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An innovation-driven economy is the most advanced stage of development a country can achieve within the global competitiveness index framework.
To be included in this group, a country needs to have a very high level of income per capita, along with sufficient economic diversification.
The World Economic Forum, based on the theories of economist Michael Porter, assesses countries’ competitiveness in terms of three main stages of economic development, including:
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Factor-driven economies: In the first stage, the economy is factor-driven, and countries compete based on their factor endowments, which are mainly unskilled labour and natural resources. Companies compete on the basis of price, and sell basic products or commodities, with their low productivity reflected in low wages.
Maintaining competitiveness requires well-functioning public and private institutions, well-developed infrastructure, a stable macroeconomic framework and a healthy and abundant workforce.
Efficiency-driven economies: With advancing development and an increase in wages, countries move into the efficiency-driven stage of development, which occurs when they develop more efficient production processes and increase product quality.
At this point, competitiveness and wealth creation are increasingly driven by higher education and training, efficient goods markets, well-functioning labour markets, sophisticated financial markets, a large domestic and/or foreign market, and the ability to harness the benefits of existing technologies.
Innovation-driven economies: Finally, as countries move into the innovation-driven stage, they can sustain higher wages and standards of living if their businesses are able to compete with new and unique products.
At this stage, companies must compete through innovation, producing new and different goods and services, using the most sophisticated design, production, management, financing and commercialization processes.
The evolution of advanced countries towards innovation-based activities has resulted from cost pressures created by emerging markets.
As manufacturing is increasingly sourced from cheaper-labour countries, advanced economies need to focus on the more complex, higher value-added and knowledge-intensive activities and segments.
This results in a strong knowledge workforce, which is essential for creating, sharing, disseminating and using knowledge effectively in order to create value. Knowledge professionals include researchers, scientists, managers, engineers, technicians, designers, architects and urban planners, for example.
All the companies listed in Construction Week’s Top 25 Most Innovative Companies have played a key role in not only driving product and technology development in their respective sectors of the construction industry supply chain, but in helping the GCC attain status as a major innovation-driven economy.
These companies range from small firms distributing innovative technology regionally, to major multinationals with dedicated capacity locally. Suppliers, distributors, and manufacturers are all considered. We also take a brief look at some examples of the latest innovations and developments for the construction industry in particular.
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