Assessment of Skill and Technology Indicators

Abstract

This chapter uses the results of the macro and firm surveys to show the interaction between the deficient educational system and the high incidence of unskilled foreign workers and their implications. The results confirm part of the second hypothesis that in the short and medium term, the Gulf countries are unable to rely on local skills and local technologies and remain heavily dependent on both foreign skills and foreign technologies at the micro level. The findings show that the major reasons for heavy dependence on foreign technologies at the micro level are low levels of both skill and technology due to the deficient educational system and the high incidence of unskilled foreign workers and their implications. The findings show that the deficient educational system – due to low quality of education – and the excessive share of unskilled foreign workers led to low skill levels, poor provision of training, serious skills mismatch, weak linkages, lack of a networks and hindered the transfer of knowledge. These factors interacted with each other and led to poor technology indicators, poor indigenous capability to build the local technology and a heavy dependence on foreign technology. These results prove part of the third hypothesis concerning the low skill and technology indicators at the micro–macro levels: the serious implications of the interaction between the causes and consequences of the deficient educational system and the high use of unskilled foreign workers. The result confirm part of the third hypothesis that the major causes of low level of local technology are low/a lack of R&D activities due to a lack of skills, transfer of knowledge, networks and collaborations between universities and industry/firms. The findings show two surprising contradicting macro–micro views. The first contradicting optimistic – pessimistic micro and macro views regarding the incidence and success of knowledge transfer/external schooling effect implies that, probably, the transfer of knowledge/the external effects of schooling is successful within firms but is unsuccessful within society at large. The second contradicting optimistic-pessimistic macro and micro views concerning the self-reliance on local skills, and the role of both technological upgrading and upskilling in reinforcing it, implies that the self-reliance strategy is probably a preferred government strategy, but is not necessarily one followed by private firms.

These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

1 Introduction

In this chapter we use the data and results of the firm and macro surveys set out in Chap. 4 to examine the third hypothesis in Chap. 1 about the serious implications of the interaction between the deficient educational system and the high incidence of unskilled foreign workers. In particular, we use the results of the macro survey to show the causes of the deficient educational system and consequences on low skill levels, poor provision of training, skills mismatch and low transfer of knowledge at the macro level. In addition, we use the results of the firm survey to illustrate that the high incidence of unskilled foreign workers leads to low skill level, poor provision of training, skills mismatch, poor technology indicators and a heavy dependence on foreign technologies. The rest of this chapter is organized as follows: Sect. 5.2 shows the causes and consequences of the deficient educational system and the high incidence of unskilled foreign workers and their implications on low skill levels, poor provision of training, skills mismatch, lack of knowledge transfer, low level of local technology and heavy dependence on foreign technology. Section 5.3 presents the micro–macro views about the upgrading of skill and technology and their potential implications. Section 5.4 provides the conclusions. The main ideas discussed in this chapter are summarized in Scheme 5.1 below.

Scheme 5.1

The causes and consequences of the deficient educational system and the excessive use of low educated foreign workers

2 Causes and Consequences of Deficient Educational System

The results of the macro survey indicate that, at the aggregate level, the official efforts to promote and upgrade the levels of local skill have been relatively successful only in some sectors.¹ In general, there has been a serious failure and shortcoming of the upskilling process, which is mainly attributed to: (1) inadequate training provision; (2) the deficient educational system; (3) misallocation of resources; and (4) failure of educated and trained workers to transfer knowledge.²

We begin our discussion by the second reason i.e. the deficient educational system, because we want to argue that both inadequate training provision and the failure of educated and trained workers to transfer knowledge are direct implications of deficient education, while the misallocation of resources is indicated as one cause of both deficient education and the poor provision of training.

