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Intellectual Capital Development in the United Arab Emirates Report (Assessment)

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Updated: May 8th, 2022

Executive Summary

The Intellectual Capital (IC) of an organisation entails to all elements of human capital, relationship capital, and organisational capital. Accountants and economists refer to IC as intangible assets. Elements of IC offer a competitive advantage to organisations because they mark differences in performances among firms in the same industry. They help companies control both internal and external processes, relations, procedures, and policies. Therefore, it is important for both organisations and countries to take interests in accounting for their IC development.

The findings show that UAE has not accounted for its IC development especially relationship and organisational capitals. As a result, the country has relied on foreign expertise for its national development. However, scholars and professionals warn that this strategy cannot sustain UAE development. In the recent past, the government has realised the need to develop and account for its IC. UAE has initiated changes in its poor education system that barely meets knowledge and skills required in driving a knowledge-based economy. This shall act as a way of changing IC development in the country. However, UAE is the best country in the Arab region in terms of IC development. The situation in UAE IC development requires both public and private sectors to take part in developing IC. Thus, the country must liaise with professional bodies in order to develop its IC.

Past studies have indicated that organisations, which practice IC management, have realised positive productions and competitive advantage. This shows the importance of intangible assets in improving market share, profit, competition, attitude, relationship, revenue, and efficiency among others.

The research has identified human capital development has the driving force behind other elements of IC. Thus, the paper recommends that UAE must improve on its education sector in order to create skills and knowledge needed in the knowledge-based economy. UAE must also develop systems of keeping its IC development records because data availability is a major problem in this area. The country must also balance its approaches to IC development. Currently, it only focuses on human capital development. However, UAE has achieved growth due to relationships it builds with its partners.

Introduction

The report looks at IC development in the UAE. It shows the development of the concept of IC for competitive advantage in organisations. In addition, the paper also highlights that IC development has become a matter of national interest in a global economy. The research also identifies theories that attempt to define the place of intangible assets in organisations. It shows how organisations or countries can use IC for creating competitive advantage.

The research uses UAE as a case study in order to understand developments in IC. The findings indicate that UAE has not developed its IC for competitive advantage. In fact, there is no report on IC development for the entire Arab region. However, many studies tend to concentrate on human capital develop leaving other two branches of IC uncovered. The research presents recommendations on how UAE can develop its IC.

Findings

Definition

The concept of Intellectual Capital refers to “all resources that determine the value of an organisation and the competitiveness of an enterprise” (Sullivan 238). It is difficult for a company to translate its intellectual capital (IC) into financial terms. IC is not like other organisational assets, which have specific criteria to discern their values. In this regard, some scholars consider IC as non-financial assets of an organisation. Thus, IC contributes to an organisation in many ways.

The field of IC has gained attention in the last decade as scholars and organisations look for ways of capturing and managing IC. However, the concept of IC is an emerging field with limited research. Some studies have investigated where IC fits in an organisation, its branches, and how organisations and countries can capture and manage it (Sullivan 240).

IC may include various knowledge and skills, which organisations have developed over time when making or providing products and services. In addition, IC may also entail information about organisational history, processes, customers, and any other relevant information competitors may find useful. This implies that IC goes beyond knowledge of an organisation as it also includes industry knowledge. This explains why we have to understand the role of IC in defining competition, profit, attitude, efficiency, effectiveness, and market share among other factors.

Elements of Intellectual Capital

When looking at the concept of IC, three elements come into focus. These include relationship capital, human capital, and organisational capital. Relationship capital refers to all areas of relationships, which an organisation maintains with other external parties such as partners, vendors, suppliers, and customers among others. Human capital reflects competence and knowledge, which a firm’s employees possess. Finally, organisational capital reflects the collective expertise of an organisation. This is beyond an individual’s capabilities. It may include valuable aspects like intellectual property, company’s procedures and policies, and information systems of an organisation (Sullivan 238).

Therefore, it is important to understand components of IC in order to relate bodies of knowledge concerning several aspects of an organisation.

Relevance of IC development in organisations

Intellectual Capital development is significant to firms because of ever-increasing demands for qualified employees, enhancing customers’ values, and improving interests on technology and learning in the knowledge-based economy.

Workers have acquired extensive knowledge in their areas of expertise. However, challenges facing organisations are how to capture and share the knowledge because most workers are unwilling to share their knowledge. Hence, firms have restricted ways of capturing, storing, and transferring knowledge to other employees. Therefore, organisations face risks of losing knowledge workers during workers’ mobility.

Intellectual Capital development can aid organisations acquire and store information about workers’ key knowledge, experiences, skills, main job areas, training, performance review, developing successive system and creating effective leadership and management programmes. Therefore, organisations must make sure that there are successful knowledge management practices for capturing and using employees’ knowledge to improve and safeguard IC development.

History of IC Development

IC has existed since human history, but its current insight has developed significantly. The current IC development focuses on enhancing the value of intangible assets in organisations since 1980s. The approach concentrates on contemporary IC against traditional elements of production such as tangible assets and financial capital. The difference in value among organisations triggered the development of IC. Organisations and scholars wanted to understand factors, which were responsible for “difference levels of value among organisations with the same financial, physical, and labour resources” (Sullivan 240). This search led to the concept of IC in organisations. It became clear as new firms with limited financial capital and physical labour soon took over the market. The issues that emerged were how to find out valuations for new firms and manage them in rapidly changing environments.

