors to
the industrial zones. $5 billion worth of manufacturing investments were made by
projects managed by ZonesCorp, representing almost 10% of Abu Dhabi’s GDP.
To date, ZonesCorp has attracted over 600 companies in the industrial cities and
has granted over 1,000 industrial licenses within its industrial zones, which are
worth approximately $13 billion.
Source: ZonesCorp; Arabianbusiness.com
Competitiveness Success Story
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Western Region Development Council
Creating a Model for Sustainable Economic Development in Al Gharbia
The Western Region Development Council (WRDC) started in 2006, and works
with relevant government entities within Abu Dhabi Emirate to improve social
development, education, healthcare, and infrastructure for the Western Region.
The WRDC is organized under 4 divisions: 1) Regional Development; 2) Investment
Promotion and Public Relations; 3) Strategy & Finance; 4) Support Services:
• Regional Development. Partners with local government entities
and companies to improve infrastructure, healthcare, education,
government and other services for the region.
• Investment Promotion and Public Relations. Increases awareness of
the region to promote tourism and attract investment. The unit also
supports initiatives related to business environment improvement.
• Strategy and Finance. Manages strategy development for WRDC,
including the preparation of annual, 5-Year and 10-Year Development
Plans and budgets; key performance indicators (KPIs); benchmarking;
finance and accounting; and financial forecasting.
• Support Services. Supports WRDC units and oversees other
internal WRDC functions such as human resource management,
procurement processing and other administrative activities.
Some examples of how WRDC has impacted the competitiveness of the Western
Region include the following:
• WRDC Scholarship Program providing top performing
students with higher education opportunities
• Establishment of the Estishara Scheme offering technical
assistance to developers in Al Gharbia
• Etihad Railway project worth $ 11 billion estimated to be completed by 2018
WRDC serves as the principal institutional catalyst for driving the competitiveness
agenda forward in the Western Region. By regularly engaging partners in the local
government and the private sector, it can leverage a broader range of resources that
are essential for the successful delivery of key competitiveness initiatives.
Source: Western Region Development Council; WRDC Strategy Plan 2013 - 2017
Competitiveness Success Story
49 48
The Competitiveness Assessment
Framework for Abu Dhabi and its Sub-Regions — Economic Structure
Mubadala Aerospace
Building a Global Aviation and Aerospace Hub in Al Ain
Mubadala Aerospace is developing Al Ain as a global aerospace hub, in tandem
with Abu Dhabi Emirate’s long-term economic diversification and industrialization
strategy. To achieve this, Mubadala Aerospace has entered into a number of
strategic partnerships with global aviation and aerospace companies to develop a
world class technology and manufacturing base.
• EADS/Airbus. Mubadala has entered into a Master Supply
Agreement with the European aerospace group EADS / Airbus
to develop an aircraft composites manufacturing base.
• General Electric (GE). Mubadala has entered into a framework agreement
with GE to collaborate in a range of areas including maintenance repair and
overhaul services for GE aircraft engines operating in the Middle East.
• FACC . Mubadala has formed an industrial partnership and entered into
a supplier agreement with FACC AG of Austria, one of the leading global
companies involved in the design, development and production of advanced
composite components and systems for the aviation sector. Major
FACC clients include Boeing, Airbus, Bombardier and Embraer.
Building a highly-skilled cadre of Emirati nationals to support the sector is
another core objective. Mubadala has launched a number of education and
training programs, including a pilot training academy, to prepare young Emiratis
to fill the 10,000 jobs in the aviation/aerospace sector that are projected by
2030. It is expected that the aerospace hub will contribute 1% of the Emirate’s
GDP.
Abu Dhabi’s plan to build an industrial cluster for the aerospace sector in Al Ain
plays a key role in growing high value-added businesses and diversifying the
economy. Through partnerships with international firms at the cluster and an
investment of around AED 37 billion from the Abu Dhabi government, this project
will attract foreign investment and encourage global companies to open offices in
the aviation cluster.
