A decade of opportunities awaits Arab countries

Special A decade of opportunities awaits Arab countries
China’s rise as an economic power offers the Middle East a strategic advantage through growing investment, with analysts predicting the region will return to its historic role as a bridge between Africa, Europe and Asia. (Shutterstock)
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Updated 27 December 2019

A decade of opportunities awaits Arab countries

A decade of opportunities awaits Arab countries
  • Saudi Arabia and the UAE are expected to see some of the Middle East's first smart cities
  • China is the UAE’s largest non-oil trading partner even as UAE’s trade with other Asian countries keeps growing

ABU DHABI: From China’s emergence to the need for smart cities, the Middle East is well placed to benefit from what the future holds, according to a number of experts who attended the region’s first SALT Conference, held recently in Abu Dhabi.

Their verdict chimes in with the remarks made by the UAE’s Minister of Cabinet Affairs and the Future Mohammed Al-Gergawi in his opening speech at Dubai’s Arab Strategy Forum earlier this month, where he spoke of the possibility of a “bright future,” provided Arab states take advantage of upcoming opportunities.

“Our region still has an increasing strategic importance and possesses huge human potential,” said Al-Gergawi, who noted that more than 100 million Arab youth were predicted to enter the labor market over the next 10 years.

Parag Khanna, managing partner of FutureMap, a data and scenario-based strategic global advisory firm, used the term “West Asia” to describe the Middle East while discussing the region’s prospects in the context of the Asian growth story.

“If this collection of countries in Asia, such as Pakistan and India, grow at just 5 percent, (they will have) a combined GDP equal to China’s present GDP in less than 10 years,” he said.

Among the key drivers of Asian financial growth and reform identified by Khanna are savings and consumption, local currency liquidity, capital-account liberalization, and purchasing-power parity.

“Asia has been getting a lot of things right in economic and structural reforms. What Japan and South Korea have already done, and China is doing with its capital account, means a lot of countries want to do that too and manage their balance of payments. This copycat effect is going to continue to play out,” he added.

“We are currently living in a tripolar economic world, with North America, Europe and Asia standing as very important pillars today.

“The mobility of people and the growing mobility of capital are going hand in hand. In the last 15 years, China accelerated (the pace of) its outbound investments into infrastructure.

“The regions that have benefited the most from Chinese outbound investments are Europe, Africa, West Asia, East Asia and the Middle East and North Africa, namely Saudi Arabia, the UAE and Egypt,” said Khanna.

Referring to China’s One Belt One Road (OBOR) initiative, he pointed out that the trend it represented was irreversible, adding that the regions that belonged together in the “Silk Road” spirit were going to continue to reconnect no matter what.

Today, China is the UAE’s largest  non-oil trading partner even as the UAE’s trade with Southeast and South Asia, particularly India, keeps growing.

“In terms of the geography of the UAE and Abu Dhabi, when historians talk about the ancient Silk Roads and the pre-colonial world, (we talk about) Afro-Eurasia,” Khanna added. “It captures Africa, Europe and Asia – and the 16th-century world was Afro-Eurasia.

“What’s happening today is the resurrection of this Afro-Eurasian system. So, there couldn’t be a better time to be based in the UAE and looking multi-directionally into how to be a connector and a bridge between these three very important demographic and economic regions.”

In his remarks at the future-focused Arab Strategic Forum, Al-Gergawi had also posed the crucial question: In which direction are (Arab) countries heading?

The answer, strictly from the standpoint of urban development, is smart cities.

Conceptually, a smart city integrates information and communication technology and various physical devices connected to the Internet of Things (IoT) network to optimize the efficiency of different operations and services and connect to citizens.

In recent years, interest in smart cities has grown in tandem with technological, economic and environmental changes such as the shift toward online retail and entertainment, climate change, greying societies, urban population growth, and pressures on public finances.

With 60 percent of the global population – or 5.5 billion people – expected to live in cities by 2050, a gradual move over to smart cities is inevitable, according to Thomas Bardawil, director at Plug and Play Smart Cities.

A $16 billion high-speed railway linking Makkah and Madinah highlights major changes in the ‘mobility industry’  as technology drives the
rise of smart cities. (AFP)

However, the way cities have been built, reflected in current levels of traffic, pollution and property prices, is “unsustainable,” said Bardawil. “We are not changing to smart cities because we think it’s cool. We are changing because we have to.”

In an interview with Arab News on the sidelines of the SALT Conference, Bardawil said that Europe, with its built infrastructure, did not hold as much promise in regard to smart-city development as the Middle East did with its vast swathes of unused land.

So, cities in the GCC region, including Saudi Arabia and the UAE, are where he expects to see some of the first smart cities emerge, as well as in China, where “promising” work is currently underway.

Bardawil cited three industries that he works closely with as part of the value chain of a smart city and essential for its development: mobility, energy and real estate.

“There is a big shift in the mobility industry and new generations don’t seem to want to own cars anymore. So, we see mobility as a service becoming a major disruptor of the mobility industry, specifically for car manufacturers.

“They will not be about producing cars anymore. Rather they will be about how they can move cars around in the most efficient way possible,” he added.

As far as energy was concerned, a revolution was happening in the industry at the moment, and Bardawil said: “Producing one kilowatt of renewable energy today practically costs as much as producing it with traditional energy sources. The marginal cost of producing renewable energy is close to zero, with solar and wind.

“So, we see that everyone is going to be producing their own green energy and then sharing this energy with networks. People will be buying and selling energy off the grid.

“In a nutshell, it will bypass all these vertically integrated energy companies and all those middlemen that kept us from connecting to each other, and this is what we call ‘power to the people.’”

As people’s lifestyles evolved under the influence of sustainability, industries such as real estate would have to follow suit, Bardawil added. And with less human interaction thanks to innovation, he expected new technologies centered on the community as well as mixed-use buildings to gain ground.

“We build an ecosystem for innovation. We bring all the players together to connect them and provide them with information and the best practices because, at the end of the day, it’s about the knowledge.

“We need startups, governments, regulators and corporations, but it’s about doing it as a team. It’s all about the network.”

Bardawil pointed out that the construction of more efficient, resistant, sustainable and safe buildings using wood would soon be a reality.

“We are working on technology startups to actually make wood smart,” he said. “A smart city is one that has been thoroughly thought-out to be efficient, sustainable and able to adapt to the growing population, without having to compromise on the well-being of its people.”


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Source: Good Judgment and Arab Strategy Forum