In the Arab World there is a poor match between regional human capital and the skills demanded by employers with many firms expressing concern that they face internal employee skills deficiencies that limit performance, a phenomenon that has been popularly labeled as a “skills gap.” Many countries in the Arab World rank amongst the countries facing the most severe skills gaps in the world. While several surveys in the Arab World have identified soft skills and more basic employability skills lacking in the workforce, there is a large empirical absence, both globally and in the Arab World, of studies regarding the impact of skills gaps on firm-level performance. This analysis will attempt to apply empirically driven international research to the case of the Arab World to determine the operational impacts of skills gaps on Arab companies. With the belief that companies and governments require more rigorous empirical evidence to translate management research into practices that solve organizational problems, the paper will conclude with suggestions on proactive strategies to close labor skills gaps to increase the competitiveness of key industries which face skills gaps.

1. How Skills Gaps Impact Firm
Performance in the Arab World
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2. Agenda Overview
• Factors affecting demand for skilled labor
1 Prevalence of • Global prevalence of skills gaps
Skills Gaps • Presence of skills gaps in the Arab World
• What international experience tells us about the impact of
2 Impact on Firm
skills gaps on private sector firm performance
Performance
• Impact of economic growth on skills
Causes of • The case for government intervention in skills formation
3
Skills Gaps
• Skills ecosystem approach to structuring a proactive response
Reducing • Systemic inefficiencies may stall knowledge-based economic development
4 • Policy responses to reducing skills gaps based on international experience
Skills Gaps
Abstract
In the Arab World there is a poor match between regional human capital and the skills demanded by employers with many firms expressing concern that they face
internal employee skills deficiencies that limit performance, a phenomenon that has been popularly labeled as a “skills gap.” Many countries in the Arab World rank
amongst the countries facing the most severe skills gaps in the world. While several surveys in the Arab World have identified soft skills and more basic employability
skills lacking in the workforce, there is a large empirical absence, both globally and in the Arab World, of studies regarding the impact of skills gaps on firm-level
performance. This analysis will attempt to apply empirically driven international research to the case of the Arab World to determine the operational impacts of skills
gaps on Arab companies. With the belief that companies and governments require more rigorous empirical evidence to translate management research into practices
that solve organizational problems, the paper will conclude with suggestions on proactive strategies to close labor skills gaps to increase the competitiveness of key
industries which face skills gaps.
2

3. Expanding trade, technological change, and changing forms of work
organization have increased the relative demand for skilled workers globally
Expanding International Trade
1 • Trade has increased dramatically
• Globalization increases the importance of
skills rather than resources
• Trade-induced flow of employees from
importing, low skill, labor intensive
4 industries, to higher skill, export industries 2
Other factors Skill-biased
• Decline in unionization Technological Change
• Tinbergen’s Race: • Pairing skilled workers
demand and supply of with capital raises
different grades of labor Increasing Global productivity
governed by trade and Demand for Skilled Labor • Globalization led to
technical progress massive investment
• FDI
• Countries adopting
technology from abroad
Evolving Forms of Work Organization
3 • Firms embracing decentralized decision
making, less hierarchy, and autonomy
• Communication, decision making, social
and problem solving skills are needed in
addition to technical skills
Source: Shankar, R. and A. Shah (2001), David H. Autor (1998), Ashton, D., F. Green, et al. (1999), Ashton, D. N. and J. Sung (2002) | 3

4. These conclusions are supported by macroeconomic data showing the growth
of skilled workers globally, international trade, and investment in fixed capital
Evolution of Skilled Versus Unskilled Work Trade as a % of Global Domestic Product Gross Fixed Capital Formation
Number of workers in millions Exports and imports as a % Glob. Dom. Prod. Investment in fixed capital in trillions
1,000 60 3,000
Investment in
900 950 960 960 58
920 fixed capital assets 2,715
891 2,500
800 56 Trade Growth 57 by enterprises,
57 2,4432,415
790 2% CAGR government and
700 741 Skilled Workers 2,223
54 2,000 households
600 653
6% CAGR 54 10% CAGR 1,928
52
500 1,500 1,639
52
50
400 457 1,358
420 Unskilled Workers 1,192
48 49 1,000
300 49 49
-.38% CAGR 48 1,041
928
200 46
500
100 155 160 138 146 177 171 171 44
131 126
102
0 42 0
1999 00 01 02 03 04 05 06 07 2008 2000 01 02 03 04 05 06 2007 2000 01 02 03 04 05 06 07 08 2009
Source: International Labor Organization, World Bank | 4

