EXECUTIVE SUMMARY

4 2016 Dubai Innovation Index

The Dubai Innovation Index was conceptualized in 2015 as an effort to baseline Dubai’s position compared to 28 leading global innovative cities and to measure the innovation maturity of Dubai’s private sector to achieve sustainable economic growth and identify areas of improvement. In the 2015 study, “Building innovation capability for the future” emerged as the key theme. The 2016 study emphasizes on the importance for Dubai to continue to build on the foundation established in 2015. This requires greater emphasis on the collaboration between public and private sectors to achieve higher performance in innovation outputs. Hence, “Strengthening public and private sector collaboration” is the theme of this year’s study.

2015

"DUBAI HAS RISEN TO #15 AMONG 28 GLOBAL CITIES IN THE DUBAI INNOVATION INDEX"

"Building capability for the future"

"Strengthening public and private sector collaboration"

2016

In the 2016 Innovation Index rankings, Dubai rose one position up to 15th. Dubai’s inspirational and visionary leadership has greatly emphasized the importance of innovation across all sectors through various initiatives over the past year. As a result of the continued efforts of the Government towards defining and communicating the innovation vision, strategy and initiatives, Dubai’s position on the global innovation map has strengthened in 2016. In particular, a significant increase in funding through Foreign Direct Investment (FDI) has helped Dubai move one place up in the rankings. This year, the overall innovation score for Dubai’s private sector has improved from last year. The significant leap in scores is a direct reflection of the private sector benefiting from the Government’s innovation initiatives. This year’s survey results suggest that the private sector has recognized the importance of innovation and has invested in building innovation capability (score increased by 15% from 2015) across areas of strategy, process and people. There have also been improvements in Dubai’s business environment, laws and legislations, making it easier for existing businesses to operate and new businesses to start.

"89% RESPONDENTS BELEIVE DUBAI GOVERNMENT SUPPORT IS HELPING BOOST INNOVATION OUTPUT (UP FROM 69% IN 2015)"

However, in order to ensure continued progress on the innovation path, a few key areas of improvement have emerged from the 2016 study. Dubai continues to face challenges in attracting and retaining skills and talent as well as developing the right skills for innovation across all professional levels. Hence, Dubai must place greater focus on enhancing these skills at all professional levels and invest in the education sector, particularly in higher and technical education to ensure sustained innovation. While Dubai has done relatively well in introducing new products and services this year, intangible innovation outputs such as patents, trademarks and published scientific and technical articles have dropped significantly from last year. This is a trigger for the Government to make policies that support the creation and protection of intellectual property, and investments in R&D institutions.

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EXECUTIVE SUMMARY continued

"PUBLIC AND PRIVATE SECTOR COLLABORATION IS THE KEY IN DRIVING INNOVATION INITIATIVES FORWARD."

“DUBAI SCORED HIGHEST IN LEVEL OF GOVERNMENT SUPPORT AND INNOVATIVE CULTURE.”

