I have a friend who has an interesting relationship with golf. One day three years ago his fingers were covered with band aids, "from practice" he said, "excessive."
Then one day two years ago I noticed his hands were soft and supple again, more like the manager he was than the athlete he had been. "No more practice?" I asked.
"Quit," he said, "It's the competition. Feel bad for myself when I lose, bad for the other guy when I win."
And then, just recently, his fingers covered with band aids, he told me he had started practicing again and that - pardon me if I don't quote him accurately -- "Competition is good for the soul."
But is it good for the world?
I believe it is, both for the soul and for the world, depending upon how you see it, and whose version of it you subscribe to. Not that I'm interested in diving into the what-is-it debate surrounding competitiveness theory. No, I'm merely interested in describing an experience I've had -- one many people often ask me about -- and how it has changed our nation for the better. And I hope the world, too.
In Saudi Arabia competitiveness has become a national policy since 2005 when we launched a plan we dubbed the "10x10" initiative. Since then I've enjoyed a many great opportunities to clarify my thoughts on the idea of competition, perhaps in part because the rubric itself has dubious connotations in a day when collaboration is a more welcome and digestible concept, or perhaps because people, like my golfer friend, have inaccurate assumptions about the true object of our competition.
Five years ago when we launched the 10x10 initiative the Kingdom began working on a program of economic reforms with the goal of creating a top ten most competitive investment destination by 2010. The standard thinking is that investment flows where it is most welcomed, so creating a welcoming environment was the objective. As benchmarks for the process we used criteria established by international ranking agencies such as the World Bank, the IMF, and the World Economic Forum, which would tell us everything we needed to do, though not necessarily how we needed to do it. For that we established the National Competitiveness Center, an independent body to monitor, assess and support the enhancement of competitiveness in the Kingdom of Saudi Arabia. It's a think tank that does more than think: it serves as a facilitator and communicator of change.
In just the most recent year of this process, 2009, Foreign Direct Investment (FDI) into Saudi Arabia grew 57% to US$38 billion, the largest in the region, and according to the 2010 World Investment Report published by UNCTAD, the 8th largest in the world. Some of the world's greatest economic powers are investing in Saudi Arabia, including the United States, the largest source of FDI inflows during 2009, around US$5.8 billion. The seven countries ahead of us in ranking, with the exception of HK, all have populations of more than 60 million people, some as high as 1.2 billion, and GDPs measured in the trillions. KSA has a population of 27 million and a GDP at less than $400 billion. Not that GDP is the most sensitive measure of prosperity in the world, because it isn't. In fact, it's not a measure of prosperity at all, but it's useful for telling at least one story.
In terms of competitiveness rankings themselves, when we started the 10x10 program in 2005 we were ranked 68th in the World Bank's Ease of Doing Business report, but now, after climbing steadily over the years, in November we are ranked the 11th most competitive nation in the world, just 1 point shy of our goal.
But is that good for the world? To answer that question I'll repeat a question I often receive, which is, "how are you doing against the rest of the region?"
First of all, we are ranked ahead of all regional countries with no exception in terms of competitiveness and FDI attraction, but that's not the point. "We aren't competing against anyone in the region," or anyone else in the world for that matter. To quote Paul Krugman: "You always have a comparative advantage in something."
As a nation we have a set of comparative advantages and our objective is to understand what those advantages are how they can be improved in light of existing global social and economic trends. For instance take the energy sector. Saudi Arabia has one fourth of all known conventional oil reserves, an advantage for which it is considered the oil capital of the world. With a view toward leveraging this natural capital, we created a Strategic Business Unit within my organization, the Saudi Arabian General Investment Authority, to develop a strategy around the sector, which includes developing policies and best practices, and developing opportunities for downstream businesses to invest in. Our objective is to become the energy capital of the world rather than the oil capital.
