WORLD ECONOMY - Stanton Chase

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OCTOBER 2010 p8 S T A N T O N C H A S E I N T E R N A T I O N A L TheInformationRevolution in the Middle East and North Africa The Middle East was once home to the world’s most advanced societies, its people skilled at mathematics, astronomy, science, and medicine, and renowned for their poetry and arts. The region is again becoming more closely integrated with the global economy, its people are traveling more widely and continuing to emigrate to the West in record numbers, social unrest brought about in large part by poverty continues, and the spread of information and communication technology (ICT) continues to encourage economic development. The ability and willingness of these countries to allow, encourage, and invest in their own information revolutions may have positive impact in the Middle East and North Africa. The wealthiest countries in the region will continue to expand their already-substantial networks and offer a greater variety of value added services in order to continue to increase their profitability. Unconstrained by finances, the ultimate shapes and uses of these networks will depend almost entirely upon the governments’ continued efforts to control information access. In countries such as Bahrain, Kuwait, Qatar, and the UAE, government will likely limit its control to other illegal activity, besides wealth, these countries have in common reasonably stable and secure governments. The big exception is Saudi Arabia, where the long-established social contract will continue to be renegotiated with an increasingly restive polity. The middle-tier countries, Egypt, Jordan, Lebanon, Syria, and Tunisia, for example,willcontinuetoexpandtheirphysicalinfrastructures,andICTpenetration will continue without any fundamental changes in the societies. The priority in all these countries will be to maintain the peace according to local interpretations of the social contract. The governments of Tunisia and Lebanon, for example, will be fully occupied with economic-development initiatives while the ruling parties attempt to maintain control. Egypt will continue to appear at once as a police state and a burgeoning free-for-all. The current rapid pace of technological change is expected to accelerate over the next 15 years. In addition to increasing the digital divide between the world’s richest countries and those that even today cannot keep pace with change, rapidly changing technology and its associated industries will place a premium on education and training. Education and training are already front-burner issues for every government in the region. “ According to Anton et al. (2000), Cultural adaptation, economic necessity, social demands, and resource availabilities will affect the scope and pace of technological adoption in each industry and society over the next 15 years. The pace and scope of such change could in turn have profound effects on the economy, society, and politics of most countries. “ The views, comments and opinion highlighted in this article are solely the personal views of Mrs Pascal Baz. By Pascal Baz Consultant with <strong>Stanton</strong> <strong>Chase</strong> UAE for Technology, Life Sciences & Healthcare Executive Newswire This cannot be good news for MENA countries, which have shown a proclivity for resisting any form of cultural adaptation. Furthermore, variations in the degree of economic necessity, social demands, and resource availability will tend to continue the increase in wealth, health, and modernity in general throughout the region. There is no single model for an information revolution. And, just as MENA countries are starting from different baseline conditions, the IR will play out differently in each country and the near- and midterm end states will vary widely. Differentiation among countries of the region is expected to grow, however, as some countries respond more effectively to the challenges of the information revolution and of globalization more generally. The effectiveness of their responses will be limited by the availability of investment funds and the conservatism of ruling elites. The countries that will have made the most progress toward an information - centric future are Bahrain, Kuwait, Qatar, and the UAE. These countries are “post-industrial,” having skipped directly from an agricultural or nomadic base. With a foundation of oil, the Arab countries rely heavily on the financial sector and international trade as their sources of wealth. All are seeking to reduce their dependency upon oil, thus hastening the expansion of non-extractive, non-industrial activities. The guaranteed country that might experience an information revolution is Lebanon. Its culture is more open and cosmopolitan than elsewhere in the MENA region, and commercial competition is keen. Then there is the gray area: countries that continue to increase the use of information technology without really achieving anything revolutionary. Chief among these is Egypt, for which continued development is critical for economic expansion, which is in turn critical for regional peace. All of Egypt’s disaffected cannot be arrested and will not stay at home forever. Syria hasthepotentialtocontinuetobeaspoilerinregionalpolitics,fuelingandhiding from international crises. Its large and aggressively commercial trading class urgently seeks any and all tools to further their interests, but it is in the end a country of traders and small manufacturers (carpets, sugar, pasta) rather than “information workers.” Jordan, Morocco, and Tunisia will probably continue modernizingtheirinfrastructuresandperhapsenjoysomeeconomicresurgence, but are unlikely to achieve anything revolutionary. None of these countries contributes significantly to regional politics or economy. Oman, too, is likely to remain a backwater. It could be a major player in regional geopolitics if it could figure out what to do with its position opposite Iran in the Strait of Hormuz. However, Information Revolution is not on their critical path. The Information Age is not dawning in the Middle East or North Africa, but significant changes will occur. Some of the changes will be affected by the proliferation of information technology, and some of the changes will affect the future of ICT development in the region. The information revolution is not a zero-sum game: All countries, cultures, religions, and peoples can ultimately benefit. But the very core values of the information revolution are at odds with the implicit and seldom-stated national goals of every MENA country.
