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This place in the Middle East is booming in tech and no, it’s not Israel
(16 January 2020)


One of the biggest advantages of technology and its development is that it proliferates without boundaries. That’s because its nature and origin stem from the human ingenuity and the myths about one nation or an ethnic group being more advanced in their way thinking than others is slowly shattering in front of our eyes.

So, whether you’re a Canadian or South African national, the chances of you getting the most up-to-date technology products and services are higher today than it was, say, fifty years ago. For instance, the industry of gambling in the latter has some of the most advanced pieces of technology like cryptocurrencies, instant money transfers, etc. so that the gaming process of the real money blackjack for South Africans is always spot-on and without any impediments.

Following this line of thinking, it would be somewhat outrageous to think that any given region has no chances of “striking a gold” and coming up with the newest technological discoveries. And what better example to prove this point but the region of the Middle East.

Israel as a tech hub in the Middle East
For quite some time now, this region has been considered one of the emerging tech sectors on the globe. But closer inspections revealed one country that was pulling the whole weight - Israel. The Israeli economy has long been directly associated with technology, progress, and improvement.

And rightly so: some of the most famous gaming titles like Guess Who? Play-On-WordZ (Hasbro), One Too Many (Waddington’s), and others have been created in Tel-Aviv. But probably more importantly, the Intel CPUs that we know and love today were first designed in Israel, at Intel’s laboratory in Haifa (Intel 8088).

And such developments are abounding, even to the point that it’s quite easy to miss the developments that are taking place in the same region. In fact, the whole world believes that if something interesting in tech is happening in the Middle East, it’s definitely going to be in Israel, because some of the most innovative tech products that the West purchases come from this place.

UAE catching up with Israel
But contrary to those expectations, there actually is another emerging point that manages to keep up with the rate of development of Israel. Yes, I’m talking about the United Arab Emirates.

For at least a decade now, the UAE government and its private sector have been pouring investments in the tech sector in hopes of reaping some tangible results. And to their fortune, the industry has produced the real results. 

Millions of people in the country, and especially in Dubai, are increasingly shifting to the technological sector and jobs that it creates. Plus, thanks to the smartphone and internet revolution, these people are also becoming some of the most avid and active tech customers, driving demand for the newest and most sophisticated products and services.

In fact, the importance of smartphones can hardly be overstated - and not just for the UAE. The rise of online payment systems in the Middle East, as well as India and some African countries, has kickstarted the revolution in finances. And it’s closely tied with the increased use of smartphones in these regions. Now, the inhabitants of these areas can easily connect with the international financial market, make online orders from Amazon and eBay, and perform foreign remittances without too much hassle.

In general, an environment that provides institutional and infrastructural freedom is what appeals to many startups and individuals in Dubai. For instance, a tax regime was relaxed for the tech industry so that it could push more discoveries in this battlefront. And it’s quite obvious that it has. The recent trends indicate that global GDP growth, that was predominantly locked in the West, has now moved to the Middle East, Africa, and South East Asia - the emerging markets, in short.

Foreign acquisitions
And to bring some more specific examples, let’s take a look at two of the biggest acquisitions that made some headlines in the region. In 2017, Amazon bought a Dubai-based online retail company for $580 million. For some two years, this was, indeed, the biggest acquisition in the Middle East.

That was until recently. In March 2019, before the stock listing in New York, Uber, which is the largest ride-sharing company in the world, purchased another Dubai-based company Careem, which is its biggest rival in the Middle East, for $3.1 billion.

Together, with a total sum of almost 3.7 billion US dollars, these two purchases are still the largest foreign acquisitions in the history of the Middle East. It shows that the startup ecosystem in Dubai has poured a lot of money and energy into its tech resources quite effectively. And it’s paying back: local entrepreneurs, who have an idea of their own, and want to make a real project from it, Dubai is a perfect place for them.

In total, according to the report data revealed at the Annual Investment Meeting in the city, the foreign direct investment from international investors has reached more than $21 billion over the period of 2015 and 2018. And that’s just in the artificial intelligence and robotics sector only.

Pros and cons of the governmental intervention
As noted above, the success of the tech sector in Dubai is a result of the cooperation between the government and the private sector. The UAE government, in particular, has been significantly proactive in pushing some of the most recent technological discoveries like AI, blockchain, etc. and incorporating them into almost every industry in the country. And with that effort in mind, some analysts draw parallels between the UAE and other technologically savvy countries like Estonia and Singapore.

But the governmental effort also comes with its potential drawbacks and threats. Despite the UAE being such a forward-thinking state, there are still some old-school politicians who believe the protectionist policies are still necessary.

These officials have this notion that if the government doesn’t explicitly protect its own economy and production, the country will ultimately crumble. And they come forward with the suggestions of tariffs, quotas, subsidies, and whatnot in the tech sector. And what better way of proving it than the simple fact that Skype and WhatsApp are still blocked to this day.

But, as we already know, technology moves towards places that are freer than anywhere else. And if these officials continue to enforce protectionist policies, this tech “Gennie” will ultimately flee from Dubai and knock on other city’s doors.

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