GCC countries can add $255 billion to their economies by 2030 and reach the level of advanced digital economies through policy initiatives and by developing technology champions, Strategy& Middle East has said.
Saudi Arabia, the Arab world’s largest economy, can add $119bn to its economy in the next eight years by focusing on the technology sector, the consultancy said in a report on Thursday.
“While the GCC digital economy is growing rapidly, that alone will not make the region internationally competitive,” said Chady Smayra, partner at Strategy& Middle East.
“Investment in research and development and in start-ups remains limited, while foreign companies are still responsible for the bulk of its product development and service delivery. Regional GDP could jump by a cumulative 5 per cent by 2030, creating some 600,000 technology jobs.”
Earlier this year, Saudi Arabia unveiled more than $6.4bn worth of investment in future technology and entrepreneurship to hasten the development of the kingdom's digital economy.
The initiatives include the official launch of Saudi Aramco Venture’s $1bn Prosperity7 fund and a $1bn investment from Neom Tech and Digital Company in future technology.
In April, the UAE Cabinet approved a strategy in which the digital economy will contribute 20 per cent to the gross non-oil national economy in the coming years.
The strategy aims to double the digital economy's contribution to the UAE's GDP to 19.4 per cent, from 9.7 per cent, within the coming decade through a number of initiatives and projects, Wam reported.
“As the regional economy transitions to being led by digital disruptors, the digital economy could increase its contribution to regional GDP potentially by $30bn over the next five years, from $169bn to $204bn,” Tarek El Zein, partner with Strategy& Middle East said.
“Digital solutions, including emerging technologies, will fuel most of this growth.”
Globally, the digital economy is growing six times as fast as its traditional counterpart, dominated by the US and China because of their technology champions, which account for 90 per cent of the market capitalisation of the world’s 70 largest digital companies, the report said.
GCC governments have an important role to play in the development of technology champions, Ramzi Khoury, who is also a partner with Strategy& Middle East said.
“Decision-makers at the national level need to find the right balance between supporting the establishment of national tech champions, attracting global tech champions and ensuring fair market access to new start-ups that could, themselves, potentially grow into the large tech companies of the future,” Mr Khoury said.
The GCC region’s focus remains tilted towards traditional information technology, and “the maturity of its tech market lags behind other parts of the world”, the report said.
“The emergence of GCC tech champions can play a significant role in closing this gap,” it said.