The British Omani Society is delighted to share the blog below by our upcoming lecturer Hamid Hamirani, who is a distinguished finance and investment professional with over 20 years of experience in Oman’s public and private sector.
Hamid's upcoming lecture on April 23rd is entitled 'Smart Industry Hub in Oman' and will build on his presentation last year in which he assessed Oman’s economic reforms and emphasised the key role technology should play in driving sustainable economic growth and enhancing the competitiveness of Oman’s non-hydrocarbon sectors.
In this blog, Hamid outlines how Total Factor Productivity plays an important role in determining economic prosperity, how Oman can learn from South Korea's economic successes, and how Oman can proactively remain engaged through the Smart Industry Initiative.
Total Factor Productivity (“TFP”) plays an important role in determining a nation’s economic prosperity. Unlike traditional metrics focused solely capital, TFP evaluates how efficiently an economy utilises all of its resources – for instance, technology, infrastructure, knowledge, and labour – to produce goods and services. If an economy is able to increase its production of goods and services while using fewer resources, it enjoys a higher TFP.
When TFP improves, it creates a ripple effect throughout the economy. Economies that can produce more without proportionately increasing labour or capital investments are able to offer higher wages, greater profitability, and improved living standards.
However, in the race for economic transformation across Gulf Cooperation Council (“GCC”) nations, Oman faces a crucial but common challenge: negative TFP growth in its non-hydrocarbon sectors. According to the IMF, with the exception of the UAE, all GCC states have experienced negative TFP growth over the last decade.
To reverse this trend, Oman can learn from a proven playbook: South Korea’s technology-driven economic transformation.
Learning from South Korea’s Economic Miracle
South Korea’s journey from post-war poverty to global technological leadership serves as a compelling blueprint for emerging economies. Central to this success was a relentless focus on innovation and technology adoption, underpinned by substantial investment in Research and Development (“R&D”). For decades, South Korea has allocated a significant portion of its GDP to R&D, allowing it to achieve an annual growth rate of 8.4% between 1961 and 1970, with GDP soaring from $2.7 billion in 1962 to $230 billion by 1989.
And this growth wasn’t just numerical in value; it represented a fundamental shift in technological capabilities, positioning South Korea as a global competitor in semiconductors and consumer electronics. South Korea is now home to the giants Samsung, LG, and Hyundai. The cornerstone of this transformation was a sharp focus on TFP, driving sustainable growth and improved living standards.
A Smart Industry Initiative:
At a time when Saudi Arabia and the UAE are competing to dominate the region’s tech and innovation sectors, it is a strategic necessity for Oman to remain proactively engaged in building its own capabilities.
The Smart Industry Initiative (“SII”) is intended to achieve just that. It has begun as a partnership between the University of Oxford’s Oxford Science Enterprises, BSG International, and the British Omani Society, and is intended to accelerate Oman’s technological transformation by leveraging the centuries-old relationship between the UK and Oman.
The SII pairs innovative technologies developed by UK startups at the University of Oxford with Omani companies in the relevant sectors to facilitate entry into the regional market, improve local productivity, and upskill local workers.
Some of the technologies developed by the UK startups as part of the SII include:
o Oxford Flow’s Valve Technology: Achieves an 85% cost reduction and zero emissions in oil and gas operations.
o Alloyed’s Digital Manufacturing Solutions: Addresses supply chain bottlenecks, particularly those experienced during the COVID-19 pandemic.
o Archangel Lightworks’ Laser Communication: Enhances satellite data transfer, offering a more reliable alternative to traditional sea cables.
o Odqa’s Renewable Energy’s Solutions: Provides continuous energy availability using locally sourced materials, requiring less land than conventional solar panels.
But the SII is designed to ensure that Oman does not simply import technology, but that it also cultivates a robust local ecosystem of innovation and knowledge-transfer to improve Oman’s TFP.
o Technology Transfer: By creating partnerships between UK startups and Omani companies, Omani industry will benefit from accelerated product and process innovation and the Omani workforce will benefit from upskilling, both of which improve TFP.
o Digital Infrastructure Overhaul: By modernising digital infrastructure and adopting advanced manufacturing technologies, Omani industry will benefit from reduced costs and inefficiencies, improving TFP.
o Access to Research: By partnering with UK startups whose innovations have emerged from research completed at the University of Oxford, Oman will have unparalleled access to the latest developments in competitive tech sectors, allowing for faster adoption and significant productivity gains.
A Vision for the Future
The road to success is not without its challenges. Boosting the productivity of Oman’s non-hydrocarbon sectors requires a comprehensive, multifaceted effort. Beyond capital investment in technology and infrastructure, Oman must invest in R&D. Currently, Oman invests only 0.3% of its GDP in R&D, lower than the GCC average of around 1.9%.
But achieving this requires sustained commitment from both the public and private sector. Policymakers must prioritise regulatory reforms and incentivise private sector investment in R&D. Meanwhile, educational institutions should focus on developing a skilled workforce, ready to engage with emerging technologies.
The SII is a significant step in the right direction, holding the potential to position Oman as a regional tech and innovation hub. With the right mix of strategic investments, regulatory reforms, and international collaboration, the SII can close Oman’s productivity gap and develop Oman into a highly competitive advanced manufacturing destination, transforming the economic landscape for future generations.
If successful, the Initiative could serve as a model for other resource-dependent economies seeking to boost their productivity and diversify their economic base.
About the author
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Hamid Hamirani is a distinguished finance and investment professional with over 20 years of experience in Oman’s public and private sector.
He served as a Senior Advisor to the Minister of Finance in Oman, playing a critical role in transforming sovereign wealth funds, including the Oman Investment Fund where he was an Investment Committee member. The fund later merged with the State General Reserve Fund to form the Oman Investment Authority in 2020.
He is a recognised thought leader in investment advisory, and his expertise spans corporate governance and business transformation.
In 2016, he co-authored a seminal paper with Professor Jerome Angel of UC Berkley, arguing that investments in technology foster sustainable economic growth more effectively than fiscal or monetary stimulus – a perspective validated by global economic trends since the financial crisis of 2008 and COVID-19 in 2020.
Currently, Hamid plays a pivotal role in advancing technology transfer from the research coming out of the University of Oxford to Oman’s energy, space, industrial, and utilities sectors.