5. In many countries, evidence points to an unmet quantitative demand for highly
skilled workers, known as a “skills shortage,” as well as “skills gaps” in which
firms face qualitative internal skills deficiencies that limit performance
Skills Gaps Skills Shortage
Skill Shortage
Skills Gap
Desired
Quantity of
Internal
Workers
Workforce
Current With a Quantity of
Skill Level
Internal Particular Workers
Workforce Skill With a
Skill Level Required Particular
Skill
Available
• Employers feel that their existing workforce has inadequate • Genuine lack of adequately skilled individuals available
skill types/levels to meet their business objectives in the labor market with the type of skill being sought
• New entrants to the labor market trained and qualified for • Employers unable to recruit staff with the skills they
occupations but still lack a variety of the skills required are looking for at the going rate of pay
5
| 5

6. Skills gaps are globally widespread with the Arab World, Latin American and
Caribbean, and the Eurasian regions indicating the highest incidence
Skills gaps are globally prevalent … … and appear to be getting worse
Prevalence of Skills Gaps by Region
% of firms indicating they face a major or very severe skills gap
The World Bank Enterprise Survey, a global
survey of firms with more than five
15.01%
24% employees in the manufacturing and services
23.98% sectors, indicates skills gaps are globally
becoming a more frequent phenomena:
16.50%
• Of 43,705 companies surveyed in 99 countries
from 2006-2009, 26.7% indicated that a skills gap
20.29% is either a major or severe obstacle to the current
17.81% operations of their business
19.65% • Of 66,000 firms surveyed in 143 counties from
2002-2005, 14% of firms responded this way
Middle East and North Africa Latin america and the Carribean • This represents a nearly 90% increase in firms
Europe and Central Asia Africa indicating that they face a skills gap
East Asia and the Pacific South Asia
Source: Author’s calculations from the World Bank Enterprise Survey | 6