2.1 Causes of Deficiency in the Educational System

With respect to the second cause, Table 5.1 shows that the deficiencies of the educational system appear in both the basic and tertiary educational systems. Major causes are the inadequate assessment and monitoring of educational needs, low quality and internal efficiency of the educational system, and inadequate planning. Other important factors are the weak linkages/networks between universities, colleges, technical and training institutes, the lack of flexibility of educational institutions, the weak incentives for enrolment in technical education and the lack of modernization and dynamism. Finally, the low involvement and spending by the private sector and the low spending in technical education are also mentioned, but are of somewhat less importance. That also holds good for the lack of infrastructure (due to inadequate investment/public spending on education) and the lack of teachers and mentors. For instance, the share of public spending on education in GDP in the UAE (1.9 %) is low compared to other Gulf countries like Saudi Arabia (9.5 %) and other advanced Asian countries such as Korea (3.6 %) and Malaysia (7.9 %) (The UNDP, 2004) – see our discussion of the supply side of educational policies in Chap. 8. Moreover, according to the twin-peaks analysis in Ziesemer (2004), which compares the distribution of public spending on education across countries, the UAE’s less than 2 % public spending on education falls below the average 4.6 % of public spending on education to improve the accumulation of human capital in 1998.

Table 5.1 The causes of deficient educational system in the UAE, 2002

We observe that, according to 82 % of the respondents to the macro survey, the low quality and efficiency of the educational system appears from the low quality at basic, secondary and tertiary education relative to international standards. Important causes are the low rates of accomplishments and motivation at higher secondary and tertiary education levels relative to international standards, but the problem is somewhat less at the basic education level. Another serious problem is the low quality of teachers and mentors,³ while less important causes include, the high pupil/teacher ratios, the low public current expenditure per pupil, the low survival rates and high drop-out and the high repetition rates.^{4 , 5}

2.2 Consequences of the Deficient Educational System

2.2.1 Mismatch Between the Output of Education and the Market Needs

We find that both the deficient basic (primary and secondary) and tertiary educational systems together lead to serious mismatch between the output of education and the market needs. In particular, about 96 % of the respondents to the macro survey reported that the mismatch is mainly attributed to deficiency of both tertiary and basic education. Moreover, the follow-up interviews with policy makers and experts show that the mismatch is attributed to the deficient educational system,⁶ the lack of coordination and planning to meet the critical skill needs and the cultural/social reasons: preference for white-collar jobs and biased against technical education and technical jobs. For instance, the deficiency of tertiary educational system is caused by the inconsistent structure: the share of students enrolled in the UAE between 1994 and 1997 in all social sciences, humanities and art faculties (73 %) was much higher than those of sciences, math and engineering (27 %). The share of students enrolled in sciences, math and engineering in the UAE is also low compared to both Korea (34 %) and China (53 %) (The UNDP, 2002, 2003) – cf. our discussion on the demand for education in Chap. 8.⁷

2.2.2 Lowering Skill Levels

From the UAE Ministry of Economy (1985, 1995), (The UAE Population Census Data (1985, 1995)) and the educational matrix for the period 1985–1995 set out in Table 5.2, we observe the low skill levels – defined by educational level of total population. The share of low educated (71–66 %) is much higher than that of high educated (10–12 %) in total population. That also indicates a minimal skill upgrading, defined by the relative rise in the share of high educated population and the relative decline of the share of low educated population during the period 1985–1995.⁸ In addition, the UAE Ministry of Planning Statistical data (1995–1997) on the distribution of economically active population by occupational classification (1985–1995) shows the low skill level defined by occupational levels, for instance, the share of unskilled population (86–81 %) is much higher than that of high skilled population (13–18 %). That also implies a slight improvement in skill upgrading defined by the increasing share of high skilled and a falling share of unskilled during the period (1985–1995). Furthermore, as we explain below, the low skill levels at the macro level is consistent with that at the micro level.

Table 5.2 The UAE educational matrix: the distribution of population by educational level (1985–1995)

2.2.3 Hampering Transfer of Knowledge

Our results in Table 5.3 show that the low quality of education hindered the easy transfer of knowledge and external schooling effects. According to the macro survey, only 42 % of the respondent policy makers and experts reported that the incidence of knowledge transfer/external schooling effect is successful, while around 58 % reported that the transfer of knowledge/the external schooling effects are constrained by several factors. The major important factors include: the low quality of education, the low quality of training, prevailing conditions in the firm do not encourage external effects, failure of skilled workers to deliver knowledge to unskilled workers and failure of unskilled workers to acquire knowledge from skilled workers.⁹

