Abu Dhabi innovation at par with best in world

The Abu Dhabi Department of Economic Development (Added) has revealed the results of the first ‘Abu Dhabi Innovation Index’ which was prepared in collaboration with Insead, one of the world’s leading and largest graduate business schools.

Added says the results confirm that Abu Dhabi is now in a position which qualifies it, according to international standards, to gain access to the knowledge necessary for innovation, and to localise and consolidate that knowledge.

Added said the outstanding status of Abu Dhabi was attributed to its ability to attract talents and international expertise, and to the outcomes of investment in information technologies, world class communications, and the modern infrastructure for transport; in addition to the wise policies of the prudent leadership of the Government of Abu Dhabi, the rational procurement processes, the strategic investments in other institutions for localisation of know-how, expertise, and high technical knowledge, such as that of  ‘Masdar’,  ‘Strata’ and the Advanced Technology Investment Company (ATIC), the Cleveland Clinic and others.

The results of ‘Abu Dhabi Innovation Index’ show that, when compared to other economies dependent on natural resources, the emirate of Abu Dhabi emerged as highly adept and very efficient in the adoption and positioning of knowledge, new technologies, products and services across its entire economy.

Rashid Ali Al Zaabi, the Acting Executive Director of Planning and Statistics Sector, at the Department of Economic Development, said, "The innovation policy is a government tool, designed to increase the pace of innovation in any economy; and the primary goal of this policy is to solve various social and economic problems, such as low levels of productivity, and economic issues related to energy, environment or health."
Al Zaabi pointed out that in GCC countries, like the majority of other rich economies, the innovation policy gained place in action plans of economic diversification policies.

In Abu Dhabi the Economic Vision 2030 for the Emirate of Abu Dhabi, has set an ambitious plan to stimulate innovation, towards attaining the main goal of turning into a sustainable knowledge-based economy.

"Based on the mandate set out by the General Secretariat of the Executive Council of the Emirate of Abu Dhabi, on the development of the Abu Dhabi Innovation Index, the Abu Dhabi Department of Economic Development contracted with Insead University to jointly build the Innovation Index for the Emirate of Abu Dhabi.

Efforts continued for nearly two years, and upon the completion of the innovation survey stage, and the building of the index, a discussion panel was held to review the results of the Innovation Index with the relevant authorities; and all proposals were then included in the innovation index report."

Al Zaabi indicated that the innovation report is aimed at evaluating the different factors that contribute to innovation in the emirate, comparing them with the performance of other economies, through the index itself, and analysing the performance of innovation in Abu Dhabi business community using innovation surveys.

Shorooq Abdullah Al Zaabi, Head of Development Indicators and Future Studies Section at Added, confirmed that based on the five functions of innovation, namely, knowledge accessing, consolidation, dissemination, creation and use; the Emirate of Abu Dhabi turned out to be having a strong ability to communicate and link with the global knowledge and innovation networks.

This was evidenced by the emirate ranking 8th out of 23 countries in terms of ability regarding (Access to Knowledge), and acquiring the fifth place out of 23 in terms of performance.

The Emirate of Abu Dhabi showed a good ability in identifying and localisation of sources of external knowledge, where the Emirate captured the 15th  place out of 23 countries in terms of ability for (the Consolidation of Knowledge Index), and won the seventh place in terms of performance. Abu Dhabi also achieved good performance, adopted new innovations, and disseminated the same in all fields of the entire economy. It was thus ranked sixth in terms of ability in the (Dissemination of Knowledge Index), and captured the third place in terms of performance.

The Abu Dhabi Index of Innovation confirmed that the emirate enjoys a strong innovative potential, based on its ability to access, consolidate and commercially use knowledge.

The emirate was ranked eighth in terms of capacity for (Knowledge Creation), and came15th in terms of performance.
Abu Dhabi enjoys relatively strong capabilities with regard to five innovation parameters.

The gap between its potential and real performance is narrow, as Abu Dhabi efficiently and successfully utilises its resources. The emirate came in the fourth place in terms of capacity in the (the Utilisation of Knowledge Index) and won the first place in terms of the performance out of a total of 23 countries.

Shorooq Al Zaabi said, "It is possible to determine the capabilities of innovation in any economic system by measuring the five basic functions, which often lead to the creation of innovation. This could be done individually or jointly. The five functions include "accessing, consolidation, dissemination, creation and utilisation of knowledge."

Regarding the Abu Dhabi Community Innovation Survey-2012, Ms. Shorooq explained, "The approach taken in this survey was a standard model for measuring the performance of innovation in countries; as national surveys of this kind depend systematically on the ‘Oslo Manual, Guidelines for Collecting and Interpreting Innovation Data", issued by the Organisation for Economic Cooperation and Development (OECD) in 1992 and its revised versions of 1997 and 2005.

Shorooq Added, "These surveys select a representative sample of businesses in any country, according to sector and size: pursuant to the innovation community survey methodology. Companies with a staff of at least 10 employees were not included in the Abu Dhabi innovation survey. Moreover, a typical random graded design with systemic probabilities by size was adopted."

She pointed out that during the design of the sample; the surveyed companies were divided and classified into non-overlapping "sectors"; as 580 companies in total were selected to represent ten economic activities in the emirate.

