x Abu Dhabi, UAEThursday 18 January 2018

Top talent will help UAE industry take off

The Emirates' Education 2020 programme should kick-start a 'virtuous circle of innovation and value creation'

Rolls-Royce registers about 350 patents a year - for technology and manufacturing. Edgar Su / Reuters
Rolls-Royce registers about 350 patents a year - for technology and manufacturing. Edgar Su / Reuters

In many western countries, including my native United Kingdom, there has been much introspection since the 2008-2009 economic crisis about the structure of the economy. Over several decades, policymakers placed too much emphasis on fostering what has been called "the post-industrial economy", in which the service sector dominates.

Much more balance is needed. There are essentially only three ways to create wealth - you can dig it up, grow it or create something in order to add value. Anything else is just moving wealth about.

In Abu Dhabi, almost more than anywhere else on Earth, this is understood, and importantly, acted upon.

The Economic Vision 2030 is a clear strategy to use hydrocarbon revenues as the basis of building a strong, knowledge-based, diversified economy, with particular emphasis on manufacturing. The focus is on areas that will benefit from a huge competitive advantage.

This kind of investment can create high sustainable economic value.

At Rolls-Royce, we use our Trent 1000 engine as an illustration of value creation.

This engine has enormous demands placed onit. It must start and operate at ambient temperatures ranging from minus 60°Cto plus 40°C. The engine draws in up to 1.25 tonnes of air a second, the equivalent of emptying a squash court of air in less than a second.

As the air passes through the engine, it is compressed to a fiftieth of its original volume and by the time the air leaves the nozzle at the back, it is travelling at about 1,400kph.

Every engine requires new technologies, which is why Rolls-Royce registers about 350 patents a year - some for technology and others for the manufacturing process. This intellectual property can be conceived only with great difficulty and, once established, creates wealth and a barrier to entry for others.

To give a sense of this value, pound for pound, a Trent 1000 engine is six times more valuable than silver. Whereas pound for pound, a motor car has the same value as a hamburger.

This value has a direct benefit on our communities. For example, in Derby, where Rolls-Royce is headquartered, company pay is over 40 per cent more than the East Midlands median.

The other good news for Abu Dhabi's push into high-value manufacturing is that it helps many other areas of the economy - from logistics and transport to property. A Singaporean study shows that US$1 (Dh3.67) of manufacturing activity creates 90 cents of related services.

Of course, creating such an industry does not happen overnight. And the main challenge is to establish a deep pool of employees with the skills and experience for jobs that had not previously existed.

Success stories suggest that developing top-level education takes years of hard work and must be an integral part of industrial policy.

South Korea has demonstrated this, emerging from a devastating war as one of the world's poorest countries to become a trillion-dollar economy and the world's largest producer of ships, computer memory chips and screen displays.

There, the government promoted the import of raw materials and technology at the expense of consumer goods, and encouraged savings and investment over consumption. This went hand-in-hand with education reform, which more than doubled the number of students enrolled in colleges and universities.

As a result, South Korea now boasts the world's highest proportion of youngsters completing higher secondary education, with 97 per cent reaching this level.

Elevating the teaching of science is also key.

In Finland, which consistently ranks among the highest globally for mathematics and science results, all teachers must have a master's degree, which is fully subsidised. Science classes are capped at 16 students, so that the students may perform practical experiments in every class. As a consequence, 43 per cent of Finnish high-school students choose to go on to vocational colleges to develop skills directly related to industry.

Education in the UAE has developed quickly through a series of five-year plans that aim to elevate innovative skills. In an important part of the Education 2020 programme, an enhanced curriculum for mathematics and integrated science was introduced at first-grade level in the early 2000s in all government schools. The conditions for learning are excellent - one teacher to every 15 children is one of the best ratios in the world.

On the tertiary level, world-class universities are also keen to complement the offering in the UAE, with the Sorbonne and New York University both establishing campuses in Abu Dhabi in recent years.

Excellence in education can help to kick-start a virtuous circle of innovation and value creation.

Research on alumni of the Massachusetts Institute of Technology showed that graduates had founded about 26,000 companies, employing 2.2 million people and generating sales above $2 trillion.

These are impressive numbers that all of us who are interested in education and job creation can aspire to replicate across the world.

Miles Cowdry is the head of global corporate development at Rolls-Royce