Table 5.3 The factors constrained the transfer of knowledge/external schooling effect in the UAE, 2002

In strong contrast to this view, the results of the firm survey show that, at the micro/firm level, the incidence of knowledge transfer/external schooling effect is successful among 95 % of the respondents firms. It is only unsuccessful within two firms because of the following: the low quality of education, the low quality of training, the prevailing conditions in the firm do not encourage the external effects and the failure of unskilled workers to acquire knowledge from skilled workers.¹⁰

This contradicting optimistic-pessimistic views at the micro and macro levels regarding the incidence and success of knowledge transfer/external schooling effect implies that the transfer of knowledge/the external schooling effects is probably successful within firms but unsuccessful between firms and within society at large. This is consistent with our observations from the follow-up interviews that the transfer of knowledge is hindered by both the low quality of education and the lack of cooperation with university sector due to inadequate awareness and lack of social partnership between public sector, private sector, university sector and society. The weak linkages and lack of networks between universities, colleges, technical and training institutes and the productive sectors is mentioned by 79 % of the respondents to the macro survey as factor that constrains the efficiency of educational system – it probably also constrains the transfer of knowledge. An additional factor is that the transfer of knowledge within society at large is probably hindered by the imbalanced structure of population and labour market. Mainly due to the excessive share of foreign workers with different nationalities, cultures, languages, etc. that probably hindered their sufficient integration and interaction with local workers and local population.¹¹ This is probably also due to a lack of incentives at the aggregate level.¹²

Finally, the macro survey indicates that the contribution of both educated and trained population to promote the local skills is constrained by several causes. Major causes are the lack of interaction to market needs (mismatch) and the lack of information on educational and training needs in the productive sectors and their demand for graduate students.¹³ Other important causes are: risk aversion, i.e. the preference of more certain short term returns to available jobs than long term skill investments; the uncertainties about future skill needs; the lack of a system of certification of skilled acquired; and inadequate incentives for trainers.¹⁴ Relatively less important causes include the uncertainties about the future value of investment in education and training and the high costs to finance education and training.¹⁵ These factors probably also contribute to hinder the transfer of knowledge within society at large.

2.2.4 Poor Provision of Training

Both the deficient educational system and the excess supply of low skilled foreign workers lead to a low skill level and hinder the provision of training. Table 5.4 shows that both the policy makers and experts (officials) and firm managers mentioned the low educational qualifications of workers among the important factors constraining the provision of training. Other important factors are the lack of appreciation/information about training, inadequate assessment and planning for training programmes and the mismatch problem. Moreover, the results of the firm survey illustrate that the low provision of training appears from the following: (1) The lack of an in house training unit – only 23 % of the respondent firms have an in house training unit; (2) The complete absence of public financial support: for instance, none of the respondent firms received any government subsidies to support training provision; (3) The selective training provision: in the year 2001, the priority for training among the respondent firms was mostly given to production workers, production engineering staff, management staff and services workers¹⁶; (4) The limited type of training: most of training provision is focused on the job training, and on the job and off the job combined, which are preferred by 87 % and 91 % of the respondent firms respectively. The other types of training such as: off the job within the firm (training centre), off the job outside the firm (outside the country) and (specialist training centre inside the country) are very limited.¹⁷ (5) The limited sources of information about training opportunities, as most of the information about training opportunities is provided by private trainers (local and foreign companies) and the chambers of commerce. Few firms find information from public educational institutions/universities, other firms working in the same sector, and government and semi government units.,^{18 , 19}

Table 5.4 The factors constrained the provision of training in the UAE, 2002

2.3 Consequences of the Low Educational Qualifications of Foreign Workers at the Micro/Firm Level

In Chap. 2 we explained that one well-known fact about the Gulf countries is the high share of foreign workers in total employment. In this section we show that next to the consequences of the deficient educational system at the macro level, the high incidence of unskilled foreign workers also causes several serious implications at the micro/firm level.

