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Arab News
30-04-2025
- Business
- Arab News
Every country must aim for manufacturing self-sufficiency
If there is one lesson governments cannot afford to ignore from the COVID-19 pandemic, it is this: every country needs to build its own manufacturing base. The supply chain breakdowns of 2020 and 2021, followed by a fresh cycle of disruptions caused by geopolitical tensions, natural disaster-related shocks and now the new trade barriers under the second Trump administration, have made self-sufficiency — not just in essential goods but also in advanced industrials — a strategic imperative. This is not to argue for every country to shun global trade and embrace economic autarky. Nor is it realistic to expect all countries to become entirely self-sufficient. But in vital sectors such as healthcare, semiconductors and industrial machinery, the ability to produce and meet at least a sizable share of domestic demand is no longer just an economic advantage. It is a matter of national security. Although fading rapidly from memory, the world's wealthiest nations found themselves, at the height of the pandemic, in the uncomfortable position of bidding against one another for face masks, ventilators and vaccine components. The World Health Organization reported that more than 90 percent of countries experienced some form of supply chain disruption in essential medical goods in 2020. Even the most globalized economies suddenly had to look inward. In vital sectors, the ability to produce domestically is no longer just an economic advantage but a strategic imperative Arnab Neil Sengupta Countries with stronger domestic manufacturing ecosystems bounced back faster. India, for instance, rapidly boosted production of personal protective equipment and generic drugs. Vietnam and South Korea were similarly able to respond swiftly due to their local industrial capabilities. Meanwhile, nations dependent on imported goods, including advanced economies in Europe, were left grappling with shortages. Few countries have demonstrated like China how industrial self-sufficiency pays dividends in moments of crisis. Its 'Made in China 2025' policy, launched years before the pandemic, aimed to strengthen local production in critical areas such as robotics, biotechnology and aerospace. That long-term bet helped the country insulate itself from Western export controls, maintain supply chain continuity and absorb the impact of sanctions that would have crippled less prepared economies. The US, once the champion of globalization, has been reshoring strategic manufacturing under both Democratic and Republican administrations. The second Trump administration this month doubled down on the president's 'America First' industrial policy, announcing sweeping new tariffs — including a baseline 10 percent tax on all imports and a 25 percent tariff on foreign-made cars and auto parts — in an effort to boost domestic production. These measures build on earlier initiatives like the CHIPS and Science Act and the Inflation Reduction Act, defying warnings of higher consumer prices and renewed inflationary pressures. The mantra of the architects of the Trump administration's trade policies is this: A country that cannot manufacture its own medicines, ships and semiconductors is not truly sovereign. It is scarcely surprising that the world's two largest economies — China and the US — are both moving in the same direction, albeit for different reasons. Xi Jinping's China seeks to reduce its reliance on Western technology. Donald Trump's America is using tariffs and deregulation to reclaim lost industrial ground, including rolling back climate and environmental rules to ease the path for domestic manufacturers. Both recognize that sovereignty begins with the ability to produce. It is not just about reacting to pandemics or political standoffs. The world has entered an age of disruption — be it the Red Sea attacks, an earthquake in Taiwan affecting chip production or droughts cutting hydroelectric power in manufacturing hubs. In 2024 alone, global supply chain disruptions surged by 38 percent, with extreme weather and geopolitical crises compounding the risks. The top five impacted industries — life sciences, healthcare, general manufacturing, high tech and automotive — underscore the structural, long-term nature of these vulnerabilities. Self-sufficiency also creates local jobs and stimulates innovation. Manufacturing has among the highest economic multipliers of any sector. It brings with it a chain of suppliers, logistics firms, service providers and skilled workers. That, in turn, promotes a culture of vocational training, research and development, and industrial competitiveness. Indeed, Japan's post-pandemic policy to subsidize companies relocating operations out of China was aimed not just at reducing risks, but also at reviving dormant domestic industries. The push toward self-sufficiency is also visible in the healthcare sector. The EU's Health Emergency Preparedness and Response Authority was set up in 2021 to ensure that the bloc can manufacture essential vaccines and therapeutics without relying too heavily on third countries. The logic is simple and unquestionable: in a