Sports success should not draw Gulf countries’ attention from innovation

The Gulf countries are experiencing considerable success in using sports as a source of income. However, given the Gulf countries’ lofty aspirations, sports must always be a secondary driver of economic growth. World class levels of innovation must be the centerpiece of any economic strategy, and sports must not distract from that.

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Everyone in the Gulf is aware that relying exclusively on oil and gas income to create jobs and grow the economy is imprudent. The resources are themselves finite, and the outlook for their long-term prices remains precarious due to the increasing need for humans to live in a more environmentally sustainable manner. This is the basic reason why the Gulf countries have presented economic strategies that prioritize diversifying their economies.

The problem that the six countries face is that the transition they seek to realize is unprecedented. There have been many previous efforts at transforming an economy from low to high levels of innovation, with notable success stories including South Korea and Taiwan. Others have also had some measure of success in diversifying away from fossil fuels, such as Indonesia and Malaysia.

What makes the Gulf countries’ voyage unique is that they are starting with very high living standards which they wish to maintain. In contrast, for a country like South Korea circa 1950, the only way was up. Rising interest rates mean that capital is becoming scarcer, and so the Gulf countries must be extremely judicious in their investments. There is no ready-made template to follow.

Regional policymakers have identified sports as a potentially valuable source of income. It is uncorrelated with global oil prices; it improves the nation’s mental health; it can boost tourism income; and it improves the country’s image globally. For these reasons, the Gulf has witnessed significant investments in global sporting events such as Formula One racing, world heavyweight boxing, and most recently the FIFA World Cup.

However, despite the prestigious and eye-catching nature of these events, policymakers should be aware of their limitations. As mentioned above, the Gulf countries are not looking to transition from a quasi-subsistence agrarian economy, or from a state that has been flattened by war. They already have some of the highest living standards in the world, and so they need to realize that these high-profile events are not enough to maintain the lavish lifestyles that citizens of countries such as Kuwait and the UAE have become accustomed to.

If we are to study the anatomy of economic growth during the last 300 years, except for natural resource abundance, there is only one way to be sustainably rich: high levels of innovation across a diverse range of economic sectors. This continues to be the Gulf countries’ weak point.

Admittedly, Saudi Arabia and the UAE have made considerable progress in this regard during the last 10 years, especially through their investments in hydrogen and renewable energies. However, the depth and scope of innovation still needs to expand significantly if these countries wish to remain in the world’s top-20 in terms of per capita income.

Unfortunately for those who seek to champion investing in innovation, the area is largely dull and uninspiring, especially when compared to something as sexy as hosting a global sports event. The elation that Saudi Arabians felt when Salem Aldawsari scored the 53rd minute goal against Argentina is something that they can never replicate when a Saudi scientist publishes the lead article in the academic journal Science, or when a Saudi company files a patent for a path-breaking technology.

Yet it is precisely these mundane, functional advancements in the field of innovation that give Saudi Arabia and the rest of the Gulf countries the best chance of perpetuating the high quality of life that their citizens experience.

Singapore and Hong Kong both have populations comparable to those of the Gulf states (except Saudi Arabia), and they also have high living standards. They are both irrelevant in terms of global sports, building their success on exceptional levels of innovation. That is a goal that the Gulf countries must not lose sight of no matter how unglamorous it is to invest in a bunch of scientists toiling away in a lab.

Fortunately, the choice is not either sports or innovation, and an intelligently drafted economic strategy will leverage the complementarity that exists between the two. For example, it is easier to attract world class innovators to a country that has lots of enjoyable sports events to attend, and where young people are entertained and pursue positive hobbies.

What the Gulf countries must be wary of is taking their eyes off the prize. If you want your car to go fast, then accessories like a good set of tires and a large spoiler help, but their effect will be negligible if you don’t have a powerful engine. High innovation is that powerful engine, whereas a strong sports economy is the extras that give you the edge in a competitive environment. For the Gulf countries’ economic visions to succeed, they need to appreciate their scientists and innovators just as much as they love their athletes.

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