2.3.1 Low Skill Level and Skills Mismatch at the Micro/Firm Level

From the demand perspective, the results of the firm survey can be used to argue that firm demand for low skilled workers leads to an excessive share of low skilled workers.²⁰ On the other hand, from the supply perspective, our findings from the firm survey show that the excessive share of low skilled foreign workers has direct implications in lowering skill levels at the micro/firm level. For instance, Table 5.5 below shows that across firms the average percentage share of low skilled workers (71 % and 75 %) is much higher than that of high-skilled workers (29 % and 25 %) defined by both educational and occupational classifications respectively. Moreover, Tables 5.4 and 5.5 show that the poor educational qualifications of foreign workers lead to poor provision of training – see our discussion above – and a serious skills mismatch across firms, as we will explain in detail in the next chapter.²¹

Table 5.5 Main technology and skill indicators defined by firm size and industry in the UAE, 2002

2.3.2 Weak Technology Indicators

From the demand perspective, the results of the firm survey can be used to argue that weak technology indicators lead firms to demand and rely heavily on low skilled workers. On the other hand, from the supply perspective, the excessive share of unskilled foreign workers leads to weak technology input–output indicators across firms. From Table 5.5 above, we observe that a weak R&D indicator appears from the following: (a) The limited R&D activities/efforts performed continuously or occasionally amongst only 37 % of all the respondents firms; (b) The limited R&D activities and expenditure particularly devoted/aimed at improving firm product and to produce a new product; (c) The low R&D expenditures and R&D expenditures as percentage of total output expenditures. For instance, amongst all the respondent firms, average R&D expenditure was around 0.9 million Dirhams,²² while the average R&D expenditures as a percentage of total output (sales value) amongst all the respondents firms accounted for only 0.01 %; (d) The low number of both full time and part time R&D employees. For instance, a large majority (87.5 %) of the respondents firms with R&D activities have a low number (1–5) of full time research employees. Only two of the large chemical firms have more than 11 full and part-time research employees and only one large metal firm has 6–10 part time research employees. For instance, the contribution of research units in adapting the imported technologies is constrained by a shortage of skilled and qualified workers amongst 86 %, 82 %, 100 %, 80 % and 89 % of all firms, chemical, metal, medium and large firms respectively, see Table 5.8 below.²³ Moreover, the follow- up interviews with the officials and firms managers revealed that R&D activities are constrained by several factors such as high costs and low public and private spending, lack of information systems, and the absence of a R&D culture due to inadequate awareness and concern. Additional constraints relate to the poor coordination between the institutions engaging in R&D activities, either due to the absence of explicit government policy or the ineffective role of a central body (e.g. government) to coordinate and promote R&D efforts and motivate collaborative research efforts between the firms sector and university sector. In addition to weak network systems, R&D efforts, in particular, are limited across firms because of weak contact and collaboration with the university sector, this is probably attributable to the fact that the university sector is lacking resources or concern and interest to conduct joint research with the firms sector.²⁴

Moreover, Table 5.5 above shows the weak technology output indicator as measured by patent applications. For instance, in the year 2001, only 13 % of all respondent firms applied for a patent; the low degree of patenting may be attributable to low R&D efforts.

In addition, a lack of R&D efforts may hinder innovative activities across firms. The increasing uses of technology has encouraged the incidence of product and process innovations, in particular, the incidence of incremental product innovation, namely, improvement of product quality amongst 88 % of all respondent firms. It has also encouraged the incidence of new process, new method of production and new combination of old output and new product.²⁵ But it has only slight effect on reducing total costs and increasing total sales and total profits – see Table 5.6 below.²⁶

Table 5.6 The effects of increasing use of technology product and process innovations across firms in the UAE, 1999–2001

