Regional innovation systems: GCC as a learning region

The model of Silicon Valley is a source of inspiration to many countries since it created a nexus for generation of new ideas, funding, and patents. How can GCC learn from the research on innovation systems in UK, USA, Canada and EU? The following are a set of key lessons learned based on the global experience in regional and sectoral innovation systems. At the outset, R&D, knowledge and innovation are social processes and key enablers for economic growth and should shape the agenda for progress. However, the capacity to innovate is underpinned by the capacity of firms and nations to constantly adapt, learn and un-learn to cope with global changes and disruptions in technologies. This process is lodged in the national, regional or sectoral innovation systems which is a complex and interactive processes and entail social and organizational learning. 

The review of global experiences in regional innovation systems reveal the following lessons to be considered for GCC. First:  clusters in knowledge and technology-based firms illustrate the notion that innovation creates interdependences among businesses.  Second: location and institutional infrastructure of a regional economy are vital for creating the interdependencies that shape the innovative capabilities of regions.  Third: social capital plays a critical role in shaping innovation process and in cultivating synergies; Fourth: organizational learning is essential for enabling industries to become more innovative. Fifth: human capital and skilled labor are the most valuable local assets. 

A key question is how do we explain regional variations in innovation outcomes within a nation-state? Research showed that innovative capacity is associated with absorptive capacity, knowledge flows, and the degree on external R&D activity. For example, research shows that high production of patents in bio-technology, ICT and clean energy was associated with regional centers. This finding is explained by Michael Porter’s concept of regional clusters as a catalyst for creating a critical mass or a tipping point but this must be supported by a national strategy, vision and public policies for enhancing the national innovation system and enhancing local content and create jobs. In the GCC context, the petrochemical industry and food industries in Aramco, GPIC, SABEC and Al-Maraei’ showed the value added for a regional innovation system in terms of competitiveness.

On the other hand, if the GCC plans to develop a sectoral innovation system in renewable energy and leverage the 2.3 trillion sovereign wealth funds as part of economic diversification, this will require policies that will shape market design, grid infrastructure, and market integration to support a new business model.  One lesson learned from Chinese experience in renewable energy is that the model of public sector reform in OCED countries is contextual and cannot be transferred to other parts of the world. The challenge is how to provide conditions for both market liberalization and renewable energy markets.  In sum, to develop a regional innovation system geography and institutional setup matter. 

Prof. Odeh Al-Jayyousi, Head of Innovation and Technology Management, Arabian Gulf University, Bahrain,  E-mail: odehaj@agu.edu