7. Synthesizing data from the World Bank and regional reports, many of the Arab
countries rank extremely high on a global ranking of skills gaps prevalence
% of Total Firms Suveyed % of Total Firms Suveyed % of Total Firms Suveyed
Rank Country and Survey Year Which Have a Major or Rank Country and Survey Year Which Have a Major or Rank Country and Survey Year Which Have a Major or
Very Severe Skills Gap Very Severe Skills Gap Very Severe Skills Gap
1 Brazil 2009 73.03% 42 Oman 2007 MBRF 33.00% 83 Angola 2006 20.00%
2 Kuwait 2007 MBRF 68.00% 43 Chile 2006 32.06% 84 Bangladesh 2002 19.83%
3 Egypt 2007 MBRF 66.00% 44 Uzbekistan 2008 31.97% 85 Tanzania 2006 18.38%
4 Chad 2009 57.33% 45 Peru 2006 31.33% 86 Lebanon 2007 MBRF 18.00%
5 Belarus 2008 55.31% 46 China 2002 30.73% 87 Timor Leste 2009 18.00%
6 CapeVerde 2009 53.85% 47 Dominican Republic 2005 30.67% 88 Mongolia 2009 17.96%
7 Saudi Arabia 2007 MBRF 53.00% 48 Estonia 2009 30.40% 89 Mozambique 2007 17.95%
8 UAE 2007 MBRF 51% 49 Tunisia 2007 MBRF 30.00% 90 Afghanistan 2008 17.94%
9 Kazakhstan 2009 50.18% 50 Malawi 2009 30.00% 91 Ethiopia 2002 17.90%
10 Russia 2009 48.90% 51 Thailand 2004 29.96% 92 Serbia 2009 17.78%
11 Argentina 2006 48.35% 52 Egypt 2004 29.80% 93 Togo 2009 17.42%
12 Morocco 2007 MBRF 47.00% 53 Kyrgyz Republic 2009 29.36% 94 Sierra Leone 2009 17.33%
13 Romania 2009 46.21% 54 Guatemala 2006 29.31% 95 Lesotho 2009 17.22%
14 Algeria 2007 MBRF 45.00% 55 Vanuatu 2009 28.91% 96 Bhutan 2009 17.20%
15 Mauritius 2009 44.97% 56 Yemen 2010 28.72% 97 Ireland 2005 15.63%
16 Micronesia 2009 44.12% 57 Kenya 2003 27.64% 98 Fiji 2009 15.24%
17 Ukraine 2008 43.48% 58 Slovak Republic 2009 27.64% 99 Mexico 2006 15.14%
18 Lithuania 2009 43.12% 59 Samoa 2009 27.52% 100 Dem. Rep. of Congo 2006 14.71%
19 Moldova 2009 42.98% 60 Venezuela 2006 27.40% 101 Madagascar 2009 14.61%
20 Tonga 2009 42.67% 61 El Salvador 2006 27.27% 102 India 2006 14.47%
21 Latvia 2009 41.70% 62 Georgia 2008 27.08% 103 Kosovo 2009 14.44%
22 Jamaica 2005 41.57% 63 Turkey 2008 26.82% 104 Nicaragua 2006 14.44%
23 Gabon 2009 41.34% 64 Bolivia 2006 26.26% 105 Panama 2006 14.24%
24 Congo 2009 40.40% 65 Algeria 2002 25.47% 106 Macedonia 2009 14.21%
25 Guyana 2004 40.37% 66 Honduras 2006 25.46% 107 Burundi 2006 14.07%
26 Bahrain 2007 MBRF 40.00% 67 Colombia 2006 25.40% 108 Spain 2005 13.81%
27 Niger 2009 38.67% 68 Benin 2009 25.33% 109 CostaRica 2005 13.41%
28 Lebanon 2006 37.96% 69 Czech Republic 2009 25.20% 110 Swaziland 2006 13.36%
29 Jordan 2007 MBRF 37.00% 70 Laos 2009 25.00% 111 Liberia 2009 13.33%
30 Syria 2003 36.33% 71 Malaysia 2002 25.00% 112 Guinea Bissau 2006 13.21%
31 Paraguay 2006 36.22% 72 Armenia 2009 24.06% 113 Slovenia 2009 13.04%
32 BurkinaFaso 2009 35.79% 73 Namibia 2006 23.71% 114 Pakistan 2002 12.76%
33 Zambia 2002 35.75% 74 Uruguay 2006 23.51% 115 Guinea 2006 12.56%
34 Cameroon 2009 35.26% 75 Botswana 2006 22.22% 116 Peru 2002 12.48%
35 Qatar 2007 MBRF 35.00% 76 Mauritania 2006 22.03% 117 Portugal 2005 12.39%
36 Tajikistan 2008 35.00% 77 Croatia 2007 21.64% 118 Azerbaijan 2009 12.37%
37 Oman 2003 34.63% 78 SriLanka 2004 21.33% 119 Gambia 2006 11.49%
38 Poland 2009 34.51% 79 Morocco 2004 21.06% 120 Montenegro 2009 11.21%
39 Albania 2007 33.88% 80 Mali 2003 20.78% 121 Albania 2005 10.45%
40 Ecuador 2006 33.13% 81 Bosnia and Herzegovina 2009 20.50% 122 Rwanda 2006 10.38%
41 Ivory Coast 2009 32.32% 82 Bulgaria 2009 20.14% 123 Uganda 2006 9.24%
*Footnote: Data are from two sources and caution must be used in interpretation and comparison Data Source: MBRF-PWC Report World bank Enterprise Survey
Source: Author’s calculations from the World Bank Enterprise Survey
| 7

8. Agenda Overview
1 Prevalence of
Skills Gaps
• What international experience tells us about the impact of
2 Impact on Firm
skills gaps on private sector firm performance
Performance
3 Causes of
Skills Gaps
4 Reducing
Skills Gaps