crisis, no global supply chain can be trusted to deliver at scale and speed. Countries that want to avoid being left vulnerable to the next global shock must build the capacity to make more at home Arnab Neil Sengupta To be sure, self-sufficiency comes with trade-offs. Critics are right to point out that it is not always economically efficient. Producing domestically can be costlier than importing from low-wage countries. That could mean higher prices for consumers and greater fiscal burdens on governments that subsidize local manufacturing. The latest US tariffs, for example, are already raising concerns about inflation and supply chain bottlenecks. Another concern is that not all countries have the resource base or scale to build wide-ranging industrial ecosystems. Small, import-dependent economies may struggle to replicate the Chinese or American model. But the goal is not self-sufficiency across the board; it is to identify vulnerabilities and reduce exposure where it matters most. There is also the danger that an aggressive pursuit of domestic industry could morph into protectionism. Trade wars, retaliatory tariffs and a race to the bottom in industrial subsidies would only deepen global fragmentation, say economists. The challenge is to strike a balance between safeguarding strategic interests and remaining constructively engaged in global commerce. But these caveats do not undercut the central argument. The COVID-19 pandemic was not a one-off event; it was a stress test of the global economic model. And the system failed to deliver. The logic of maximizing efficiency at the expense of self-sufficiency has run its course, as it were. Countries that want to avoid being left vulnerable to the next global shock — whether that is a pandemic, war or natural disaster — must build the capacity to make more at home. For countries in the Global South and the Middle East, the moral of the story is: total self-reliance may be impossible to achieve, but strategic self-sufficiency is within reach. The time to start is not when the next big crisis hits but now, while there is still time to prepare.
Arab News
02-04-2025
- General
- Arab News
A better world begins with raising better children
To people born between the mid-1960s and about 1980, Gen Xers in short, the world can seem increasingly complex. We deal with political challenges, economic uncertainties and rapidly changing social norms. Often, we look for grand solutions in famous quotations, autobiographies, speeches and even podcasts, but overlook the most fundamental building block of a thriving society: our children. A better world will not be built on abstract ideals but on the values, skills and character that parents impart to the next generation. Even while caught up in the pressures of day-to-day life and the demands of the modern world, parents cannot afford to forget that early childhood experiences provide the foundation for cognitive and emotional growth. A nurturing environment all the way from infancy through adolescence to adulthood is, therefore, a necessity. The interactions a young man or woman has with their parents, caregivers, friends, teachers and the world around them in those formative years will shape their intellectual development. They could make all the difference between an individual ending up as a radical political activist or a job-creating serial entrepreneur. The media that we expose our children to also plays a crucial role. Positive media exposure can help impart lasting social-emotional skills, which in turn enable children to manage their emotions and forge healthy relationships. Conversely, exposure to heated rhetoric, misguided narratives, violence and negativity can have detrimental effects on their development, delaying intellectual maturity. Parents cannot afford to forget that early childhood experiences provide the foundation for cognitive and emotional growth Arnab Neil Sengupta Research conducted in various parts of the world consistently demonstrates the tangible benefits of parental involvement. Children with hands-on parents tend to perform better academically. It is not just about helping with homework, but about instilling a love of learning, encouraging intellectual curiosity and creating an environment where children feel empowered to explore their potential. In her book, 'My Life in Full: Work, Family and Our Future,' and in numerous interviews, Indra Nooyi has credited her upbringing for instilling discipline, hard work and gratitude, which influenced her journey from the Indian city of Chennai to becoming the US-based CEO of PepsiCo. Raised in a disciplined environment with supportive yet strict parents who balanced freedom with boundaries, Nooyi's parents encouraged her to think about how she could contribute to the world, rather than just what she wanted to be. 