Ideation Center Insight
Energizing the digital economy in the Gulf countries
From digital adopters to digital disruptors
Economic expansion and resilience are increasingly dependent on digital maturity. As the digital economy rewrites economic growth stories, GCC countries have an opening to leap forward as disruptors.
A construct for measuring digital maturity
Our Digital Economy Index (DEI) is a comprehensive and evidence-based tool that measures a country’s digital maturity based on 86 indicators along five pillars: foundations, talent, innovation, adoption, and local production. The DEI allows policymakers to assess their country’s digital economic development and where they need to focus their efforts to encourage growth.
We used the DEI to assess 109 countries, which we have ranked into three categories: digital learners, digital adopters, and digital disruptors.
Global digital economy rankings
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The digital economy market value is dominated by advanced economies
Advanced economies lead the globe in digital economy market value, with the United States representing more than one third of the global sector’s market value. Saudi Arabia’s digital economy market value ranks in the top 20 countries globally, making up half of the GCC market size.
Digital economy market value (US $) of top 15 countries
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The GCC is ripe for disruption
DEI scores reveal the majority of GCC countries are digital adopters. The DEI also indicates GCC countries are growing their digital economies almost twice as fast as advanced economies, potentially catching up with OECD levels in five years. While that is promising news, they will need to transition from adoption to disruption.
A maturing digital economy
OECD4
Growth: 0.32%
GCC2
Growth: 0.71%
Note: Growth rates are CAGR for the 2010-2019 period.
Targeting the right areas for the highest return
To keep pace with advanced economies, GCC countries need to evaluate themselves across the five pillars of digital maturity.
Foundations
GCC countries are almost at parity with the OECD in terms of foundational technology, thanks to heavy investments in digital infrastructure.Talent
GCC countries need to produce more local digital talent by investing in STEM education at the secondary school level.Innovation
Most GCC countries lack sufficient R&D and financial resources to support innovation, although the number of startups is increasing.Adoption
GCC countries almost match the OECD in adoption of digital technologies. However, more could be done to encourage online consumer transactions.Localization
GCC countries lack adequate localized digital production. Digital industry underdevelopment and a lack of resources for digital entrepreneurs have created a dependence on imported technology and services.Leaping across the digital gap
Participating in the digital economy is no longer a choice. It is the core engine for economic growth. To make the leap, GCC countries will need to build adaptive regulatory frameworks, aggressively develop talent, expand innovation capacity, and increase local production of digital goods and services. By leaping across the digital gap and transitioning into digital disruptors, GCC countries will increase the digital economy’s contribution to the overall economy from 12.2% to 13.4%, implying an aggregate regional GDP growth of US$138 billion.
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