Hassan Y. Aly - Nile University ERF 25th Annual Conference Knowledge, Research Networks & Development Policy 10-12 March, 2019 Kuwait City, Kuwait

1. 1
The Role of Knowledge in the Process of
Innovation in the New Global Economy:
MENA Prospective
Comments
By
Hassan Y. Aly,
Professor of Economics,
and Dean of the Business School at Nile University, Egypt
Presentation to the ERF 25th Annual Conference, Kuwait City, Kuwait
March 2019

2. 2
Policy Response
“Create, Protect and Valorize IP
• Public procurement
• Patent collectives
• Unlock university-based IP
• Patent collectives are a way to « socialize » the costs and
benefits of individual patents by pooling them by sector or
country »?
• Agreement on easing the patenting process and
unlocking university based IP. However, most of
the universities in the ME are teaching institutions
and focus on research is rare and very theoretical.
Pooling by country?

3. 3
Policy Response
• “Redesign programs from “job centered” to
“person centered”
• Funding higher education
• Savings and pension schemes ( tax free saving and
portable pensions)
• The focus should be “firm” centered rather than
“person” centered!
• Savings and Pension Schemes ( are these for
GCC?). Pensions and new demographic facts.
• Most ME countries do not have the capacity to
fund higher education. The focus should be on
changing the quality of higher educating.

4. 4
Policy Reponse
• “As the nature of work changes so will the skills and
expertise we look for in the workforce. As a result, the
current emphasis on “upfront“ learning should be replaced
by policies that remove barriers to reskilling with policies
that incentivize lifelong learning and encourage public and
private sector collaboration.”
• Total agreement on the lifelong learning
• However, our focus is on the
unemployed in general and the youth in
particular.

5. 5
Surplus of Unemployed and
Misemployed Model of Growth
* Applying the basic principle of Arthur Lewis’s
model to the ME region ( very much like what the
Chinese did). Basically, move labor from zero or
negative MP to positive MP
Some Stylized facts about the ME now:
1- Youth under 25th represent over 60% of the
population of the ME.
2- Large percentage of this youth group are either
unemployed, disguisedly unemployed, or
misemployed due to the skills gap that exists. These
groups may represent the unlimited supply of labor a
la Arthur Lewis.

6. 6
Surplus of Unemployed and
Misemployed Model of Growth
Some More Stylized facts about the ME now:
3- Business education is ranked very low on the
international scale. Egypt is dead last on the world
competiveness report in the business education
component.
4- Projections estimate that by 2020, the region will
reach 60 percent overall smartphone adoption, in line
with the rest of the world
5- The Middle East’s top IT players do not rank in the
top 600 companies by annual revenue globally.
(McKinsey 2016)

7. 7
Surplus of Unemployed and
Misemployed Model of Growth
ME Digital potential now:
• There is a potential for unified digital market across
the Middle East (160 million potential digital users
by 2025) amounting to approximately 95 billion
US$.
• The Middle East and North Africa (MENA) region
is ranked second in the world by number of daily
YouTube videos views at more than 310 million
• By 2020, projections suggest that there will be
around 2 zettabytes of data in the Middle East—
greater than the estimated number of grains of sand
covering the entire Arabian

8. 8
Surplus of Unemployed and
Misemployed Model of Growth
1- The mechanism by which these groups are turned
into productive human capital through innovation,
technology, and entrepreneurship is in the heart
of the success of this model.
2- Youth led economic transformation is very
possible and it would be the end result of this model if
there is proper planning and coordination between the
government, the private sector, and other supporting
eco-system from NGOs to even the diaspora outside
the country.

9. 9
Surplus of Unemployed and
Misemployed Model of Growth
1- Governmental public policy that force firms to pay
for training by universities and other educational
institutions where the latter will be accountable to
firms is very much in line with what “Paul Collier”
explained yesterday.
2- The innovations, technology, and entrepreneurship
should not be confined in one sector but in all sectors.
Any new idea that will help improve productivity or
connect the market players in agriculture, industry,
trade, and any other service whether for the final or
intermediate product or service should be pursued.

10. 10
Surplus of Unemployed and
Misemployed Model of Growth
In a nut shell:
1-Considering the unproductive Human Capital, the new oil of
the region.
2-As exploration costs, extraction, and building refinery are
essential primary costs to produce and sell oil, a holistic
change in the education system is essential to use and improve
the human capital productivity.
3-Creating a new class of young entrepreneurs who use
innovations and technology is the goal of this model.
4- Digital can also have a positive impact on inclusion and
poverty reduction, increase access to and quality of healthcare
and education, and reduce CO2 emissions. Improvement in the
Overall quality of life.

11. 11
Thank You

12. 12
McKinsey 10 RECOMMENDATIONS TO ACCELERATE
DIGITISATION ACROSS THE ME REGION
GOVERNEMNT
• 1. Move from e-government-focused digital
initiatives to full digital economy
development
• 2. Empower national digital agencies
• 3. Create policy frameworks that foster, and
do not hamper, digital innovation
• 4. Seize the opportunity of large public IT
spending to create home-grown IT players at
scale

13. 13
McKinsey 10 RECOMMENDATIONS TO ACCELERATE
DIGITISATION ACROSS THE ME REGION
BUSINESS
• 5. Take the once-in-a-lifetime opportunity to
create critical digital platforms for the region
• 6. Step up the collaboration among
corporations and digital disrupters in the
region
• 7. Embrace agility through digital to address
the ever-faster business environment

14. 14
McKinsey 10 RECOMMENDATIONS TO ACCELERATE
DIGITISATION ACROSS THE ME REGION
FUNDING
• 8. Scale digital VC funding and increase
visibility of investment opportunities
TALENT
• 9. Create digital curricula and seamless
learning pathways from primary schools to
higher education and into employment
• 10. Rethink how to attract and retain digital
talent and reconsider applicability of
nationalization to digital