9. International studies show skills gaps have a significant negative impact on
productivity, capital investment, and R&D
Effect of Higher
Industry, Product Type, Effect of Skills
Effect of Skills Gaps on Productivity Capacity Utilization, Innovation Gap
Educational
Qualifications
22.8% less
Produced quality product/service
• A significant negative impact on productive
51% less
productivity depending upon the Producing considerably below capacity
productive
industry, product type, level of •Text
Leads in developing 5% more
innovation, and capacity utilization Products/Processes productive
Manufacture of leather and leather 39.5% less 20% less
• Dampen productivity in capital intensive products productive productive
Manufacture of Fabricated Metal
industries as well as labor intensive 36.7% less 9.1% less
Products, Except Machinery and
productive productive
Equipment
• Lead to underutilization of capital, with Manufacture of Machinery and 49.9% less
firms operating below full capacity Equipment Not Elsewhere Classified productive
Manufacture of Office Machinery and 27.5% less
• Global competitiveness suffers due to Computers industry
Manufacture of Rubber and Plastic
productive
38.6% less
lower productivity – For example, in the Products productive
UK, foreign owned plants have higher Manufacture of Wearing Apparel; 10.2% more
levels of productivity than British owned: Dressing and Dyeing of Fur industry productive
US-owned plants are 15% more Manufacture of Wood and Products of
Wood and Cork, Except Furniture; 13.7% more
productive; other foreign owned plants
Manufacture of Articles of Straw and productive
are 14% Plaiting Materials
Manufacture of Motor Vehicles, 8.1% less
• Reduce incentives to invest in capital Trailers and Semi-trailers productive
and R&D due to complementarities Manufacture of Machinery and 9.7% less
between skilled labor and capital Equipment Not Elsewhere Classified productive
16% less
Manufacture of Tobacco Products
productive
Source: (Harris, Li et al. 2006) 9 | 9

10. Agenda Overview
1 Prevalence of
Skills Gaps
2 Impact on Firm
Performance
• Impact of economic growth on skills
Causes of • The case for government intervention in skills formation
3
Skills Gaps
4 Reducing
Skills Gaps

11. This conclusion is further supported by rampant market failures observed
internationally that lead to underinvestment in human capital
Source of
Market Failure Key Areas of Failure
Poor
1 • Poor macroeconomic policy and unfavorable business environments: Technical skills accumulation requires sound macroeconomic
management, high rates of investment, outward looking trade regimes, and open domestic markets
Macroeconomic
Policy • Misalignment of education and training system with economic development: The education and training system and policies must
be aligned with industrial needs
• Overreliance on foreign direct investment and foreign technology: FDI cannot solely drive the industrial sector; Skills and
capabilities of domestic competing and supplier firms must be upgraded as well
Insufficient
2 • Externalities - The benefits of training investments may accrue to other parties
Individual • Information gaps and uncertainty: Individuals may not know the future value of skills investments, the return on particular skills,
Investment and future skills needs
• Risk aversion: Individuals may prefer more certain short term returns to available jobs
• Lack of certification of skills acquired during enterprise training: This makes the investment in such training less attractive, since its
value to other firms is reduced.
• Capital market deficiencies: Individuals may not be able to finance their learning costs and foregone earnings, because capital
markets lack the information and monitoring capacity
• Labor market rigidities: Artificially compressed wage scales; unions or minimum wage legislation that raise wages above the market
level, low employer demand for skilled labor; when pay and status are not linked to the attainment of qualifications may reduce the
incentives of workers to invest in their own training (Research 1996)
Source: (Acemoglu and Pischke 1996; Research 1996; Lall 1999; Ziderman 2003)
| 11

12. Sources of
Market Failure Key Areas of Failure
Education and
3 • Supply-Demand Informational Gaps: Lack of information on current and future skill trends in industry and demands from students
due to rapid technical and organizational change or government industrial policy
Training System
Misalignment • Insufficient Funding: Capital market deficiencies in raising the funding for better standards
• Prohibitive Costs: High costs of educational services provided
• Low Teaching Standards and Curricula Irrelevancy: In the public sector training institutions, danger of bureaucratic and rigid
management, poor remuneration and inadequate incentives for trainers, lack of interaction with the market, and low standards
leading to irrelevant curricula, poor teaching and equipment, and an emphasis on abstract rather than practical training
• Lack of Quality Standards: In the private sector system, risks of variable and unsatisfactory standards in the absence of effective
monitoring
4 • Inadequately educated workforce: Low absorptive capacity by poorly educated workers
Failure of Firms
to Invest in
• Inadequately educated management: Low educational qualifications on the part of employers and managers who underestimate
Workforce the returns to training
• Informational gaps to calculate training returns: Lack of appreciation of or information on the benefits of training, latest
technology, and skills in relevant activities
• Lack of training capacity and needs assessment: Lack of training materials or teachers in-house or Inability to form efficient training
programs in line with changing skill and technology needs
• Lack of private training providers: Lack of specialized institutions to provide appropriate training at reasonable cost or lack of
interactions between these institutions and enterprises
• Cost Constraints: Lack of finance to cover costs of training.
• Externalities: If trainees are likely to leave for better-paid jobs after training, a bias towards providing training in specific, non-
transferrable skills or decreased levels of training emerges (Acemoglu and Pischke 1996)
• Low-skill production methods supported by poor economic policy: Lack of technological upgrading, with enterprises content to
stay with existing technologies, equipment, and skill levels exacerbated by policy that stifles competition and exposure to markets
| 12