At a global scale, the economic environment has been challenging with low oil prices, political uncertainty across major countries and volatile markets. This has resulted in triggering innovative thinking and new ways of working among both public and private sector. Governments have acted on making and implementing policies that support ease of doing business. For example, Dubai has rolled out three key laws – bankruptcy, Public Private Partnership (PPP) and SMEs laws to attract start-up and support businesses. The innovation outlook for the Middle East is highly positive with Dubai, Riyadh and Doha all climbing up the ranking table. Diversified investments, a vigorous focus on industrial diversification and major developments in infrastructure, along with a relatively undemanding tax framework with the lowest average total tax rate, have contributed to the region’s success. New York has risen to the #1 spot from #5 while London has lost its #1 position to #4 in 2016. The increase in joint ventures and venture capital deals have made New York the new favorable destination for businesses and startups. London dropped three places due to a significant decrease in market capitalization and the total value of stocks traded. This could be attributed not only to the declining global economic climate but also the anticipation of the Brexit referendum. Whereas, Paris has made a giant leap from #10 position in 2015 to #2 position in 2016. This rise is credited to the vast increase in funding, mainly from FDIs and from the city’s new policies that support innovation in businesses. Dubai Innovation Index measured innovation inputs through “enablers” while innovation outputs were measured as “performance”. New York City topped the overall enabler rankings, notably scoring high for innovation infrastructure, due to top-tier investments in new technologies and research institutions, while Zurich topped the Political, Economic and Social (PES) rankings for a second year due a high standard of living and robust financial and educational institutions. Dubai scored highest for the levels of government support and innovative culture. However, it is recommended that these areas continue to develop in order to achieve the levels of leading cities such as Singapore and Stockholm. With regards to innovation performance, measured through “tangible” and “intangible” output, Dubai has dropped two places to #17 in 2016 for overall performance, indicating that Dubai’s outputs are not in line with the investments and initiatives undertaken last year. Furthermore, Dubai dropped five places in 2016 in the tangible output pillar. Although the city experienced an improvement in growth and revenue generation scores, it exhibited poor performance on indices such as value-added services. New York was ranked the highest in this pillar, due to its increase in media and entertainment output, and rise in creative and culture exports on a global stage. Dubai also scored lower in intangible outputs than it did tangible outputs. This is largely due to a significant drop in collaboration scores, which can be attributed to the extremely low number of JV-strategic alliance deals and a lack of collaboration between the private and public sectors. Leading in this pillar was Paris, with especially high intellectual capital and collaboration scores. From Dubai’s private sector view, Dubai’s overall enabler score, consisting of “capability” and “activity”, has increased by 10% from 2015, which is primarily driven by an increase in the collaboration score (a sub-category of “capability”), which increased by 66% from 2015, and organizational enabler score (also a sub-category of “capability”), which has increased by 31% from 2015. Dubai’s innovation impact scores, consisting of “tangible” and “intangible” impact, have slightly decreased from 2015. The significant movements were attributed to increased growth and revenue generation (a “tangible” impact), which increased by 11% from 2015. Dubai’s collaboration score (an “intangible” impact), additionally experienced a significant movement, declining by 9% from 2015. Overall, the increase in enabler scores are a good indicator of Dubai’s private sector’s continued commitment to build on innovation capabilities.

6 2016 Dubai Innovation Index

Finally, a number of insightful themes and observations have emerged from the 2016 study, and particularly from analyzing the outputs of the Dubai Innovation Index across the macroeconomic and private sector levels: •D  ubai is developing a sustainable ecosystem that would provide financial support to innovation initiatives •T  he interest and appetite for innovation has developed in the private sector as a result of the Dubai Government’s initiatives •T  he global economic slowdown has triggered positive response towards innovation at Government and private sector levels •D  ubai’s private sector firms need to invest in technology in their core areas of business to realize the value and enhance innovation output •D  ubai must continue to invest in skills and talent with a focus on innovation, data analytics and entrepreneurship • Intellectual capital continues to remains an area of development for Dubai Furthermore, based on the aforementioned observations, there are clear recommendations for Dubai to improve its innovation levels further in the coming years: 1.  Collaboration within the ecosystem - Dubai’s unique economic character comprises of an appetite for investment in innovation from the public sector and the know-how of innovation from the private sector. In addition, it is essential for public and private sector entities to identify their core business areas and endeavor to innovate and excel in them. Hence added efforts towards public-private and private-private collaboration models are essential for the overall growth of Dubai’s innovation ecosystem and subsequently its global position. 2.  Education for innovation - Although Dubai has made significant progress and investments to develop world-class educational infrastructure; faculty and curriculum to support growth in innovation require improvement. It is essential for every stakeholder in the education ecosystem, from government and legislative authorities, to public and private sector institutions and individual members of the educational community to make significant efforts towards enhancing Dubai’s offering towards enhancing skills & talent for innovation. 3.  Policies that support technology adoption - Although Dubai has made significant efforts towards increasing ICT access and enhancing technology platforms, extensive policies supporting the use of a wide range of technology infrastructure and interfaces that foster and support innovation require improvement. 4.  Global connectivity to accelerate innovation - In order to accelerate innovation, Dubai needs to build partnerships with its global peer cities, leading global educational and R&D institutions and global forums/council. Partnership with peer cities will create opportunities for knowledge sharing, learning and collaborations in the areas of future developments. Leading global educational and R&D institutions can benefit from Dubai’s willingness to quickly embrace technological developments and Dubai should leverage its position to seek collaborative relationships with them to build skills and talent. Some other themes have also emerged where Dubai needs to make more focused efforts. Dubai must continue to invest in skills and talent with a focus on innovation, data analytics and entrepreneurship. Private sector firms need to invest in technology their core areas of business to realise the value and enhance innovation outputs. Additionally, intellectual capital continues to remains an area of development for Dubai The Dubai Government, the Dubai Chamber and the private sector have a role to play in these areas and greater collaboration is needed between among them to celebrate the progress.

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