Shorooq said that three categories were adopted from the size of the sample; small companies with (10-49 employees), medium companies with (50-249 employees) and large companies with (250 or more employees). As the construction sector is characterised as highly labor-intensive, a special classification for this sector was adopted, with the following categories; small companies with (10-199 employees), medium companies with (200-2399 employees), and large companies with (2,400 employees and more). 

She noted that the results of the survey revealed that 38.5% of companies offered new or significantly improved products, 21% of companies provided new products or goods, while 33% offered new services.

"16% of the product innovations, offered by Abu Dhabi companies, were developed up to the international level, while 41% of the products offered were new to UAE market and the remaining 43% were not new except for innovating companies which provided them.

Shorooq reported that 59.4% of the surveyed companies in Abu Dhabi conducted innovations for new or significantly improved processes during the period 2008 to 2011; and indicated that half of these innovations were in the form of maintenance, purchasing, accounting or new computing systems."

"The manufacturing and production processes came in the second place, followed by innovation operations related to logistics. The results indicated that the largest share of innovation operations in Abu Dhabi, were in the form of information technology systems, especially that a large share of innovations processes (42%) were developed by or in cooperation with other parties. This trend is in fact a positive indicator of the level of knowledge transfer, and cooperation in the innovation system."

According to Shorooq, the sources for operation innovations are similar to those specified for product innovations; however, customers and suppliers are the primary channel for Abu Dhabi companies to learn innovation, followed by the activities of exposure to the international market and exhibitions.

The results of the survey show that 60% of the surveyed companies in Abu Dhabi, reported that they did not allocate any funds to directly support activities related to innovation, noting that only 2.6% of surveyed companies had received general financial support for their innovations activities during the period 2008-2011.

Shorooq said that the innovative activities of companies could be measured against the amount of money spent by these companies for innovation, indicating that there could be a difference in the distribution of these funds among the various categories of innovative activities.
Abu Dhabi clearly occupies a place among those economies which, on average, allocate considerable funds for innovation, as a percentage of sales.

The percentage spent on innovation reaches 3.2% - if non-innovative companies are excluded. This percentage is nearly the same as that of Northern European countries, such as Denmark, Finland, and Sweden. Abu Dhabi comes close to the most advanced European countries such as Austria, Belgium, France and Germany.

She said that the results of the Abu Dhabi Innovation Survey revealed that Abu Dhabi government entities have been the main propeller of demand for innovation in UAE.

The same applies to the construction sector, which enjoys high demand driven mainly by the government, despite that the construction sector is classified as a market private sector.

"The Abu Dhabi Innovation Survey revealed that during the four year period 2008-2011, about 12% of the surveyed companies gave up some of their innovation activities or projects at the initial idea stage; 15% of companies experienced considerable delays, while 9% of the companies dropped their innovative activities at some point after the startup of the activity/project. " Shorooq said.

A list of external and internal factors, which sited obstacles to innovation activities facing the Abu Dhabi surveyed companies, was provided. Surveyed companies were asked to classify these factors in terms of importance (high - medium and low).

The most common and recurring obstacles were found to be, the high cost of innovation; and the control and dominance of well-established companies in the market.

Shorooq said that it was interesting, that a relatively small number of companies felt the presence of obstacles due to lack of information available on the market, in line with the results of the index which indicated that Abu Dhabi enjoys great ability to access knowledge.

Regarding the requirements of policy innovation in the Emirate of Abu Dhabi, it was found that, according to the results of the index, access to knowledge lies in facilitating the process of creating a greater number of providers of advanced services, as well as promoting innovation programs similar to those applied in Europe.

As for consolidation of knowledge, the results of the index pointed out that Abu Dhabi had simplified the procedures for the establishment of business for foreign companies, and that it provided distinct incentives to companies; which encouraged companies to take the emirate as their regional headquarters; in addition to the continuous reviewing of foreign ownership laws to ensure competing with other similar economies.

Referring to the dissemination of knowledge, it was revealed that the Emirate of Abu Dhabi is able to further promote the quality of education and training at all levels, provide secondment programs to increase opportunities for students and researchers to move between the academic / educational and industrial systems, provide opportunities for industrial apprenticeships and draw solid plans to pave the way for talents and new innovations to move from the academic world into the industry.

Regarding creation of knowledge, Abu Dhabi invests to build strong capabilities to create knowledge as part of a long-term strategy, which will need some time before they could have a significant impact. So, it is important to continue these investments, to develop knowledge and cognitive abilities.

Concerning the use of knowledge, the results of the index showed the extent of the attention paid by Abu Dhabi to its SMEs and entrepreneurs, as they represent new sources of knowledge; with aim to horizontally expand innovative activities, and enter into new markets.

The survey indicated that the cost of innovation pose a big challenge, especially for SMEs in their attempt to innovate in the local market, which is dominated by big companies. These are the structural issues, which require government intervention to change the terms of the framework, under which SMEs operate.

The Khalifa Fund for Enterprise Development offers different funding programs, aimed to create a generation of entrepreneurs citizens, promote, support and develop SMEs as well as start-up of companies based on innovation.  Added says this requires the provision of core funding, and venture capital for special activities, to commercially benefit from innovative ideas, through technology transfer, promoting activities and supporting of foreign trade.

Some countries have established specialised public entities to provide all of these services through one instrument (such as ‘Innovation Norway’), while others used a combination of partners to provide assistance to certain types of companies.

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