2.3.3 Dependence on Foreign Technology

From the demand perspective, the results of the firm survey can be used to argue that the dependency on foreign technology leads firms to demand and rely heavily on low skilled workers. On the other hand, from the supply perspective, the deficient educational and training system and a high supply of low skilled foreign workers lead to low skill levels, lack of knowledge transfer and low capability to build and promote the local technology. The results of the firm survey show that this condition leads to weak technology indicators and dependence on imported technology that appears from the following: (1) The high dependence on the imported equipment, machines and techniques among 90 % of the respondent firms. (2) The high percentage value of capital equipment to total capital equipment that has been built by foreign companies (70 %) among the respondent firms. (3) The considerable percentage value of imported capital equipment to total capital (40 %) among the respondent firms in the year 2001. (4) The short run plan for 46 % of the respondent firms is based/depends on imported technology.²⁷ The main reasons for the dependence on foreign technology are the lack of local technology from local suppliers, better price and better quality of foreign technology in that order.²⁸ Due to the high dependency on imported technologies, it is not surprising that the level of technology used is similar to international standards amongst all the respondent firms. However, a high degree of automation through the use of sophisticated and advanced technology is limited only within 40 % of all the respondent firms- see Table 5.5 above. The degree of automation/sophisticated use of advanced technologies is determined by both firm size and industry/activity.²⁹

The dependence on foreign technologies also appears from the reported information on the transfer of foreign technology that is made through different channels. For instance, Table 5.7 below illustrates that strategic alliances, hiring foreign skills/technologically advanced workers/consultants and joint ventures are more common channels of technology transfer, while FDI and technology licensing are less preferred channels. The transfer of technology, mainly the transfer of technologically advanced workers/consultants, has induced important effects in enhancing firm production but has had only slight effects in enhancing the capacity to develop the local technologies.³⁰

Table 5.7 The channels of technology transfer and their effects on firm production and development of local technology across firms in the UAE, 2002

In the firm survey questionnaire the question on the channels of technology transfer allows for multiple answers, assuming that firms may choose more than one channel to transfer technology.³¹ Our results indicate that chemical firms are less interested in transferring technologies through formal licenses. These may not be often requested, probably because of more liberalized and open market policies that led to considerable presence of foreign capital investment and allowed for foreign and mixed ownership – cf. Table 6.1 Chap. 6 below.³²

These findings on weak technology indicators and dependence on foreign technologies at the micro level are consistent with those at the macro level and the interaction of these findings lead to a large technological gap – see also our earlier discussion in Chap. 2 above. Our results in this chapter and Chap. 2 above verify the second hypothesis in Scheme 1.1 in Chap. 1 above that, in the short and medium term, the Gulf countries are unable to rely on local technologies and remain heavily dependent on foreign technologies.

Our findings from the firm survey show that both skill and technology indicators, product and process innovations, the channels of technology transfer and their respective effects vary enormously across firms and seem determined by both firm size and industry level. For instance, Table 5.5 above shows that skill levels, technology input–output indicators (R&D and patent), the provision of training (upskilling), the dependence on imported technology, the degree of automation and the use of sophisticated and advanced technology vary across firms and increase with firm size and industry level. Moreover, the use of ICT and provision of ICT training increase with firm size, while the transfer of knowledge/external effects of schooling increase with industry level.

2.3.4 Shortage of Skilled Workers and Weak Adaptation of Imported Technologies

From the demand perspective, the results of the firm survey can be used to argue that low supply of skilled workers lead firms to demand and rely heavily on low skilled workers. On the other hand, from the supply perspective, our findings show that the excessive share (supply) of low skilled foreign workers and low supply of high skilled workers lead to some shortage of skilled workers, since firms are experiencing increasing demand for skilled workers, see Fig. 5.1 below. We find that the increasing demand for high skilled workers is related to increasing use of new technologies, which has not only raised the demand for these workers in the past few years, but has also encouraged firms to predict a future/long run increase in this demand. For instance, Fig. 5.1 identifies and compares past and future trends of the demand for skilled workers, which vary enormously across firms according to size and industry level. According to 61 % of the respondent firms, the interpretations of the predicted long run increase in the demand for skilled workers are related to expansions of production, project plans, increasing R&D activities, implementation of new processes, output technologies, advanced control systems and purchases of new machines and equipment. Additional reasons for the rising demand are the increasing adoption of international standards and enhancement of production, product diversification, market share, turnover, sales, shortage of manpower, competition, increasing motivation to reduce costs, increasing production, achieving high standard precision work and improving productivity and quality of work and demand for more specialized skills in IT. On the other hand, the major explanations for the predicted long run stability in the demand for skilled workers across 39 % of all respondent firms is related to the stability in quantity of production, sales, business, demand and market; as well as to the lack of a plan for critical expansion of product operations, potential stability in substituting and replacing the outgoing skilled worker in any field, the use of automated technology and the dependence on the policy of parent company-MNC and its affiliated research group.