'I think I am a product of my family, my upbringing, the city and the country,' she said in one interview. In the Arab world, the concept of 'tarbiyah' encompasses not just education but overall upbringing — the nurturing of a child's intellectual, moral and spiritual development. It emphasizes the importance of building character, instilling values such as honesty, compassion and respect for others. Family background continues to exert a strong influence on educational outcomes. Studies have shown that socioeconomic status significantly influences a child's academic achievements, which is why excellence in medicine, law, engineering, business, mathematics and literature seems to run in some families instead of all. The Arab world, where family and community ties are deeply valued, is well placed to utilize its cultural strengths to raise better children Arnab Neil Sengupta The downside is that this phenomenon can also reinforce inequalities that can be difficult to overcome. This is not a Western, or 'First World,' problem but a global one. In many parts of the Middle East and North Africa, for instance, access to quality education remains uneven, meaning children from underprivileged backgrounds face significant barriers to success. Fortunately, early interventions have the potential to generate crucial long-term benefits. Indeed, investments in early childhood care and education are a lot more than just a social good. Such programs have been shown to improve academic performance and reduce social problems later in life. There is also a strong need to recognize the importance of neighborhood and peer influences. Children from low-income families who form friendships with wealthier friends or classmates have been found to earn significantly more as adults, underscoring the importance of diverse social interactions. The Arab world, where family and community ties are deeply valued, is well placed to utilize its cultural strengths to raise better children. It can draw on its rich traditions of support spanning generations, strong family networks and emphasis on moral education to create ideal environments for children to thrive and become role models. This is not to say Arab communities can afford not to adapt and evolve. The need to embrace modern educational techniques, promote gender equality and address the socioeconomic challenges that hinder the development of children cuts across borders and geographical boundaries. While embracing these responsibilities, every generation must demonstrate to members of the next the overarching goal of contributing to society and making a difference. This perspective should ideally shape their values, crucial decisions, conversations and actions for the rest of their lives. All things considered, creating a better world starts at home, in schools and in communities, whether in North America or North Africa. It requires a collective commitment to investing in the well-being of children, nurturing their potential and instilling in them the values that will help build a brighter future for all humankind. The children society raises today will determine, for better or worse, the world they inhabit tomorrow. - Arnab Neil Sengupta is a senior editor at Arab News. X: @arnabnsg
Arab News
23-02-2025
- Business
- Arab News
Pursuit of economic security is a double-edged sword
Like all social media storms, the one over whether couples are wise to delay having children for financial reasons is unlikely to throw up any practical solution soon. But there are enough pros and cons in this debate to keep it simmering for as long as platforms like X allow people across the world to express their opinions freely. This discussion overlaps with a much bigger question that confronts perhaps every generation: Should achieving economic security take precedence over all pursuits and activities that involve a degree of risk? As is almost always the case, there are no easy answers. What can be said with some confidence, though, is that achieving economic security is a goal that is gaining in importance with every passing generation, especially in countries that don't have reliable social safety nets. This will most likely result in young people in such countries becoming less enterprising and more risk averse, both in personal and professional choices. Yet elaborate welfare services or social security benefits do not guarantee the opposite. Editions of the Arab Youth Survey since 2021 reveal a striking paradox: 71 percent of millennials admire entrepreneurs, yet 63 percent fear failure. This tension between aspiration and anxiety highlights the Middle East and North Africa region's struggle to balance economic security with the risks necessary for societal progress. Across the Middle East, young men and women face multiple existential dilemmas — whether to chase stable salaries or launch business ventures; delay marriage for financial readiness or build families early; prioritize career continuity or reinvent themselves. These choices are not merely personal; they shape the economic and social fabrics of nations. While caution is understandable in uncertain or turbulent times, excessive risk aversion is inimical to innovation, demographic vitality, and long-term societal resilience. Fortunately, the Gulf Cooperation Council bloc's free-market economies, particularly Saudi Arabia's Vision 2030, demonstrate that calculated risk-taking — supported by policy infrastructure and mindset shifts — can transform the quest for economic security from a negative influence into a catalyst for growth. While caution is understandable in uncertain or turbulent times, excessive risk aversion is inimical to