Throughout history, manufacturing has evolved to keep pace with the economic environment: From single skilled artisans and microfabrication to mass production. Even today, the term still conjures up images of steel mills and difficult physical labor. However, today's advanced manufacturing does not rely on low-cost human resources, but rather on skills and creativity to produce highly complex products.
The Middle East region is currently facing challenges and opportunities directly related to this manufacturing value chain. Global developments in the energy sector, coupled with significant demographic shifts to include a young and rapidly growing population, are setting the stage for a future that will require countries to utilize increased innovation and collaboration to achieve the ambitious goals that have been set for continued development and prosperity. A prime example is the Kingdom of Saudi Arabia, a country looking to drive the future of a population where 70 percent of Saudis are under the age of 30.
Saudi Arabia has long enjoyed a significant crude oil feedstock advantage; however the developments of North American shale gas and coal technologies in Asia have started to change the feedstock landscape globally. As a result, the Kingdom is working around the clock to translate that advantage into tangible economic growth and diversification through manufacturing. For instance, plans are afoot to harness the incredible energy and potential of Saudi Arabia's youthful population, which will create a dynamic economic environment. This will require a concerted collective effort from government, foreign investment, and academic institutions in order to successfully drive and nurture human capital to achieve the country's long-term vision.
Thanks to its visionary leaders, efforts have been already made to ensure that all the different elements of the manufacturing value chain are available to companies, local and multinational, making it the investment destination of choice across many sectors. The direct result is a favorable economic environment for the Kingdom and its people.
Growing employment in this way will require even further economic diversification. Fortunately, Saudi Arabia has one of the most expansive economies in the region and the benefit of a relatively large domestic market for many goods and services. The country is already taking steps to further grow its industrial base, and aims to have its industrial sector account for 24.9 percent of its gross domestic product (GDP) by 2024, up from 19.6 percent in 2004. However, the need to grow skilled employment to feed tomorrow's industries will require even more work to be done and growth to be achieved.
The leaderships' vision has been guiding the Kingdom into a natural progression in the form of downstream petrochemical expansion, which, when pursued with vigor and creativity, will drive economic diversification and new employment. Three elements in particular are an essential part of this mix: A policy framework that encourages growth; innovation across the value chain; and collaboration and partnership, not just in business ventures but in maximizing the contributions of the public and private spheres to expand and enhance the country's skills base.
Saudi Arabia has already begun to develop the necessary foundations for its expansion in the downstream petrochemicals industry, supported by heavy investments in infrastructure, and is already reaping significant benefits as new generations of Saudis are up-skilled and begin to lead locally and, indeed, compete globally. The Kingdom is also embracing collaboration, with partnerships such as that of Saudi Aramco and The Dow Chemical Company, which created the groundbreaking Sadara petrochemical facility and conversion park, as well as Dow's joint venture with Tasnee & Sahara Petrochemicals that established the Saudi Acrylic Monomers Co. (SAMCo). A knowledge-based economy that invests in Science, Technology, Engineering, and Math (STEM) education is also imperative for establishing a sustainable advanced economy, which is why the country has collaborated to focus efforts on centers such as the King Abdullah University of Science and Technology (KAUST).
The challenges of rapidly growing populations in the region, the evolution of petrochemical capacity, and global economic uncertainty make it even more imperative that countries who currently enjoy feedstock advantages continue to grow their advanced, downstream manufacturing sectors. The Kingdom's visionary homegrown formula for driving its economic success combines its natural feedstock advantage with a commitment to the shift toward manufacturing. Supported by a public policy platform that encourages growth, driven by innovation across the value chain, and expanded through collaboration and partnership - especially in the pursuit of R&D and STEM education, Saudi Arabia will have all the ingredients to achieve and exceed its economic goals.
— Zuhair Allawi is president of the Dow Saudi Arabia Company. He is responsible for driving The Dow Chemical Company's growth strategy in the country.