The world's energy capital sees energy in a larger global perspective, which means a future predicated upon finding more efficient and cleaner ways to generate power than the combustion of a liquid. The energy capital of the world recognizes that its most abundant resource is an ancient organic compound, and that sending it into the atmosphere through the ends of pipes isn't the best way to use it, for anyone, and that more precious, valued added products can be created with longer life spans and more integrated value chains. The energy capital of the world recognizes an obligation to remain a steady and reliable supplier of energy to the world during the transition, that in global oil markets, demand is outpacing supply and only KSA has the capacity to keep up with swing demand, something we've historically done to fill supply gaps. The energy capital of the world, from that perspective, views oil as limited, and any alternative, renewable or more efficient source of energy is a resource to be invested in, particularly the kind of energy that shines upon us every day. The energy capital of the world understands that enough sunlight hits the earth every hour to power the humans on it for a year at a time. And that in certain places wind is abundant and that, if we care as much for our children as we do ourselves, we'll make the most of what we've been given.
This is Saudi Arabia.
In 2010 His Majesty King Abdullah bin Abdulaziz, the Custodian of the Two Holy Mosques, established an organization dedicated to developing and designing the national and international energy policy needed to meet the needs of a country with increasing energy demands, as well as the energy demands of a world developing rapidly around it. The King Abdullah City for Atomic & Renewable Energy will invest heavily in developing Saudi Arabia's alternative energy infrastructure, which will translate into securing the Kingdom's resource rich environment for generations to come, and also preserving these resources for much higher-value products. The head of that organization, Dr. Hashim Al-Yamani, will be speaking at the 2011 Global Competitiveness Forum, an annual event held in Riyadh to raise awareness and open a global dialogue on the subject of competitiveness. "From Energy to Sustainable Energy" is the topic of his speech.
If Krugman is right, and we all have a comparative advantage in something, then combined we all have a comparative advantage in everything. Considering growing demands upon the earth's resources, a swelling global population, severe issues with respect to food, water, health and poverty to name a few, competitiveness is our opportunity as humans to understand ourselves and make the most of what we've been given.
In September 2009, Saudi Arabia was one of the seven founding members of the first global network devoted exclusively to competitiveness strategies, the Global Federation of Competitiveness Councils (GFCC), which was established in order to explore means of collaborating and cooperating on, and supporting policies that expand global prosperity. In an interview Deborah Wince-Smith, President of the Council on Competitiveness and President of the FGCC, said:
"Around the world, there is growing convergence in national interests that are affected by global economic conditions. The growing interdependence among nations offers a golden opportunity to move beyond static engagement to dynamic global strategic partnerships that will spur economic growth, development, and jobs."
A golden opportunity. That's how we see the competitiveness debate. To quote the basic principles, the GFCC is an opportunity to:
- Create an ongoing dialogue between leaders from competitiveness councils around the world who are committed to their national prosperity and the prosperity of the world;
- Establish a global forum for the exchange of information, ideas, and best practices between competitiveness councils to promote national competitiveness, and in turn promote global economic growth;
- Identify emerging challenges and obstacles that jeopardize national competitiveness, global growth, and prosperity through the collaboration of leaders from competitiveness councils around the world;
- Establish a model of global cooperation on competitiveness that supports national prosperity based on innovation, and sustainable economic growth and development.
At one point during his speech at the 2009 GCF Michael Phelps said, "there are no limits to my life." I thought this was a profound statement at the time, and think about it quite often. I imagine most people drew the obvious conclusion -- given who he was and what he had just achieved -- that we can accomplish almost anything we dream of and set out to. But that's not how I understood it. I understood it to mean that my life does not begin and end with my own physical boundaries, but that we have an impact on the world beyond ourselves. What we do has a reach, perhaps an enormous one, on a vast, remarkable, delicate and often complicated tangle of living beings, my children included. When we set out to be among the top ten most competitive nations in the world, we weren't competing against anything but our ability to become our personal best in light of certain well defined standards that have and will continually evolve, and we believe that will bring sustainable national and global prosperity.
I came to government from the private sector, so I understand the language of the private sector. If there is a better place to do business in your sector or industry than Saudi Arabia, that's the place you need to go. But like golf, that doesn't mean I'm immune to what others are doing to improve their games. Competitiveness is about being informed of the tools that are available and finding ways to make those tools work better in a particular context. I can't compete with Egypt, which has a huge chunk of the world's history on and below its surface, and an enormous river running through it, but I can examine and improve my gifts.
And this is all we're trying to do.
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