MENA innovation, demographic vitality, and long-term societal resilience. Arnab Neil Sengupta The Arab world grapples with a 30 percent youth unemployment rate, yet 78 percent of young Arabs prioritize stable salaries over entrepreneurial ventures. This contradiction is nothing but a reflection of systemic barriers: Studies show that entrepreneurs in Egypt and Tunisia are typically older, less educated and male, contrasting sharply with the unemployed youth demographic. However, exceptions in the form of successful startups in Jordan show education and mentorship can bridge this gap. The UAE's entrepreneurship ecosystem further proves that calculated risks yield dividends when supported by streamlined regulations and funding access. Recent surveys suggest more than 58 percent of Gulf youth now find entrepreneurship 'easy,' compared with 73 percent in North Africa who describe it as arduous. The lesson is clear — economic security and ambition are not mutually exclusive but interdependent variables of modern life. Rising living costs concern 56 percent of young Arabs, delaying marital plans. In the Gulf, 43 percent of couples are believed to postpone marriage for financial stability, wary of inheritance complexities and childcare expenses. However, family networks remain a cultural safety net; 68 percent of youth still value traditional family structures, even as they marry four years later than their parents' generation. Childcare subsidies that reduce daycare costs in some Gulf states demonstrate how policy can alter risk perceptions, enabling people to marry young without sacrificing quality of life. To be sure, the financial challenge of parenthood worldwide is daunting, with first-year childcare costs exceeding $12,500 in advanced economies. In the Arab world, 61 percent of mothers return to work within six months postpartum, often due to economic necessity. At the same time, sharp declines in fertility rates in Gulf countries since 1980 have stoked fears of a demographic timebomb. With a median age of 22 — eight years below the global average — delayed family formation regionwide adds to strain on societies and labor markets. Egypt alone needs 700,000 new jobs annually to absorb youth entrants, a demand that calls for greater self-reliance and creativity. To compound the problem, 52 percent of Arabs believe their economies are headed in the wrong direction, with 40 percent blaming mismanagement. Lebanon's currency collapse, which wiped out middle-class savings, has forced people to protect what little they have as institutions grow weaker. Sixty-one percent of Arabs say they do not worry about personal safety, yet economic anxiety dampens propensity for risk-taking. Guaranteed public sector jobs provide stability to households but reduce incentives for private enterprise and innovation. Physical security enables entrepreneurial experimentation, but it must be supplemented with financial safeguards like bankruptcy reforms and venture capital access. The truth is, risk-taking in any form is not necessarily followed by rewards. Up to 90 percent of startups can fail within five years even in Gulf states, and MENA entrepreneurs often earn less than wage workers. Cultural stigma around failure is all too real: Surveys show that 63 percent of Arab millennials fear entrepreneurial missteps. In Egypt, youth view entrepreneurship as a late-career pursuit best explored after accumulating capital and experience. There are possible solutions, though. Integrating entrepreneurship education into MENA curricula can make the nature of risk easier to understand. Saudi Arabia's Misk Foundation workshops and the UAE's Hub71 incubators are models of this approach, combining technical training with mentorship. Likewise, childcare subsidies and funding for small and medium-scale enterprises have demonstrated the benefits of targeted state interventions. Expanding bankruptcy protections and reducing startup fees would make entrepreneurship less risky in the Arab region. Thanks to such steps and a generational shift, 53 percent of Gulf youth now pursue entrepreneurship. As things stand, micro-entrepreneurship via social media may be the best way to overcome traditional barriers. Indeed, 15 percent of Arab startups now focus on e-commerce, leveraging the popularity and reach of platforms like Instagram, Facebook, YouTube, and TikTok. Encouragement of bold career switches and late-stage entrepreneurship can contribute to economic vibrancy without hurting innovation. Some experts believe the path forward lies in redefining economic security not as an absence of ambition but as the capacity to withstand risk. Whatever the correct course, for MENA countries to thrive and compete on the global stage, the goal of government policies should be to empower — not stifle — the ventures, families and individuals, and innovations that drive lasting progress and ensure demographic robustness. • Arnab Neil Sengupta is a senior editor at Arab News. X: @arnabnsg
Arab News
09-02-2025
- Business
- Arab News
Arab world carves out a niche in crowded AI market
