Needed: A Strong Patent System & An Innovation Friendly Culture in the Arab World

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  • The on-going transition from oil to non-oil based economy has heightened the pace of patent development in the Arab World, with Saudi Arabia leading the region.
  • However, patent development activity in the region pales in comparison to other countries worldwide, and is reflective of a lack of innovation friendly culture in the Arab world.
  • The pace of innovation and patent development needs to increase rather quickly in order to protect new technology being developed by Arab countries, and also to attract more foreign investments.

The on-going transition from oil to non-oil based economy has heightened the pace of patent development in the Arab World. In the past 3-4 decades, most of the economic output in the MENA region was generated from the hydrocarbon sector, and other sectors were undeveloped leading to low levels of innovation and patent development. However, the trend has started to change in recent years as MENA nations (especially GCC) look to diversify their revenue base by increasing focus on non-oil sectors like technology, hospitality, tourism, infrastructure development, etc. This has led to increased patent filing in the region, which has gone up from 41 in 2003 to 403 in 2013, a jump of nearly 10 times, as per a recent report by Orient Planet and MADAR Research & Development.

Saudi Arabia has consistently led the region in patent filings and continued its dominance in 2013 as well with 237 patents. The kingdom is currently home to ~50% of the patents in the Arab world, followed by Kuwait and Egypt with 272 and 212 patents respectively. UAE, which has the most vibrant non-oil sector in the region, stands fourth with 120 patents. Comparing the number of patents issued per million of a country’s population makes the above numbers more significant and drives home the dominance of GCC nations. In 2013, Kuwait had 21.24 patents per million, while Saudi Arabia followed with 7.79 patents per million and UAE was placed third with 1.90 patents per million. Qatar, which is gearing-up to host the 2022 FIFA World Cup, currently has 3.42 patents per million, and this number is likely to go-up as it plans to invest USD 200 billion on infrastructure development over the course of next 8-10 years.

Utility Patents by Country and Year

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Source: USPTO, Orient Planet, MADAR Research & Development

Now the above numbers may seem impressive on a standalone basis, but pale in comparison to the patent development activity in other countries worldwide, and are reflective of a lack of innovation friendly culture in the Arab world. The US alone has 133,593 patents, ~75 times the 1,818 patents in all Arab countries combined. Therefore, it is not surprising that most of the next generation technology development happens to take place in the US, leading to birth of disruptive business models and companies. The US is followed by Japan, Germany and South Korea as shown below. Saudi Arabia is the only Arab country in the top 30, indicative of a lack of innovation friendly culture in the region.

Number of Utility Patents Granted – 2013

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Source: USPTO, Orient Planet, MADAR Research & Development

The pace of innovation and patent development needs to increase rather quickly in order to protect new technology being developed by Arab countries, and also to attract more foreign investments. Arab nations are currently undertaking massive projects that will require new technology development and it is imperative that these technologies are patented to ensure competitiveness of Arab nations and companies at a global scale. Some of these include Saudi Arabia’s King Fahd City, UAE’s Dubiotech research park, Masdar City Project in Abu Dhabi, and multiple infrastructure projects (special economic cities, carbon neutral climate technology, railway, metro, airport, power plant, hotels, etc.) being developed in Qatar and Dubai in the build to World Cup 2022 and Dubai Expo 2020, respectively.

Also, patented technology is essential to attract foreign investment. As per the latest UNCTAD 2014 World Investment Report, FDI inflows to West Asia have declined from USD 71.9 billion in 2009 to USD 44.3 billion in 2013. While part of the decline can be attributed to global recessionary conditions and geo-political volatility in MENA nations, slow pace of innovation and high dependence on oil revenues is also a key contributing factor that is keeping foreign investors at bay, thereby reducing the growth prospects of companies in the Arab world.

Therefore, it is imperative that Arab countries learn from other leading nations to develop a strong patent system and nurture an innovation friendly culture. Till they do it, opportunities in the Arab region will remain unused leading to a loss of billions of dollars.

The article was originally published at: Arab Business Review

To read more thought-leadership stuff by leaders from Arab Region, please visit Arab Business Review

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