Productivity is an essential element of economic growth. In economic theory, productivity refers to the ability to have higher output while using the same level of input. The benefits of this ability are obvious. Economic players incur lower costs but produce more. Because of this, they can have higher profit margins, which they can utilize to achieve other economic goals. The benefits of enhanced productivity spill over to living standards, competitive advantage, increased innovation, lower inflation rates, and more job opportunities. It creates a win-win situation for all economic players since none loses value. Given these benefits, declining productivity in the UAE is a major cause for concern. It means that the country loses the benefits above, disadvantaging economic participants. Investment in research and development and workforce training can enhance productivity in the country.
Investment in Research and Development
Research and development is critical for contemporary economies. It enables them to identify new technologies and processes that are less time-consuming as well as non-resource intensive (Božić, 2020). At the firm level, stakeholders can identify process-specific improvements that translate into value. In a study evaluating the relationship between research and development and national output, Tekeoğlu et al. (2019) demonstrate that higher investments in research translate to increased output. This is demonstrated graphically in Figure 1 below:
Source: https://www.avekon.org/papers/2303.pdf
At the moment, the AUE ranks 59th in global research productivity. It contributes only 0.28% of global research, underscoring the need for increased effort (Ajayan et al., 2022). One of the reasons this has yet to be implemented could be the reluctance to shift from an oil-based to a knowledge-driven economy. So far, growth in the country has come from the oil industries. Transitioning to a new model will take time, hence the slow adoption of research and development.
Workforce Training
Training enhances employee skills and enables workers to tackle emerging problems with dexterity. It contributes to organizational commitment and better job performance, hence higher levels of productivity (Ruhomally, 2021). Policy changes designed to enhance workforce training and education will improve productivity in the UAE. They should include investments in education infrastructure, vocational training, and initiatives to upskill the existing workforce to meet the demands of a rapidly evolving global economy (Yimam, 2022). Given the broadness of the UAE economy, the framework shown in Figure 2 below can guide workforce training.
Source: https://www.tandfonline.com/doi/full/10.1080/2331186X.2022.2107301
This framework offers a structured approach to workforce training and will allow policymakers to customize proposed initiatives. A possible reason this has not happened is differing priorities. Decision-makers might prioritize measures that yield short-term results. Workforce training is a long-term strategy, and this mismatch might encourage leaders to ignore it in favor of measures that yield immediate results.
Summary
Productivity in the UAE has declined notably over the past few years. This means that the country forfeits benefits like better living standards, competitive advantage, increased innovation, lower inflation rates, and more job opportunities. For an economy that seeks to compete globally, this is not sustainable and must be addressed urgently. This discussion contends that investment in research and development and workforce training can enhance productivity in the country. Research and development allow players in different sectors to identify efficient technologies and processes that save time and increase profitability. Workforce training equips employees with relevant skills, and they can easily solve contemporary challenges.
References
Ajayan, S., Balasubramanian, S., & Ramachandran, S. (2022). Benchmarking the research performance of United Arab Emirates with Gulf Cooperation Council countries – A bibliometric study. Frontiers in Education, 7. https://doi.org/10.3389/feduc.2022.792548
Božić, L. (2020). Sources of business growth at different levels of innovativeness: Case of firms in EU countries. Managing Global Transitions, 18(2), 127–145. https://doi.org/10.26493/1854-6935.18.127-145
Ruhomally, F. (2021, August 18). What are the impacts of training on employees’ productivity? LinkedIn. https://www.linkedin.com/pulse/what-impacts-training-employees-productivity-fatwimah-ruhomally/
Tekeoğlu, M., Algan, N., İşcan, E., & Oktay, D. S. (2019). The impact of research and development on productivity: Case of Turkey. International Conference on Eurasian Economies. https://www.avekon.org/papers/2303.pdf
Yimam, M. H. (2022). Impact of training on employee performance: A case study of Bahir Dar University, Ethiopia. Cogent Education, 9(1). https://www.tandfonline.com/doi/full/10.1080/2331186X.2022.2107301
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