Abu Dhabi eyes growth through innovation

Tech 2013: Global R&D investment is forecast to hit $1.5tn this year, as businesses and governments in the region and beyond look to propel the next big technological leaps.

A worker inside a clean room of a semiconductor fabrication plant in the US. Jason Janik / Bloomberg News

Robots that detect a person's mood, mobile phones with 3-D displays and affordable touchscreen gadgets have all become a reality in the past decade.

The rapid pace of change means that many of the technologies around us today - from the latest iPhone to life-saving hospital equipment - would have been unimaginable a generation ago.

Except, that is, for the scientists busy at work in the world's research and development (R&D) labs, which help drive the future of high-tech.

Multibillion-dollar businesses are hinged on the work done in such labs, which also helps underpin government attempts to create thriving knowledge economies.

Global R&D investment this year is expected to grow some 2 per cent to US$1.5 trillion (Dh5.51tn), according to the research company Battelle, with most of the spending expected to come from the private sector.

"From a global perspective, we are seeing less government investment and more private R&D investment," says Trevor McFarlane, the senior editor for continental Europe, Middle East and Africa at the Economist Intelligence Unit (EIU).

For the past few years Japan, China and India have led the way in R&D investment, together accounting for 36 per cent of the total last year, followed by the United States with 29 per cent. Japan alone invested more than 3 per cent of its GDP.

The Middle East lags behind the rest of the world - but the situation is improving. The region also stands out because it is the public sector that leads in R&D investments.

"If you consider the economic visions across the region, all of the governments are looking to move further up into high-value products and services. In order for them to be able to do that, there is a recognition that they need to invest in R&D," says Mr McFarlane.

Private-sector spending on R&D is also expected to rise in the Arab world. In a survey conducted by EIU in 2011, more than 50 per cent of senior executives of private companies in the Middle East and North Africa said they had plans to invest in R&D in the region.

"R&D is the one area of investment most tangibly and directly tied to innovation," says Sami Issa, the executive director of technologies ecosystem at the Advanced Technology Investment Company (Atic), a subsidiary of Mubadala Development, a strategic investment company owned by the Abu Dhabi Government.

"From a larger economic perspective, annual growth in real GDP is closely linked to advances in technology contributing to a more efficient society. In this regard, R&D's relationship to economic growth is absolutely fundamental."

According to Booz and Company's Global Innovation 2012 report, Apple, Google and 3M are the world's most innovative companies. Corporate spending among the top 1,000 innovative companies reached $603bn in 2011, up 9.6 per cent from the year before.

In 2011, Japan's Toyota invested the most in R&D at $9.9bn, followed by the health care company Novartis which spent $9.6bn. The top 20 companies invested $154bn in 2011 - 26 per cent of the total spent by the top 1,000.

Data on the amount spent on R&D in the Arabian Gulf region is especially hard to come by. One of the most recent government announcements came from the Abu Dhabi Education Council, which pledged $1.3bn on R&D in universities from 2009 to 2018.

Atic has invested more than Dh100 million in research grants and funds since 2009. Recipients include Khalifa University, UAE University, American University of Sharjah and the Masdar Institute.

Atic and Mubadala together have invested locally and globally to help push Abu Dhabi's position in R&D investment. The emirate spends 0.6 per cent of its GDP on R&D, but this is expected to grow over the next few years.

"It is critical. You cannot envisage a healthy R&D environment without long and sustained investment from government institutions," says Lutfi Albasha, an associate professor of electrical engineering at the department of electrical engineering at the American University of Sharjah. "It helps source equipment for research and recruit the best students and faculty to carry out the research, which can be published in international publications."

According to Prof Albasha, R&D investment at the nation's universities has improved significantly in the past few years. In his field of semiconductor research, his department has worked closely with Atic, receiving funding for projects and opening up research labs to buy equipment and recruit students.

"Put simply, the advanced technology ecosystem is growing strong in Abu Dhabi," says Mr Issa of Atic. "In technology and especially in semiconductors, innovation is not a nice-to-have, but an absolute must-have for any company seeking to take a leadership position."

It is this need to stay ahead that drives competition. And with spending on R&D in the UAE set to increase, the next chapter in the high-tech world could, in part, be written here.