Source: Mubadala Aerospace; TheNational
Competitiveness Success Story
51 50
1,310,300
9.76 %
7.5 %
10 % 6.8 % 17.8 %
2.57 %
12.40
18%
Nationals
% Population with University Degrees
(Nationals -10 yrs & over)
Illiteracy Rate
Unemployed Nationals as a
%of National Labor Force
Total Unemployed
National Males
Total Unemployed
National Females
Unemployed as
% of Labor Force
Students per Teacher
ABU DHABI CITY
P
O
P
U
L
A
T
I
O
N
L
A
B
O
R
F
O
R
C
E
U
N
E
M
P
L
O
Y
M
E
N
T
E
D
U
C
A
T
I
O
N
82%
Non-Nationals
8%
Nationals
92%
Non-Nationals
68%
15.8%
Female Labor Force
Participation
53,076 AED
46,075 AED
2.86 64.27
573,355 AED
Annual Avg. Per Capita
Earnings – Nationals
Annual Avg. Per Capita
Earnings – Non-Nationals
NewFirmGeneration
per 1,000Population
Total Firms per
1,000Population
GDP Per
Employee
Population Based
E
A
R
N
I
N
G
S
B
U
S
I
N
E
S
S
E
S
L
A
B
O
R
P
R
O
D
U
C
T
I
V
I
T
Y
Business Licenses by Sector
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Education
Information and
communication
Mining and Quarrying
Light Manufacturing
Hospitality and food
Real estate
Insurance and
financial services
Professional activities
(scientific & technical)
Other
Construction
Wholesale and
retail trade
6%
International
Companies
15%
Other
44%
Individual
34%
Limited Liability
Type of Business Licenses
Sources: SCADStatistical Yearbook 2012; Abu Dhabi Department of Economic Development; SCAD: Household
Expenditure and Income Survey 2007/2008
53 52
225,700
85%
9.72 %
7.7%
9 % 5.2 % 27.8 %
0.87 %
8.80
11%
Nationals
% Population with University Degrees
(Nationals -10 yrs & over)
Illiteracy Rate
Unemployed Nationals as a
%of National Labor Force
Total Unemployed
National Males
Total Unemployed
National Females
Unemployed as
% of Labor Force
Students per Teacher
AL GHARBIA
P
O
P
U
L
A
T
I
O
N
L
A
B
O
R
F
O
R
C
E
U
N
E
M
P
L
O
Y
M
E
N
T
E
D
U
C
A
T
I
O
N
89%
Non-Nationals
5%
Nationals
95%
Non-Nationals
3.7 %
Female Labor Force
Participation
41,560 AED
30,187 AED
2.66 58.04
451,772 AED
Annual Avg. Per Capita
Earnings – Nationals
Annual Avg. Per Capita
Earnings – Non-Nationals
NewFirmGeneration
per 1,000Population
Total Firms per
1,000Population
GDP Per
Employee
Population Based
E
A
R
N
I
N
G
S
B
U
S
I
N
E
S
S
E
S
L
A
B
O
R
P
R
O
D
U
C
T
I
V
I
T
Y
Business Licenses by Sector
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
1%
International
Companies
3%
Other
74%
Individual
22%
Limited Liability
Type of Business Licenses
Education
Information and
communication
Insurance and
financial services
Mining and Quarrying
Real estate
Hospitality and food
Professional activities
(scientific & technical)
Light Manufacturing
Other
Wholesale and
retail trade
Construction
Sources: SCADStatistical Yearbook 2012; Abu Dhabi Department of Economic Development; SCAD: Household
Expenditure and Income Survey 2007/2008
55 54
584,800
62%
9.76 %
7.3 %
15 % 8.3 % 31.2 %
4.4 %
10.20
31%
Nationals
% Population with University Degrees
(Nationals -10 yrs & over)
Illiteracy Rate
Unemployed Nationals as a
%of National Labor Force
Total Unemployed
National Males
Total Unemployed
National Females
Unemployed as
% of Labor Force
Students per Teacher
AL AIN
P
O
P
U
L
A
T
I
O
N
L
A
B
O
R
F
O
R
C
E
U
N
E
M
P
L
O
Y
M
E
N
T
E
D
U
C
A
T
I
O
N
69%
Non-Nationals
14%
Nationals
86%
Non-Nationals
19.4 %
Female Labor Force
Participation
33,333 AED
21,650 AED
2.37 49.26
645,520 AED
Annual Avg. Per Capita
Earnings – Nationals
Annual Avg. Per Capita
Earnings – Non-Nationals
NewFirmGeneration
per 1,000Population
Total Firms per
1,000Population
GDP Per
Employee
Population Based
E
A
R
N
I
N
G
S
B
U
S
I
N
E
S
S
E
S
L
A
B
O
R
P
R
O
D
U
C
T
I
V
I
T
Y
Business Licenses by Sector
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Type of Business Licenses
Mining and Quarrying
Education
Information and
communication
Insurance and
financial services
Real estate
Professional activities
(scientific & technical)
Hospitality and food
Light Manufacturing
Other
Construction
Wholesale and
retail trade
1%
International
Companies
9%
Other
69%
Individual
21%
Limited Liability
Sources: SCADStatistical Yearbook 2012; Abu Dhabi Department of Economic Development; SCAD: Household
Expenditure and Income Survey 2007/2008
57 56
Going forward, the goal is for this report to be
published biennially to track Abu Dhabi’s ongoing
improvements and progress towards enhancing
competitiveness. This will include updates on
new public and private sector initiatives as well
as the outcome of the specific challenges and
recommendations currently identified. As more
data becomes available for Abu Dhabi and its
sub-regions, the report can provide additional
disaggregated competitiveness intelligence and
analysis to better serve the needs of COADs
stakeholders.