13. In the Arab World, for example, higher education is facing several challenges
starting from its underlying environment through to supply and consumption
Education – Key Findings
Consumption and
Environment, Funding and Institutions
Related Beneficiaries
Infrastructure (Education Supply)
(Education Demand)
Big spenders on education in order of magnitude: Universities account for at least 86% of the total More females than males are enrolled in higher
Jordan, Saudi Arabia, Tunisia, and Morocco number of students in higher education education; Only five countries in the Arab World
have more male students
Avg. regional expenditure per student is US$ 2,444, Teaching is didactic, with no emphasis on students Education is more developed in Jordan, Lebanon,
OECD countries average US$ 14,027 per student becoming independent learner and critical thinkers Libya, and the Palestinian Territories, where
enrollment is near 40% or above
Many universities do not have sufficient Universities that teach in Arabic have limited
institutional resources for teaching and research choices regarding texts and other teaching material The higher the degree level, the larger the
proportion who study abroad: 5.7% at the BA level,
Current system does not reward faculty 13.0% at the MA level, and 34.4% at the Ph.D. level
Centralized educational systems are organized to
performance and full time engagement in
facilitate expansion rather than performance-
academia The bigger education spenders in the region have
oriented systems with emphasis on quality
higher quality domestic labor markets
Arab scholarly, scientific, and professional
Governments lack experience in policy and strategy organizations operate at a low level of activity Few partnerships between the private sector and
development as well as in planning and
education institutions which produce graduates
management of higher education systems Institutions rely on faculty members educated
with new and adaptable skills and who possess the
abroad to enrich the education scene with a variety
ability to continuously upgrade their skills
Leaders require accurate data to compare of intellectual background and educational
institutions, promote more informed decision practices
There have been attempts to link higher education
making about programs, and formulate policies
100,000 faculty members in institutions of higher to development and social issues but they center
education; 60% of them have PhDs; (40%) have on public awareness campaigns rather than on key
Profit-oriented, private institutions are not
M.A.’s, but only a few (15.5% of both groups) hold changes in the curriculum or the community
adequately accommodated in educational policy
professorial titles
and there are no governmental quality standards
Legend
Favorable Satisfactory Unsatisfactory
Source: Author’s analysis
| 13

14. Similarly, many of the features necessary for an innovation system typical of
knowledge-based economies in high and medium income countries is lacking
Funds to bring
Commercialization
Research Funds research to
Research Funds
Development and consumers Research Consumers
Institutions
Product Prototype Linkages to bring (Demand)
(Supply) Commercialization
Research Linkages research to
Linkages
consumers
Research
Corporate funds Corporate R&D Entrepreneurs
Consumers
IP developers
Seed VC, Angels Corporations • Academics and
Universities Researchers
Professional
Corporate R&D Industrial Funds
Societies • Business
National labs Technology
transfer agencies Community
Entrepreneurs SME’s
• Government
Govt. SciTech Tech. transfer
bodies funds • The Public
Govt. departments Late VC, PE • Press
Science
foundations To bridge this lack of infrastructure,
several Arab countries have
launched industry clustering
Status initiatives. Examples include
Dubaiotech and the Qatar Science
Missing Weak Existing and Technology Park.
Source: Adapted from DDIA R&D White Paper, 2004
| 14

15. In addition to market failures and changing skills demands, public budgets,
demographics, and skilling previous disadvantaged groups are key challenges
to high skill, knowledge-based economic development in the Arab World
Market Failures
E&T systems failing to keep up
with macroeconomic forces
Government budgets ↓
High skill,
innovation-based,
knowledge
economy
Demographic change and high
population growth rates
Lack of skills of disadvantaged groups
| 15

