From digital adopters to digital disruptors

The Gulf Cooperation Council (GCC) countries1 have recorded strong digital sector growth over the last decade. GCC countries now need to take vigorous policy actions if they are to move from being mostly adopters of digital technologies to becoming disruptors hosting powerful local companies, institutions, and talent. We measured where the GCC countries stand using our Digital Economy Index (DEI), an evidence-based tool that provides a comprehensive view of the digital maturity of 109 countries between 2010 and 2020. The DEI has five pillars: foundations, talent, innovation, adoption, and local production. Our econometric models demonstrate that a 10 percentage point increase in any country’s DEI score would lead to a 2.6 percent increase in GDP per capita growth and 1.1 percent growth in employment. According to the DEI, 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 over the medium term. Similarly, the GCC needs more digital activity in terms of patents, disruptive business models, and venture capital availability to keep up with the activity of advanced economies. However, the right policies and initiatives can help the region’s digital economy approach the level of maturity of Organisation for Economic Co-operation and Development (OECD) countries within five years. If regional countries went from being digital adopters to being digital disruptors, they could add between US$138 billion and $255 billion to regional GDP depending upon how far they advanced. Participating in the digital economy is not a choice but a requirement that conveys economic vibrancy and resilience, and that protects sovereignty. To develop their digital economy, GCC countries must build adaptive regulatory frameworks, aggressively develop talent, expand innovation capacity, and increase local production of digital goods and services. Policymakers need to accelerate digital economy development — and act now to transition toward becoming digital disruptors.

GCC countries are growing their digital economy almost twice as fast as advanced economies are, but they must move faster in three areas: reforming the regulatory framework, deepening the talent pool, and strengthening innovation and localization. Advancing in these areas will allow them to move from being digital adopters to being digital disruptors — a critical step for ensuring economic growth, creating jobs, and building economic resilience and sovereignty. 

Source: https://www.strategyand.pwc.com/