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  • The rise of Middle East technology parks

The rapid growth of technology parks in the Arab world has so far created more expectations than outcomes, reports Waleed Al-Shobakky.

Over the past few years, technology parks have been sprouting up all over the Middle East: from Egypt, Morocco and Tunisia in the north, to Kuwait, Oman and Qatar in the east.

Recognising that their natural resources, particularly oil, are being fast depleted, and looking to emulate the success stories of technology parks in Asia, Europe and North America in creating jobs and successful businesses, countries like Turkey and the United Arab Emirates have constructed as many as seven or eight parks.

But as the ranks swell, the question remains: will technology parks be able to prove their worth?

Good reasons

The concept of gathering together businesses with similar interests in one place is now a region-wide movement in the Middle East, but different reasons lie behind each country's decision to join the bandwagon.

For instance, to the oil-wealthy Gulf states, science and technology parks are tools for diversifying the economy in preparation for the post-oil times.

For the less-endowed countries, such as Egypt and Jordan, technology parks seem to be a way out of poverty with high potential returns without the need for prohibitively high investments.

The successful parks of India and Malaysia look particularly appealing to these countries. This may explain why Middle Eastern governments have established a total of 30 technology parks dedicated to information and communication technology (ICT) alone, according to the United Nations Industrial Development Organization (UNIDO). There are also 15 biotechnology parks, and 12 dedicated to advanced engineering.

Egypt's Smart Village
Credit: Smart Village
Indeed, the buzz surrounding technology parks in the region, says Eulian Roberts, chief executive officer of Qatar Science and Technology Park (QSTP), is coming from what policymakers see happening elsewhere namely the technology parks' ability to foster a country's economy, without necessarily relying on natural resources.

And there is research to back this up. A study from the United Kingdom's Science Park Association, says Roberts, found that companies located inside technology parks stand a better chance of gaining funds and support and hence success than their counterparts outside.

Technology parks are also thought to help initiate synergy with academic institutions. They encourage productive RD in academia and provide a mechanism to commercialise this research, says Omar Hamarneh, director of iPARK, Jordan's government-run institution mandated with supporting technology start-ups.

A focus problem

But the near consensus over the validity of establishing technology parks erodes when it comes to deciding what to do with them.

One view, as articulated by Tarek Elabbady, director of the Microsoft Innovation Centre in Egypt, is that technology parks should focus on supporting the most rewarding industries, in terms of either monetary returns or jobs.

Elabbady says high-population countries like Egypt can make the most of technology parks by channelling their energy into the most rewarding job-creating sectors, such as agriculture and textiles. To that end, research and development activities could focus on areas such as bioinformatics and fertilizers.

Another view is that a technology park should be employed as an instrument to augment the economic gains from a country's existing natural resources, says QSTP's Roberts.

For a country with a small population such as Qatar, Roberts explains, technology parks can be a way to generate wealth through intellectual capital for example, through development of specialised fuel formulas for the aeronautic industry and more environment-friendly energy solutions rather than relying solely on the direct exploitation of natural resources like oil.

Besides the intellectual capital gains, science and technology parks can also bring about human capital gains. They could attract expatriates back from Europe and the United States and stem the brain drain, says Mikko Suonenlahti, a Finnish venture capitalist who runs the two new technology funds of the QSTP.

And beyond that, Egypt's Smart Village, like its counterparts in the region, is starting to attract foreign entrepreneurs and executives to set up their own companies.

Indeed, the current zeal for technology parks has put entrepreneurs in a good position. Governments and technology park authorities in the region try to outbid each other in offering incentives (such as tax holidays, access to venture capital and unrestricted movement of labour, equipment and merchandise) to attract entrepreneurial talents, both from within the region and from outside.

To some, such as Suonenlahti, competition is always good, because the free movement of talents and venture capital in the region will lead to the best allocation of resources, and best outcomes.

Competition vs. integration

To others, such as Elabbady, competition at this stage should give way to integration that is based on specialisation. That view probably stems from a curious dilemma in the Arab world: countries that are rich in human resources (like Egypt and Turkey) are often poor in resources, and vice versa as is the case in the Gulf.

Cairo Microsoft Innovation Centre
Credit: Smart Village
The result is either a technology park rich in human capital but poor in infrastructure and facilities, or one with good resources but a limited (and hence highly expensive) talent pool.

One consequence is that countries with similar economies such as the Gulf States, with their reliance on oil look set to compete for the same big clients in the hydrocarbon sector. Everyone is talking about specialisation in the long term. But it seems that little has been done to that effect.

QSTP's Roberts says that specialisation is surely the road ahead; but the nascence of almost all technology parks in the region makes them hold their bets as to what to specialise in, until areas of specialisation emerge naturally, in response to market realities. QSTP, for example, has among its targeted sectors aircraft operations, environmental technology, gas and petrochemicals and ICT.

Tarek Elabbady sees the situation differently. He says most technology parks in the Arab world are not focused, spreading their already limited resources on widely diverse activities.

The state of science and technology today, he says, would reward most those with focus on a certain discipline such as what Singapore is trying to do in biotechnology, South Korea in electronics, or Taiwan in microchips.

Elabbady also believes that many of the science and technology parks in the Arab world have practically no entry criteria and are in essence real estate development projects with just a tiny research and development component.

Attempting to be everything to everyone, Elabbady says, could help technology parks get quick returns in the short term by attracting multinational and large national companies. But this approach, he adds, robs technology parks of any significant future potential, particularly in local capacity building.

On the other hand, Ahmed Naim, sales and marketing director at the Smart Village, says that the traditional boundaries between different research fields such as information technology, media and communication technologies are no longer relevant. And this is why such a diverse range of companies do business at the village.

Should the lack of specialisation then be a reason for concern? Adhip Chaudhuri, economics professor at Georgetown University in Qatar, says no.

In the oil-rich Gulf, he says, specialisation will happen sooner or later because the growing demand on oil serves as an incentive for companies to come and set up shop here in search for niche markets or innovative products.

Not the panacea

Whether diversity is good or bad for science and technology parks may not be certain. What is certain is that what those parks have achieved so far in the Middle East is not much in terms of patents granted or technology companies listed on international stock markets.. In spite of this, euphoric reports, particularly from state-run media, have already started portraying technology parks as a magic entry pass into the league of developed countries.

We sometimes get carried away by the excitement and lose sight of the goals and how we are going to get to them, says Microsoft's Elabbady.

To counter this, adjusting expectation is necessary. Eulian Roberts says that policymakers and the public alike need to be reminded that technology parks are not the panacea for the knowledge economy. They are rather one important instrument that can focus effort and resources and deliver visible results.

Nevertheless, technology parks are already sending a positive message about the region into the larger world. Says the Smart Village's Naim, The mere presence of technology parks in Egypt and other countries is gradually changing the desert-and-camels stereotypes about the region.

This article is part of a Spotlight on The way ahead for Islamic science.

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