16. Agenda Overview
1 Prevalence of
Skills Gaps
2 Impact on Firm
Performance
3 Causes of
Skills Gaps
• Skills ecosystem approach to structuring a proactive response
Reducing • Systemic inefficiencies may stall knowledge-based economic development
4 • Policy responses to reducing skills gaps based on international experience
Skills Gaps

17. The skills ecosystem model, based on high skills environments such as Silicon
Valley, provides a useful conceptual and theoretical framework to summarize
the enabling factors and institutional players involved in skills formation
High skill ecosystem that supports
competitive advantage, innovation,
and high wages
Education and Firms Governments Individuals
Training Providers
Key Role Key Role Key Role
Key Role See comparative advantage Vocational Education and Invest in skills because
Responsive delivery at all levels through addressing skill Training, employment, and rewarding career
that individuals and employers development and business industry policies that support opportunities are available
value performance to generate high skills strategy
innovation and growth
Typical Stakeholders Typical Stakeholders
•Universities/schools Typical Stakeholders • Training policy bodies
•Training Organizations • A network of enterprises • Development agencies
•Industry forums/bodies • Industry bodies and unions • Sector-specific agencies
•Material/equipment suppliers • Supply chains • Local government
•Technical/industry experts • Regional clusters/networks
•Research Centres
•Centres of Excellence
Source: Adapted from (Windsor and Alcorso 2008)
| 17

18. Many countries in the Arab World are reaching the high skills equilibrium,
knowledge-based economic stage; yet many are at intermediate stages
10
High Skills Equilibrium
United Kingdom Germany
9 Ireland
Employer Demand for higher, knowledge-intensive
Estonia • Strong demand for high level skills
High
Spain
Czech Republic Hungary • Skills formulation institutions and the
Lithuania Korea, Rep.
8 Latvia Portugal enabling environment work in tandem
Knowledge Economy Index Ranking)
Slovak Republic Greece • Knowledge-based economies with
skills (as proxied by the World Bank
Poland Croatia
Chile Bulgaria lower levels of skills gaps
7 United Arab Emirates Qatar
Romania Uruguay
Bahrain Malaysia Costa Rica
Kuwait
6 Brazil Serbia
Russia Turkey
Medium
Saudi Arabia Jordan Oman Mexico Africa
South
Belarus Very little research in
5 Colombia Lebanon this area despite the massive
China growth in these countries
Egypt Tunisia Sri Lanka Philippines
Morocco Botswana Azerbaijan
4
Bolivia Vietnam
Cape Verde Indonesia
Syria Honduras
India
Guatemala Swaziland
3 Kenya
Algeria
Senegal
Uganda
Pakistan
Ghana Low Skills Equilibrium
Zambia Yemen Tanzania
Lesotho
Burkina
2 Nepal • Employers face few skill gaps in a
Low
Faso Mozambique Cambodia
Bangladesh
Ethiopia Eritrea predominantly low skilled workforce
Rwanda
Guinea
• Little incentive to participate in
1 education and training and raise
qualification levels and aspirations
0
0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00% 100.00%
Low Medium High
% of firms with sufficient internal skills levels
(1- % of firms reporting major or very severe skills gaps)
| 18

19. International experience suggests several policy options for intervention in
training markets Policy Options
Government Government
Reason for Intervention Subsidy of Training Provision of Training Complementary Policies
Externalities None
Property rights (employer Levy-grant schemes
fear of poaching)
Market imperfections Deal with sources of
(economic and social imperfections if
policy distortion) politically possible
Inadequate Firm-based Build firm training
training capacity; levy-grant
schemes
Weak private training Build up private training
provision capacity
Create equal opportunity Reduce subsidies to
trainees' peers, selective
scholarships
Disadvantaged groups Targeted training
subsidies;
employment creation;
Source: Ziderman (2003) income redistribution
| 19