This first report paves the way for an informed
discussion about regional competitiveness in Abu
Dhabi, with the hopes that these efforts will lead to
an improved environment for the people, businesses,
and regions of the Emirate.
Key objectives going forward
1. Update the model and report every
other year to track the Emirate’s
progress, successes and emerging
challenges in competitiveness
2. Enhance data collection efforts for more
robust intelligence and reporting on
competitiveness issues
3. Work with stakeholders in both the
public and private sector to ensure that
key challenges are being addressed
Improving Abu Dhabi’s economic competitiveness
requires a detailed understanding of both the
current state of play in the Emirate as well as the
future state model that is outlined in the Abu Dhabi
Economic Vision 2030. Since competitiveness
cuts across all dimensions of an economy from the
micro to the macro levels, the Abu Dhabi-specific
competitiveness framework described in this report
will enable policy makers to identify the principal
competitiveness challenges in the Emirate and
its sub-regions; define priorities for intervention;
and design and implement targeted policies and
initiatives to address these priorities.
The improvement areas highlighted in the report
should contribute to enhancing competitiveness
under each of the key drivers, Human Capital,
Businesses, and Economic Structure, but will also
have dependencies to others. They will not operate
in isolation, instead contributing to the overall
competitiveness landscape. To facilitate this, it is
vital that stakeholders work together and are aligned
in their aims and objectives. While COAD can
work to align initiatives, stakeholders across Abu
Dhabi will have a key role their implementation and
contribution to improving competitiveness.
GOING FORWARD
59 58
The model provides a logical framework through
which to examine the factors that are driving regional
competitiveness in Abu Dhabi. The main purpose of
this model is to understand the relationship between
the principal determinants of competitiveness and
integrate them to explain what accounts for the
competitiveness of a region. Inputs are the types
of capital needed to generate economic outputs of
competitiveness. Outputs measure the performance
of the region. Over time, these outputs form the
basis for long-term competitiveness outcomes, such
as rising incomes and a high standard of living which
shape the overall competitiveness of a region.
Since competitiveness is a “self-reinforcing
process”, current inputs of competitiveness
produce future outputs of competitiveness, which
subsequently become inputs for a new cycle of the
competitiveness process.
The Model – Regional Competitiveness
Index (RCI) and Sub-Regional Index -
Rationale
The foundational Abu Dhabi Regional and Sub-
Regional Competitiveness Index consists of
three building blocks which constitute the core
elements of competitiveness. These three building
blocks, Competitiveness Inputs, Competitiveness
Outputs and Competitiveness Outcomes, contain
socio-economic variables that measure regional
competitiveness. These blocks are framed by a
set of Competitiveness Enablers, which are the key
conditions that affect the business environment and
drive the competitiveness of an economy.
ANNEX
Key Determinants Competitiveness
Competitiveness
Inputs Human
Capital
Physical
Capital
Financial
Capital
GDP growth
Trade
volume
Market structure
New firm
generation
Productivity
Knowledge
output
Long-term improvements in living standards
Competitiveness
Outputs
Enablers
Competitiveness
Outcomes
Financial Capital
Financial capital measures the investment and
accessibility of money that is put to economic use.
