UAE most networked economy in the region

The UAE is the most networked economy in the information, communication and technology (ICT) sector in the Middle East region but the country could lose this edge if it does not improve its higher education and research systems, says the latest report.

According to the World Economic Forum's Global Information Technology Report 2008-2009, the UAE government's efforts to push for higher penetration of information technology (IT) in the economy has been impressive in recent years, which is reflected in the country's ninth and 16th position in the government readiness and usage categories, respectively.

The UAE realised its largest improvement from 2007 in the environment component, going up seven places to 32nd in this dimension. The business environment is assessed as being quite ICT conducive (24th), with an impressive first and second place for the extent and effect of taxation and for total tax rate, respectively, and little red tape (fifth for the burden of government regulation), said the report.

WEF economists forewarned that the major challenges for the country in increasing its innovation potential in the years to come has to do with the quality of its higher educational and research system, which is assessed as being fairly poor and does not seem to provide local businesses with a sufficiently large qualified labour pool (ranked 75th worldwide for the availability of scientists and engineers).

Regionally, Middle East countries improved their networked readiness, with most of the countries appearing in the top half of the Network Readiness Index (NRI) rankings, namely the UAE (27th), Qatar (29th), Bahrain (37th), Saudi Arabia (40th), Jordan (44th), Oman (50th), and Kuwait (57th).

The Middle East has seen a stellar upsurge in penetration rates in recent years, with a 600 per cent increase in the number of internet users from 2002 to 2007, the largest in the world. Also ICT is increasingly seen by many countries in the region, notably the Gulf countries, as an essential tool (both as a target sector and infrastructure) to promote a structural transformation in the production and export sector toward more value-added goods and to modernise their societies.

Considering such high benefits, the UAE has embarked on a number of multibillion dollar technology-based projects, notably the Dubai Media City, Dubai Internet City, and Knowledge Village, with the aim of creating innovation clusters.

The UAE also made a mark in the business process outsourcing (BPO), becoming a major hub in the Middle East along with Egypt.

Qatar, ranked second in the region, also made ICT the focal point of its economic, political, and social modernisation process, creating in 2004 ictQatar as both regulator and ICT champion in the country. Other, less wealthy economies in the region, such as Jordan and Egypt, have proven quite successful in leveraging ICT to improve economic efficiency and service provision, particularly in education.

Egypt has also recently turned into an important ICT outsourcing center, thanks to a savvy government strategy in promoting an FDI-friendly environment.

Qatar, ranked 29th, continues its rise to the top of the rankings, with a cumulated seven-place improvement since 2006, the year of its first inclusion. The country makes significant progress in all three NRI components with gains of 14, two, and three positions in environment (29th), readiness (26th), and usage (31st), respectively.

Also on a steep upward trend, Bahrain soared eight ranks to 37th for a total gain of 13 ranks since its first NRI appearance in 2006. As for the UAE and Qatar, the most significant improvements are observed in the environment component (from 50th to 37th this year).

Thanks to progress made across the board, Saudi Arabia (40th) improved by eight positions with respect to its inaugural rank last year. While it places 45th or higher in seven other categories of the NRI, Saudi Arabia's situation presents serious shortcomings in terms of individual readiness (79th), notably the quality of the educational system, especially for math and science (85th).

As a result, individual usage still remains limited (53rd). While Jordan (44th, up three) and Oman (50th, also up three) are on the rise, Kuwait (57th) drops five places. Much lower in the rankings, Syria realises an outstanding 16-place jump to 94th rank as the result of a remarkable strengthening of individual and business readiness.

Globally, NRI rankings for 2008-2009 featured Denmark as the most networked economy in the world for the third consecutive year, the culmination of an upward trend observed since 2003. The other Nordic countries also continue to teach best practices on how to leverage ICT for increased competitiveness, with Sweden, Finland, Iceland, and Norway at second, sixth, seventh, and eighth position, respectively.

Among the top 20, the US continued to deliver a convincing performance in networked readiness, climbing one position to an outstanding third place, followed by Singapore (4th) and Switzerland (5th). Five other economies from the Asia and Pacific region come in the top 20 this year: South Korea (11th), Hong Kong (12th),Taiwan (13th), Australia (14th) and Japan (17th).

With regard to the largest Asian emerging markets, China leapfrogs 11 positions to 46th, overtaking India (which is down four positions at 54th) and the rest of the Bric countries.

The assessment of Latin America and the Caribbean is more mixed in nature, with only six economies in the top half of the rankings, namely Barbados (36th), Chile (39th), Puerto Rico (42nd), Jamaica (53rd), Costa Rica (56th), and Brazil (59th). Chile loses five positions and the leadership in the region for the first time since the inception of this index. Mexico and Argentina are both losing ground, positioning themselves at 67th and 87th, respectively.

Despite some positive trends, sub-Saharan Africa continued to lag behind by a significant margin, with only two economies (Mauritius and South Africa, at 51st and 52nd place, respectively) in the top half of the NRI, while 18 rank below 100th place.


Ict firms to cut spending this year

Information and communication technologies (ICT) firms will cut technology spending this year but investment will still stay in the positive territory as they feel the crisis, according to forecast by a global consultancy.

IDC – an IT consultancy – has predicted global technology spending will grow by 2.9 per cent year-on-year in 2009, lower than the previously forecasted 4.9 per cent.

While the US economy is expected to shrink in 2009, technology spending in the US is forecasted to grow by 0.9 per cent as compared with the previously forecasted 4.2 per cent.

There are two underlying reasons why the technology sector, while suffering because of the overall economic challenges is showing such signs of resilience.

One is that technology is evolving continuously and, despite economic uncertainty over the coming years, progress in most areas of ICT capabilities continues at a blistering pace. For example, the price of personal computers is falling rapidly and the emergence of a whole new class of laptops, priced as low as $100 (Dh367) is enabling large segments of emerging countries to now get access.

Mobiles, social networks popular

Despite slowdowns in sales in many technology products, the sales of mobile phones are expected to grow by six per cent in 2009, according to forecasts by Gartner Inc as compared with previous forecasts of 16 per cent growth, and the popularity of social networking sites is growing steadily.

When the crisis hit hard in September 2008, LinkedIn's membership shot up by 25 per cent in a single month to 28 million. As the economic crisis deepened, the site's sign-ups were clocking at the amazing rate of one new member every second. The mobile segment of the industry has quickly overshadowed fixed-line communications, accounting for 55 per cent of the global industry's $2 trillion annual revenues in 2008.

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