Fig. 5.1

Past and future trends (increase or stability) in the demand for skilled workers across firms (Source: Firm Survey (2002))

We observe that the expected future rise in the demand for high skilled workers across firms is reasonable since increased use of skilled workers in the past has had significant effects. In particular, there have been improvements in firm production, the level of competitiveness in the local market, faster adaptation of foreign technology, utilization of technology and product quality.³³ On the other hand, our results from the firm survey indicate that the relative shortage of skilled workers amongst 32 % of the respondent firms leads to serious delay, slight abolishment/cancellation of project implementation and constrains the R&D units in adapting imported technologies – see Table 5.8 below.³⁴

Table 5.8 The shortage of skilled workers and effects across firms in the UAE, (1999–2001)

Our analysis of the shortage in skilled workers is based on the economic interpretation and definition of ‘skilled shortage’ as scarcity or lack of sufficient skilled workers needed, mainly because the supply of skills (as shaped by systems of education and training) has not responded fully to the rising demand across firms. However, managers may have a different interpretation and understand this as a lack of sufficient skilled workers in conjunction with wages constraints, due to limitations on their ability to pay higher wages for the high skilled workers they demand. This may constitute a limitation and appropriate caution should be exercised in interpreting our results with respect to skilled shortage, mainly because the firms answered the questionnaires do not really make it very clear how they have perceived the shortage of skilled workers and their further consequences.

3 The Impacts of Skill Upgrading and Technological Upgrading: Micro–Macro Views

In view of the above findings and our results in Chap. 2 above on poor skill and technology indicators, it is therefore essential to recommend further incentives to upgrade both skill and technology levels at both micro and macro levels. From that perspective, our findings in Table 5.9 below show that at the micro level the upskilling plan amongst 55 % of the respondent firms induced significant effect in enhancing firm production and facilitating the effective utilization and upgrading of technologies. But it has only a slight effect on restructuring the imbalances of labour market via hiring more skilled national workers, upskilling national workers in the firm, reducing future demand for foreign workers and reinforcing the employment of national skills. Moreover, technological upgrading induced significant effects in enhancing firm production, raising skill levels and reinforcing firm ability to promote the local technology, but it has only a slight effect on both upskilling and hiring more skilled national workers.

Table 5.9 The effect of upskilling plan and technological upgrading across firms in the UAE, 2002: micro view

At the micro level, Fig. 5.2 below compares the plans of public and private firms to depend on national skills. It predicts a great disparity between private and public firms that appears from the potential strong commitment to rely on national skills in the short, medium and long run plans in the large public firm. While our results from the firm survey and Fig. 5.2 below show that managers of private firms have a somewhat pessimistic view regarding the self-reliance on local skills and the potential role of both technological upgrading and upskilling in reinforcing the self- reliance strategy. For instance only 19 % of the respondent firms provide special training programmes for upskilling national workers and only 15 % of the respondent firms have plans to rely on national skilled workers even in restricted fields. Amongst all the respondent private firms the plan for depending on the national skills over the long run will not exceed 20 % of the total skilled workers.

Fig. 5.2

Short, medium and long run plans of self- reliance on national skills across public and private firms (Source: Firm Survey (2002))

In strong contrast to the above view, the macro survey shows that the respondent policy makers and experts are highly optimistic regarding the interactions between technological upgrading and upskilling and their roles in reinforcing economic growth, self-reliance on local skills and restructuring the labour market at the aggregate/macro level. For instance, Table 5.10 below shows that all the respondent policy makers and experts predict strong linkages between both upgrading of technology and upskilling of labour force to reinforce each other and to have a similar effect on reinforcing the self-reliance strategy and reducing unemployment rate. The official view predicts that the effect of upskilling is stronger than the effect of technological upgrading in both reinforcing economic growth and solving the imbalances in the labour market and so reducing the future demand for foreign skilled workers.