20. Traditional theories of skill formation provide some prescriptive guidance for
human capital development shedding light on how skills gaps can occur but
fall short due to challenges and changes brought on by macroeconomic forces
Theories Key Arguments/Approaches Takeaways
• Look at effective institutional • High skills production systems are
architecture and ways in which associated with competitiveness and
Educationalist
education and training is strong economies; but low skills
delivered alternatives may be necessary given
constraints
• Education and training are investments • Sufficiently high levels of general
• Individuals/firms respond to individual incentives education are required by the workforce
Economics and optimization to determine training for higher skill production
• When examining a country’s training system must
look at level of general education, how much of • Effective institutions are key elements of
skills formation occurs in firms, regulation and skills formation systems
regulatory institutions
• There is no one ideal national education
• Education provision, and training system ; forms are shaped by
organizational structure,
Sociological social, historical, and cultural, and
industrial relations, and class organizational factors, as well as level of
structure shape skills formation economic development
• Policies and institutions combine • Without sufficient systemic incentives or in
to create high skills systems the presence of labor market constraints
Political Science both individuals and firms underinvest in
education and training
Source: Author’s analysis, (Ashton and Green 1996)
| 20

21. Human capital requirements increase as countries develop, as industry
structures become more diversified and competitiveness oriented, and as
firms move from smaller patriarchal family structures to larger size firms
Economic Development Phase and Key Government Economic Firm-level Competitive Environment
Source of Competitiveness Policy Priorities and Innovation Capacity Education and Training Priorities
Middle Income Countries • Improvements in • Export manufacturing and • Universal secondary education for literacy
• Investment-driven growth infrastructure outsourced service exports and numeracy, language, mathematics,
• High quality, technologically • Regulatory enablers of high value added goods and science skills
advanced, flexible (customs, taxation, and services • Deepened vocational and technical
production using imported company law) to allow • Technology/designs still education for post-secondary technicians
technology global integration imported through licensing, • Life-long learning
• Attraction of foreign capital • Reduction of red tape and JVs, FDI, and imitation • Enterprise-based training for SMEs
and technology to support improved the legal system • Companies extend • Private training provision
economic growth • Development of local capabilities more widely in • Develop managerial capacity
financial markets the value chain • Strengthened training authority to
administer skills development funds
High income transition requires direct government involvement in fostering a high rate of innovation, through public as well as private investments in research and
development, higher education, and improved capital markets and regulatory systems that support the start-up of high-technology enterprises.
High Income Countries • Emergence of world-class • Companies innovate at the • Highly developed education with high
• Innovation-driven growth research institutions world technology frontier, rates of science-based learning in general
• High rate of innovation, • Dynamic R&D) sector develop unique product education
adaptation, and linking higher education designs, sell globally • Technical education in engineering
commercialization of new and innovative firms • Low reliance on foreign specializations
technologies • Venture capital availability technology • Occupation-specific training provided
• Production of innovative • Improving supply of • Decentralized and flexible privately, either within enterprises or
products and services scientists and engineers organizational structures through trainee-financed private training
• Knowledge-based • Sophisticated demand providers
economies that generate conditions and intense • Complete professionalization of
technological innovation local competition management with a break from family
orientation
Source: (Porter, Sachs et al. 2002), (Bank 2004)
| 21

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We are interested in opportunities where our ‫إننا مهتمون بالفرص التي يمكن من خاللها استخدام مهاراتنا‬
technical skills and expertise can be used to
‫وخبراتنا الفنية لتكميل أو لتنويع مهارات وخبرات شركائنا‬
complement or diversify those of potential ّ
‫المحتملين بما يمكن من السعي للحصول على تمويل حكومي أو‬
partners to pursue specific government funding
opportunities, commercial contracts, or RFPs. To
‫عقود تجارية. لبدء نقاش حول الدخول في تحالف مع شركة‬
begin a discussion about entering into an alliance ‫تحسين لالستشارات يرجى االتصال بوليد العرادي على العنوان‬
with Tahseen Consulting, please contact Walid walid.aradi@tahseen.ae
Aradi at walid.aradi@tahseen.ae
‫• بالنسبة للعاملين في الصحافة أو في وسائل اإلعالم‬
• For Members of the Press or Media
ّ
‫لالستفسارات المقدمة من قبل وسائل اإلعالم يرجى االتصال بـ‬
For media inquiries, please contact Wes Schwalje wes.schwalje@tahseen.ae ‫ويـزلي شـوالييه على العنوان‬
at wes.schwalje@tahseen.ae