RIYADH, 21 December 2006 — Gulf states should invest in top quality education of their youth, address productivity concerns, and rev up the pace of their economic reforms in order to acquire a bigger share of the global investment market, a top aide of former US president Bill Clinton said.
Speaking on “Global Economic and Financial Opportunities and Risks 2007” at the “Investment Horizons” seminar on Tuesday night, Dr. Robert F. Wescott, Clinton’s senior international economic adviser, said the surge in oil prices was one of the factors that would cause a global growth downshift from five percent to 3.5-4 percent next year.
Wescott said in order to stay competitive at the international level, countries in the Middle East will have to make a paradigm shift in terms of their educational policy and investment strategy. On the educational front, there will be a growing demand for those well versed in ICT, which will play a crucial role in boosting productivity — as in the developed countries and the newly emerging economies. Top quality education was of the essence.
He noted that there is a perceptible shift of talent toward the knowledge-based industry, with South Korea in the lead as it has the largest number of Ph.D. holders from the US. And Poland, one of the newly emerging economies, has scooped up a fair share of the global investment, which stood at $916 billion last year.
Against such scenario, the highly competitive newly emerging economies were forging ahead with China accounting for 13 percent of the global gross domestic product. Poland was also doing well as a destination for foreign investment by boosting its productivity by 4.2 percent a year over its reliance on information and communications technology, in which investment increased.
Wescott further said that 2007 will present both challenges and opportunities in investment. The risk factor will be due to turbulent oil prices, which could cause a dent in the economic growth of the developed countries. “We now have a new silk road. Before it was silk and spices. Today it is hydrocarbons and petrodollars,” he pointed out.
However, new business opportunities were looming on the horizon. He said that now, more than ever, the thrust of international research was toward finding alternative sources of fuel by making use of solar and wind power. Investors would be well advised to take a closer look at environmental technology, especially the one that relates to the development of diesel particulate filters, considering that in the US alone, diesel accounts for about 30-40 percent of energy consumption. Therefore, investment in such technology could yield high returns in view of its global market potential, he added. Investments in coal gasifiers and CO2 capture could also yield lucrative returns as they fit in well with the provisions of the Kyoto Protocol.
Wescott also noted that there will also be a growing demand for mobile telephones, luxury goods as well as for the travel and tourism industry. Other growth sectors were health care (especially care of the elderly) and biotechnology.
The infrastructural market was also set for phenomenal growth in order to cope with the rising demand for cement and other construction materials especially from China, India and Southeast Asia. All these countries had an investor-friendly economic environment and high rates of productivity, he said.
Fathi Al-Merdasi, Tunisia’s former foreign investment minister, said the Gulf states will have to fine-tune their economic reforms program and also pay attention to productivity practices to boost their global investment potentials, which currently stands at only two percent (including the Middle East) of the total $916 billion last year.