Last month, Intel Corporation Chairman Dr. Craig Barrett and his wife Barbara, paid a visit to Riyadh. In a series of meetings with Custodian of the Two Holy Mosques King Abdullah, Communications and Information Technology Commission Governor Dr. Mohammed Al-Suwaiyel and Saudi Arabian General Investment Authority Governor Amr A. Al-Dabbagh, Barrett shared his thoughts on issues pertaining to sustainable development in Saudi Arabia. By the end of his visit, two key agreements in regards to venture capital had been signed and several other initiatives relating to sustainable development were under consideration. In an exclusive interview, Barrett met with Arab News to discuss the prospects for sustainable development in the Kingdom.
“I think every economy, every country has the same challenge and that’s how to be competitive going forward,” said Barrett. “Sustainable development requires three things. To encourage sustainable development there are only three knobs you can twist and one is education, especially educating people in the fields that make up the foundation of the knowledge-based industries. We don’t have to talk about information technology. We could talk about medicine, but what is needed are people with math and science capabilities. To make that happen you need good universities. Secondly, you need to invest in research and development which creates new ideas for new products, new services and new companies. And then the third thing you need is an environment to put good people together with good ideas to do something.”
During the discussion Barrett repeatedly emphasized that all three essentials for sustainable development must be present and evolving as required, or the likelihood for stagnation increased.
“If you’re not doing a good job educating your young people, if you’re not doing a good job investing in R&D and you don’t have the environment, which can be everything from rules and regulations to broadband to venture capital — there are a whole variety of things that play into creating the environment — if you don’t have those three things, then I don’t believe that as a nation you can be competitive going forward,” he advised.
Barrett was saddened by the unemployment levels in the Kingdom, especially among the young people. He stated that harnessing the enthusiasm and talents of any nation’s youth results in a brighter future.
“Young people are an opportunity,” remarked Barrett. “When we go back to the three things I mentioned for sustainable development, in regards to young people the education aspect is critical. It is incumbent upon the society and the economy to do a good job educating their young people. That is the ticket to the future, no question about it. So you either do a good job in education or you fall behind. The impact of a good education system doesn’t come tomorrow or the next day but it comes in five years, 10 years, a generation from now, when you have a work force that can compete at the international level.”
According to Barrett, in today’s emerging knowledge economies, learning never ends. At Intel, newly-hired college graduates are told that the half-life of their university education is less than five years and that if they hope to prosper, they should view learning as a lifelong goal.
“Education doesn’t stop when you graduate from college. It starts when you graduate,” said Barrett. “Sustainable development for the individual is continuing education. Sustainable development for the corporation is continuing to remake itself and continuing to have its employees learn and do new things. Sustainable development for a nation goes back to continuing to upgrade the education process, continuing to upgrade the investment in R&D, creation of new ideas and continuing to have your environment competitive with other environments in order to attract innovative investment.”
Barrett and Intel have found that the environment for investment varies dramatically from country to country. In those nations where companies see that they can get a return on their investment, the money flows in. Potential investors must also feel that the nation has the enthusiasm to embrace new ideas.
“New ideas lead to innovation, this is the genesis. The investment in research and development is part of the idea creation system. But you also have to create an environment where innovation or entrepreneurship is acceptable,” claimed Barrett. “Many societies have what I would call a fear or stigma attached to failure. In some countries there is a societal stigma associated with a failed company. If you go to Silicon Valley in the US, it is the Red Badge of Courage if you’ve worked for three companies that have failed. Entrepreneurial behavior invites failure. Of course in business you’d like to be successful, but there’s a fair chance that you’ll fail. You have to get people in tune with what entrepreneurship is all about.”
Advised on the current attitude of the banking system in the Kingdom in regards to investing in small businesses, Barrett said with a sigh that this is a common problem globally.
“The normal financial mode of investment is death to entrepreneurship with financial institutions saying, ‘I will only invest my money with a guaranteed 15 percent return on invested capital.’ It doesn’t happen,” he explained. “When it comes to the return on venture capital, you invest in 10 companies. One is a success, one is break even and eight fail. The successful one is enough to compensate for the eight that fail. So for entrepreneurship to be encouraged a different model is required for investment. That is why venture capital is so important. One of the MOUs I signed during my visit was with the Saudi Arabian General Investment Authority (SAGIA) to create a venture capital fund and try to bring the best practices associated with venture capital from around the world into Saudi Arabia.”
In addition to venture capital, Intel plans to be immediately involved in education and research and development in the Kingdom.
“Intel has a very effective program, that is about to be rolled out in Saudi Arabia, training teachers to integrate technology in the classroom. It has been a very effective program worldwide. We’ve trained over three million teachers. I think this program will be very successful here in Saudi Arabia,” said Barrett. “Additionally, the way we engage in new geographic areas is through interaction with universities or research institutes in joint research programs. Next comes independent, or stand-alone research capability.”
As for the prospects of Intel setting up some sort of manufacturing facility in Saudi Arabia, Barrett said that the establishment of a manufacturing facility should not be the end goal for an economy when it comes to sustainable development.
“Intel itself has a much higher need for software engineering centers or research centers than it has a need for manufacturing facilities. Actually, there is always more impact on an economy when you create wealth by creating new products, new ideas and new businesses, than there is in trying to create wealth by creating a manufacturing facility. True, a manufacturing facility is a glamorous thing. It is a thing worth hundreds of millions of dollars in some instances, but it is a relatively stagnant thing. It creates a fixed number of jobs and they pay well so it is a foundation, but the sustainable growth of an economy really is dependent on smart people with new ideas who create new companies,” counseled Barrett.
He added, “If you look at the value creation, the creation of one company can far outweigh the value of a manufacturing plant. I’ll admit that manufacturing plants are far more tangible. You can put your arms around them and hug them and kiss them, but they don’t change the world. Ideas and the ability to turn ideas into something is what changes the world. This is the most important thing that any government, any economy can do. Educate your young people. Give the system the ability to produce ideas and then provide the nurturing environment to turn those ideas into something. That’s how to generate sustainable development. It is so simple but so difficult at the same time.”