OCTOBER 2010 p9 S T A N T O N C H A S E I N T E R N A T I O N A L MEA-Culpa! By Ali Borhani Director of Corporate Strategy & Business Development for Bosch & Siemens Home Appliances in Middle East & Africa Executive Newswire Yes you guessed right, MEA is Middle East & Africa! Yet it rhymes very well with Mea culpa! Mea culpa is a known Latin phrase that translates into English as "my mistake" or "my own fault". If you want to add to the gravity of the mistake, "maxima" can be inserted, resulting in "mea maxima culpa," which then translates as "my most [grievous] fault." Interestingly enough this term, applies to MEA for not having fully utilized the potential of a unique, rich and fertile region to diversify beyond its legacy business culture & model. With the exception of Dubai, which has really stretched itself in leaps and bounds, bursting on fiscal seams, the rest of the region have very little to show when it comes to the topic of diversification. Even Dubai and UAE at large still have a long way to go to become a fully diversified economy. This is clearly obvious in markets like Qatar, Bahrain, Kuwait, and even KSA in Middle East and with the exception of a handful of countries in Africa you will find very little “Bang for the Buck”! The vital important key to the future for this large region is diversification, which lack of it continues to haunt these economies. Diversification is most of the time associated to a departure from Oil & Gas to other revenue streams for the economies in Mid East and GCC in particular. In case of Africa it refers to a move from commodity driven and mismanaged state run business models that unfortunately rest solely on export of their natural resources, without harvesting the hidden yet, real value of the downstream industries. Yet the real chance for MEA rests and lies with the ability, willingness and determination to diversify more than anything else, the Mind-Set of how the region is functioning and how it plans to poise itself for a new decade. The biggest asset, the major differentiator and yet the most unique winning card in this process for MEA is its young population & demographic. However, the same advantage can be its Achilles’ heel. The recent challenges to region’s economy are not only a byproduct of slowdown in Real Estate sector, the escape goat in GCC, or the periodical changes in commodity prices. But more so a result due to the absence of a cohesive plan in building the blocks of talent, cross regional harmony in investment and decision making process. If you canvass the GCC you will find in flying time of a maximum one hour Academic Cities that are all boasting Placards of some of the best International Universities, yet the scale, the research capacity and the necessary incubation infrastructure, organization around these campuses, collectively all together, can be eclipsed by one of the universities that they all represent! MEA is suffering from a Legacy Thinking Model in which the states have not realized the huge harnessing power that can arise from a cohesive, consistent and transparent policy of opening their economies, at a regional level and eventually globally. GCC for that matter is still hampered by overlap and cross investments in competitive industries for which their individual state egos are not sufficient to win. In other words, what’s missing is the realism in really putting together a long term, cross regional strategy as to what the region has to become and what is the role and contribution of each stake holder. Yet what I refer to as opening of the economies, is to create, a business culture in which the existing potentials can manifest in successful business models, a comprehensive and cohesive and conducive mindset that is supportive of talent development. Competition is going to be more and more defined and based around how economies develop, poach and support talent. No matter how many so called “ Cities” like Technology City, Biotech City, Health Care City and likes the states open at astronomical costs, the reality is that at large all these expenditures, since hardly you can call them investments, will struggle to bear the necessary fruits and results. MEA will continue to remain a magnificent and high potential region, plagued with haphazard policies, unless there is a collective and perhaps genuine soul search as to how as an economical block it has to strategically position itself in the global economy at large. The number of F1 circuits in GCC is more than China or Brazil for that matter. But are we as fast as these economies on the circuit of diversification? If MEA is to win the coming decades, it has to think of preparing a Talent Attraction, Development, Nurturing, Integration and Support Strategy (TADNISS). I believe that there is a more important figure in any society than Gross Domestic Product. It also has the same abbreviations, GDP but is called Gross Domestic Participation. The more conducive, supportive the pillars of TADNISS the higher will this figure be. No matter how high the oil prices go, the real growth of the Gross Domestic Product figure will remain to be very low for years to come unless the Governments really “Diversify their Mindsets”! CEOs and key decision makers in the region are best positioned to lobby, consult and assist the governments and to collaborate for bringing these essential changes if MEA is to harvest its true potential. Between now and that day, we shall continue to say MEA-Culpa! The views, comments and opinion highlighted in this article are solely the personal views of Mr. Borhani.
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WORLD ECONOMY - Stanton Chase

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