Table 5.10 The effects of technological upgrading, skill upgrading at the aggregate level in the UAE, 2002: macro view

This contradicting optimistic-pessimistic views at the macro and micro levels, regarding the self-reliance on local skills and the role of both technology and upskilling in reinforcing it, imply that the self-reliance strategy is probably a preferred government strategy, but not necessarily favoured by firms. This is consistent with the observation that 96 % of the respondent firms are private firms dominated by foreign workers and probably lack the incentives/interests to rely on national workers, mainly due to low skill and high salary requirements – see also our earlier discussion in Chap. 2 above. The respondent firms, which are costs minimizers/profits maximizers, are probably willing to continue hiring cheap readymade skilled foreign workers instead of hiring, training and upskilling expensive national workers.

4 Conclusions

This chapter uses the results of the macro and firm surveys to show the interaction between the deficient educational system and the high incidence of unskilled foreign workers and their implications.

Our results confirm a part of the second hypothesis in Scheme 1.1 Chap. 1 above: that in the short and medium term, the Gulf countries are unable to rely on local skills and local technologies and remain heavily dependent on both foreign skills and foreign technologies at the micro level. The major reasons are low levels of both skill and technology due to the deficient educational system and the high incidence of unskilled foreign workers and their implications.

On the one hand, from the demand perspective, the results of the firm survey can be used to argue that firm demand for low skilled workers, weak technology indicators and dependency on foreign technology led firms to demand and rely heavily on low skilled workers. On the other hand, from the supply perspective, our findings in Sect. 5.2 show that the deficient educational system – due to low quality of education – and the excessive share of unskilled foreign workers led to low skill levels, poor provision of training, serious skills mismatch, weak linkages, lack of a networks and hindered the transfer of knowledge. These factors interacted with each other and led to poor technology indicators, poor indigenous capability to build the local technology and a heavy dependence on foreign technology. These results prove hypotheses 3.a and 3.b in Scheme 1.1 in Chap. 1 above concerning the low skill and technology indicators at the micro–macro levels: the serious implications of the interaction between the causes and consequences of the deficient educational system and the high use of unskilled foreign workers. We confirm hypothesis 3.c. in Scheme 1.1 in Chap. 1 above that the major causes of low level of local technology are low/a lack of R&D activities due to a lack of skills, transfer of knowledge, networks and collaborations between universities and industry/firms.

Our findings show two surprising contradicting macro–micro views. The first contradicting optimistic – pessimistic micro and macro views regarding the incidence and success of knowledge transfer/external schooling effect implies that, probably, the transfer of knowledge/the external effects of schooling is successful within firms but is unsuccessful within society at large. This is probably because the transfer of knowledge is hindered by: low quality of education; the weak linkages and lack of networks between universities, colleges, technical and training institutes and the productive sectors; and the imbalanced structure of population and labour market. We show that the major cause behind the low transfer of knowledge/external schooling effect is low educational qualifications, and deficient educational and training systems. The major consequences are the lack of networks and collaboration between universities and firms, low R&D efforts and low technology indicators. These results prove part of the sixth hypothesis in Scheme 1.1 in Chap. 1 above with respect to the failure and the factors hindering the transfer of knowledge/external schooling effect at the macro level. But, on the other hand, our findings surprisingly reject a part of the sixth hypothesis in Scheme 1.1 in Chap. 1 above concerning the failure of the transfer of knowledge/external schooling effect at the micro level.

Our observation of the second contradicting optimistic-pessimistic macro and micro views concerning the self-reliance on local skills, and the role of both technological upgrading and upskilling in reinforcing it, implies that the self-reliance strategy is probably a preferred government strategy, but is not necessarily one followed by private firms. Driven by profit-maximizing considerations, private firms are likely to continue in hiring cheap readymade skilled foreign workers rather than hiring, training and upskilling expensive national workers. From these observations, our results reject hypothesis 8.c. in Scheme 1.1 in Chap. 1 above about the consistency of upskilling and transfer of knowledge at the macro–micro levels.