48
It consists of business loans, investments, risk
capital, specialized finance and other sources of
funding to promote innovation and economic growth
in an economy. If such funds are not available,
innovation and investment can be hampered. For
example, data on R&D spending in OECD countries
reveals a strong correlation with productivity levels.
Competitiveness Outputs
Outputs are the measures of economic activity and
performance (i.e., rising GDP, growth in trade and
improvements in factor productivity indicating the
well-being of the economy). They result when inputs
are put to economic use. Increasing knowledge
output - such as patent registration and publication
of journal articles - demonstrates that innovation is
taking place, while new firm generation suggests a
healthy entrepreneurial culture and robust markets.
Competitiveness Inputs
Inputs are factors of production that produce goods
and services and drive economic activity. Inputs are
not an end to themselves; they provide the means to
achieve outputs and long-term outcomes. Measured
on their own, inputs provide limited useful insights
on the economic performance of a country unless
they are linked to an analysis of outputs.
Competitiveness Inputs consist of human, physical
and financial capital and are the necessary
“feedstock” of economic growth.
Human Capital
Human capital measures the skills, knowledge,
and competencies of an individual that enable
them to generate economic wealth.
47
Extensive
global research reveals a strong positive correlation
between human capital advances and economic
growth. OECD countries have invested heavily
in education and training, resulting in significant
improvements in the skill and education levels of
their workforces. This has resulted in rising GDP
growth, increased labor productivity, increased
knowledge output in the form of patents and new
inventions, and a growing number of enterprises.
Physical Capital
Physical capital includes natural resource
endowments, machinery, and physical infrastructure
such as transportation and ICT infrastructure. Major
investments in IT, software and communications
equipment have resulted in rising labor productivity
throughout the most competitive regions, which has
subsequently resulted in higher growth levels and
increased competitiveness.
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Competitiveness Inputs
Human Capital
Physical Capital
Financial Capital
Competitiveness Outputs
GDP growth
New firm generation
Trade volume
Productivity
Market structure
Knowledge output
47
OECD definition
48
The Economist’s definition
61 60
Competitiveness Outcomes
Outcomes are the long-term results of
competitiveness. They are defined by sustainably
rising living standards that result from improvements
in productivity. Rising living standards are
associated with rising real incomes and decreasing
unemployment levels over the long-term.
Competitiveness Enablers
Enablers are the conditions and factors
that determine the perceived potential for
competitiveness, by creating a favorable business
environment for firms at the macro and micro-
levels. Regions with a sound business enabling
environment that facilitates economic development
are likely to increase their competitive advantage by
attracting investment, skills and talent.
Illustrative examples include: effective rule of law
which facilitates commercial activity; ease of doing
business; government initiatives; and ultimately,
the perceptions of businesses and individuals in a
particular region.
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Competitiveness Outcomes
Long-term improvements
in living standards
Below are the assumptions and calculations of all proxies used in the RCI model:
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Disclaimer
• This report has been prepared using information and data from sources listed throughout this report. This information
is believed to be accurate at the time that this report was developed
• Recommendations on improving the competitiveness of the Abu Dhabi Emirate are based on findings from extensive desktop
research as well as stakeholder workshops and individual interviews conducted with various ADDED – COAD stakeholders
• Proxies were used for indicators where data was not readily available for Abu Dhabi, which involved complex
calculations and assumptions
Indicator Calculation Assumption
Broadband access per
1,000 population
(Total UAE broadband) x (ratio of Abu Dhabi GDP) / Abu Dhabi
population
Function of the share of Abu Dhabi’s
GDP
Per capita private equity investment (Total private equity investment in UAE) x (ratio of financial firms in
Abu Dhabi) / Abu Dhabi population
Function of the distribution of
financial firms in Abu Dhabi
No. Of patents registered per one
million inhabitants
(Total patents in UAE) x (ratio of universities in Abu Dhabi) / Abu
