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GCC countries have experienced strong growth in the digital sector over the past decade. They now have the possibility of moving from the status of adopters mainly of digital technologies to that of disruptors, hosting powerful local companies, institutions and talents. If GCC countries moved from being a digital adopter to being a digital disruptor, they could add $ 138 billion to regional GDP.

We recently measured the position of GCC countries using the Digital Economy Index, a comprehensive measure of the digital maturity of 109 countries between 2010 and 2020. DCI is built on five pillars: Foundations, Talent, Innovation, Adoption and Production local.

The GCC region’s DEI score has increased the fastest of any region in the world, twice as fast as OECD countries over the past decade. GCC countries have invested in digital infrastructure, adopted e-government platforms, and launched technology parks and business incubators.

Overall, however, GCC countries still have a significant opportunity to seize the economic potential of digital. Ranked according to DEI performance, countries can be grouped into three different categories.

First, there are digital learners who prioritize core connectivity development and adoption, improving their digital infrastructure to gain the benefits of digital solutions.

But digital adopters – which include GCC countries – have met connectivity requirements, which in turn are driving higher demand for digital outputs. These countries typically seek to develop talent, foster digital innovation and localize digital services. They empower the sector through policies and regulations, establishing capacity development programs and formalizing partnerships with the private sector.

Digital disruptors, which include the most developed economies, have developed a vibrant and empowering digital ecosystem. They are leaders in the adoption and production of digital outputs. Disruptors tend to be net exporters of technology solutions; they encourage innovation, sponsor dynamic startup ecosystems and house the best digital talent.

Our analysis of 109 countries confirms a strong positive correlation between a country’s DCI score and national economic development and performance. Specifically, our analysis shows that a 10 percentage point increase in any country’s DEI score would lead to a 2.6% increase in GDP per capita growth and a 1.1% increase in employment.

If GCC countries were to move from adopters to disruptive status, the digital economy’s contribution to the global economy would drop from 12.2% to 13.4%.

For example, if Saudi Arabia increased its DEI from 44.47 to 54.72, which matches the level of Germany, its GDP per capita would increase from $ 19,587 to $ 20,779, and this would generate a net gain of ‘approximately 340,000 jobs.

To seize this opportunity, governments must take strong action to implement the right policies. Our DCI analysis shows that GCC countries need more digital talent, innovation, and domestically produced digital products and services if they are to play a role in global digital markets in the medium term. Likewise, the region needs more digital activity in terms of patents, disruptive business models and the availability of venture capital to keep up with the activity of advanced economies.

To bridge the digital divide and keep pace with advanced economies, GCC countries need to focus their efforts in three main areas.

First, they should reform regulatory frameworks to adapt to the new market realities of the digital age. Regulations need to be adaptive and proactive to keep pace with technological change and business models. Governments should also strengthen their economic and technical capacities in a way that allows them to continuously assess the impact of specific policies and correct any implementation shortcomings. In particular, prudent regulation of financial services, data protection, digital economy policies (such as taxation), cybersecurity and e-commerce transactions can increase the efficiency of financial flows in the region.

GCC countries should then deepen the talent pool. Countries in the region need more digital talent, a key catalyst for building sustainable and prosperous digital economies. Digital talent is a combination of the ability of the education system to produce the skilled graduates required by the economy, improve the basic and advanced skills of current workers to harness and innovate digital technology, and increase the current share of the workforce. -work used in digital. trades.

Finally, decision-makers must strengthen innovation and localization. Local production and digital innovation are vital because they contribute significantly to the growth of national GDP and employment, either directly through income and direct employment, or indirectly by nurturing an ecosystem of startups and SMEs. innovative.

The growth of the digital economy is no longer a choice for the Gulf countries. It is imperative for their economic future, ensuring economic growth, creating jobs and strengthening economic resilience and sovereignty.

Bahjat El-Darwiche & Tarek El Zein are partners of Strategy & Middle East, which is part of the PwC network. Dima Sayess and Rizk Melissa also contributed.


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