It is undeniable that, as of today, the Arab region is viewed mainly as an avid consumer of technology, not an incubator or a producer. Despite young Arabs' natural affinity for smart devices and gaming and their addiction to digital platforms and social media, it is rare to come across a cool tech gadget assembled or manufactured in an Arab country. But that contradiction will, by all accounts, be resolved sooner rather than later. As the world rapidly embraces artificial intelligence, the initiatives some Arab countries are undertaking in terms of research, development and investment have the potential to transform the destiny of the region. Middle Eastern sovereign wealth funds have increased their AI investments an estimated fivefold in the past year, with Saudi Arabia and the UAE leading the regional push. This strategy aligns with the two countries' broader economic diversification efforts, which are aimed at reducing dependence on oil and gas by investing heavily in AI and other cutting-edge technologies. Indeed, both Arab Gulf states have made bold moves in recent years to position themselves as global AI leaders through a combination of strategic investments, farsighted policies and international partnerships. They are utilizing their oil wealth to build AI ecosystems through multibillion-dollar funding, the establishment of strategic ministries and tie-ups with tech giants such as Google and Microsoft. Saudi Arabia aims for AI to contribute 12 percent of its gross domestic product by 2030, while the UAE projects a $96 billion boost from AI adoption over the same period. Other Gulf nations have signaled an interest in tech investments, though specific incentive figures remain unconfirmed. In today's continuously evolving digital environment, where the average shelf life of skills is estimated to be less than five years, building a future-ready workforce is easier said than done. By equipping their science and engineering graduates with expertise in AI development, automation principles and data science methods, the Gulf countries hope to nurture a generation of entrepreneurs who can build AI-powered solutions tailored to public and private sector needs. Saudi Arabia dominates in financial scale and infrastructure, while the UAE excels in policy innovation and private sector growth. Both aim to position the region as a global tech corridor, rivaling Silicon Valley, by reducing reliance on hydrocarbons and building sustainable knowledge economies. Last November, Saudi Arabia launched Project Transcendence, a $100 billion AI initiative to build data centers, support startups and develop infrastructure. This initiative aligns seamlessly with the Kingdom's Vision 2030 strategy to diversify away from oil. The initiatives some Arab countries are undertaking have the potential to transform the destiny of the region. Arnab Neil Sengupta The country's sovereign wealth fund, the Public Investment Fund, valued at more than $900 billion, is no longer merely an investor in Uber, Zoom, Live Nation and Activision Blizzard. It has also become a driving force behind AI development through the Saudi Company for Artificial Intelligence, which focuses on large-scale AI deployments. In 2019, Saudi Arabia established the Saudi Data and AI Authority to oversee its national AI strategy. Since then, it has partnered with Google to invest up to $10 billion in Arabic-language AI models and localized applications. The PIF is in negotiations with US investors for a $40 billion AI fund, underlining its intention to be a key player in the AI sector. In 2017, the UAE became the first country in the world to appoint a minister of state for AI, Omar Sultan Al-Olama. It also created the Artificial Intelligence, Digital Economy and Remote Work Applications Office to implement its National Strategy for Artificial Intelligence 2031. This office has been collaborating with companies like Samsung and UiPath to deploy AI solutions across government services. Since 2019, the UAE has established the Mohamed bin Zayed University of Artificial Intelligence, which produced more than 300 AI research papers in 2024, and launched blockchain initiatives to strengthen its tech ecosystem. Additionally, Abu Dhabi has launched a $10 billion fund targeting AI and other sectors, with its state-backed entities G42 and Mubadala Investment Company emerging as key Gulf investors in AI-driven projects ranging from climate modeling to semiconductor development. MGX, which is backed by Mubadala and G42, has partnered in fundraising efforts for OpenAI and Anthropic, while pursuing investments in AI infrastructure and semiconductor manufacturing. MGX's investment areas range from AI core technologies to advanced applications in fields such as software, data, life sciences and robotics. By tapping into Abu Dhabi's deep financial resources and global partnerships, it aspires to become a dominant player in the AI and advanced technology landscape. These bold and strategic moves by Saudi Arabia and the UAE will result in a shift in global perceptions of the Arab region's role in tech research and development. The hope is that, as these initiatives mature, the Arab world will get an opportunity to transition from being an adopter to a developer of cutting-edge technologies. By nurturing AI talent today, Arab countries are laying the groundwork for homegrown innovators who will power tomorrow's digital economy.