Dhabi population
Function of the distribution of
universities in Abu Dhabi
Regional gdp (AED) – population
based
(Total Abu Dhabi GDP) x (ratio of regional population) Function of the ratio of each regions
population
Labor productivity (AED) –
population based
(Population –based GDP) / employment Function of the ratio of each regions
population
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Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Indicator Definition
Annual average gross earnings Gross annual income is the amount of money that someone receives from his/her rendered services or sold
goods before any annual deductions, such as taxes are taken out. This is an indicator of the standard of living in a
country since high incomes are associated with high standards of living
Broadband access per 1,000
population
Number of inhabitants who have broadband access per 1,000 of the total population
Exports Exports are the sales of goods or services made to another country
Female labor force participation Female labor force participation rate is the number of females ages 15 and older that is economically active: all
females who supply labor for the production of goods and services during a specified period
Gross domestic product The gross domestic product (GDP) is a measure of a country's overall economic output. It is the market value of
all final goods and services made within the borders of a country in a year. High per capita GDP is an indicator of
high standards or living
Gross fixed capital formation Gross fixed capital formation includes land improvements; plant, machinery, and equipment purchases; and the
construction of roads, railways
Gross value added A productivity metric that measures the difference between output and intermediate consumption. Gross value
added provides a dollar value for the amount of goods and services that have been produced, less the cost of all
inputs and raw materials that are directly attributable to that production
New firm generation New businesses registered in the calendar year as a ratio of population
Number of managers per 1,000
population
Measures level of skilled workforce
Number of patents per 1,000,000
population
A government authority to an individual or organization conferring a right or title, esp. the sole right to make,
use, or sell some invention. In this case it’s calculated per 1,000,000 population of a country
Per capita foreign direct investment (FDI) is the movement of capital across national frontiers in a manner that grants the investor control over
the acquired asset. Firms that use FDI are known as multinational enterprises
Per capita private equity investment Money invested in private firms as a proportion of population - indicates access to finance, which affects the
competitiveness of firms
Percentage of population with
university degrees
All the inhabitants of a particular town, area, or country with a university degree; indicator of skill level
Unemployment rate The percentage of the work force that is unemployed at any given date
Abu Dhabi Competitiveness Report
Improving the Competitiveness of the Emirate of Abu Dhabi
Regional Benchmark Data Sources:
Region Broadband
Access
Per 1,000
Population
No. of
Managers
Per 1,000
Population
Per Capita
Private
Equity
Foreign
Direct
Investment
Per Capita
New Firm
Generation
– No. of
New Firms
Per 1,000
Population
No. of
Patents
Registered
Per 1
Million Pop-
ulation
Gdp Inclu-
sive And
Exclusive of
Oil &Gas
Sectors
Oil &Gas
Contribu-
tion to Gdp
Manu-
facturing
Share of
GDP %
Abu Dhabi World Bank,
SCAD
Yearbook
2012
DED
Economic
Planning
Division 2011
World Bank
2008, UAE
Stats Office,
CBUAE
Annual
Report 2011,
Gulf Venture
Capital
Association
DED
Economic
Planning
Division
2009
Abu Dhabi
Department
of Economic
Development
World Bank
2009, World
Intellectual
Property
Organization
(WIPO) 2009
SCAD
Statistical
Yearbook
2012
SCAD
Statistical
Yearbook
2012
SCAD
Statistical
Yearbook
2012
Singapore Statistics
Singapore,
World Bank
2009
Statistics
Singapore,
Ministry of
Manpower
2010
Statistics
Singapore
(2010),
McKinsey &
Co. (2011)
World Bank
2010
Singapore
Statistical
Yearbook
2012
Statistics
Singapore,
WIPO2009
Singapore
Statistical
Yearbook2012
Singapore
Statistical
Yearbook2012
Singapore
Statistical
Yearbook
2012
Norway Eurostat,
World Bank
2009
Statistics
Norway 2010
Eurostat,
European
Venture
Capital
Association
2010
World Bank
2011
Statistics
Norway 2012
Eurostat,
WIPO 2009
Norway
Statistics
2011
Norway
Statistics
2011
Statistics
Norway 2011
Alberta,
Canada
Statistics
Canada,
World Bank
2009
Statistics
Canada,
2011
OECD Stats,
Canada’s
Venture
Capital
and P.E.
Association,
Stats Canada,
Thomson
Reuters,
2010
World Bank
2010
N/A Statistics
Canada,
WIPO, 2009
Statistics
Canada,
2011
Statistics
Canada,
2011
Statistics
Canada,
2011
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