In 1980s, Hiroyulti Itami of Japan focused on the invisible assets of organisations. This was a significant step towards understanding IC development. In 1986, David Teece highlighted the importance of resource-based organisations. According to Teece, companies have “different or unique resources, capabilities, and endowments” (Sullivan 241). Organisations could not add or discard these resources. Therefore, people referred to them as sticky. They were intellectual resources of an organisation. Teece shows that acquisitions of skills and knowledge management are fundamental, strategic issues in most organisations.

Karl Sveiby of Sweden also made major contributions to IC development in the 1980s. He realised that non-manufacturing firms had little to do with tangible assets. As a result, Sveiby noted that these firms relied on invisible knowledge-based assets. Further, he pointed out that people in service industries concentrated on networking, image, and other people. Sveiby is responsible for the development of knowledge capital and its expression in organisations. Sveiby maintains that knowledge can only be useful when organisations find ways of sharing it.

Such studies demonstrate that knowledge is responsible for differences in organisations. It is applicable in all areas of an organisation like managerial duties, sales, research and development, operation, and other areas.

Other scholars and proponents of IC developments include Baruch Lev and Patrick Sullivan. Lev aims at explaining the correlation between intangible assets and values as applicable in the capital markets. Sullivan’s studies have formed the basis of modern IC development in organisations. He aims to encourage organisations and individuals to share knowledge, undertake joint decisions, and create methods and systems that deliver results.

Application of IC for value creation and extraction

Organisations involved in IC development have used IC for value creation. On the other hand, those in accounting have used IC to understand the prerequisite for value extraction. Value creation and extraction are the focus of successful organisations. Thus, IC has become necessary for creating values to stakeholders.

Thomas Stewart noted that IC was replacing well-established sources of wealth like land, capital, and labour. The use of IC worked effectively for the Swedish insurance company, Skandia. Skandia positioned itself as a company focused on managing IC. Stewart also demonstrated how organisations could use untapped and unmapped knowledge as a competitive tool. Skandia continued to influence the world with the idea of IC and its application in modern firms.

In 1994, policy researchers, firms, and academia met in California in order to define the course of IC and its application. The company pioneered the development of a structure for “presenting human, structural, and other components of IC” (Sullivan 244). Skandia IC model concentrated on five distinct areas like customers, process, financial, and renewal and development, and human development. The main aim of Skandia model was to develop a sustainable performance-based value. The company referred to this model as navigator. The navigator enabled the company to change IC into financial capital by understanding the company’s abilities. It provided systematic ways of accounting and reporting of results.

Another company that also pioneered IC was Dow Chemical. The company has a director of intellectual assets. Dow chemical used its IC to change its “research and development efforts and patent inventory as it developed technology and tools to optimize strategic knowledge for value perspectives” (Sullivan 248).

Since then, other organisations have developed IC and applied it in different areas for value creation and extraction for stakeholders.

Theories of IC development

The concept of IC is still developing. However, academic works have proposed various approaches to discern the role of intangible investments in organisations (Ducharme 3). Some of these theories include human capital theory, technical change theory, intellectual investment, and new growth theories.

These theories originate from accounting and economics perspectives. They have developed beyond individuals and organisations to nations. This happens because of the need to measure and understand knowledge asset as a critical factor of success in the future (Bontis 14). Thus, governments need to understand how to manage intangible wealth of their nations because such assets have become determining factors of economic success. The World Bank shows that developing IC is critical in enhancing people’s lives in many ways.

Intellectual capital of a country accounts for “values within individuals, enterprises, institutions, communities and regions” (Bontis 14). Bontis developed a mapping system to show IC of a country.

Intellectual capital of nations (Bontis, 2004)
Fig. 1: Intellectual capital of nations (Bontis, 2004)

Human capital theory

Studies have recognised developments in human intellectual as a necessary factor in economic development and production (Ducharme 3). They also argue that human capital has a complementary role in other areas of IC development. According to this theory, employees are investors. This implies that people invest in their education in order to achieve higher incomes later. This theory relates human capital to demands in labour with regard to education and training as its main features (Ducharme 4). In this sense, human capital becomes an asset just like other factors of production like financial and physical capitals.

Studies have demonstrated the importance of human resources in increasing productivity in organisations (Ducharme 4). Such intangible investments also have externalities that benefit society. This explains why countries have started accounting for their IC development.

Education plays an important role in developing human capital. It is also responsible for acquisition and transmission of knowledge. In this sense, the UN and the World Bank have developed indicators that help countries understand their human development.

Knowledge-driven organisations strive to capture, store, and transfer knowledge among their employees. This enables such companies to achieve higher levels of competitiveness. This shows that competitive abilities of organisations are in their intellectual capital. Thus, it must utilise its own knowledge base for competitive advantage.

Ducharme reviewed several studies and established positive links between intellectual capital and positive production. Thus, human capital theory highlights that IC has many roles in an organisation through provisions of skills to complement physical capital. Further, it provides knowledge that is necessary for innovation to spur economic growth. This is the way human capital “contributes to the concept of intangible assets” (Ducharme 7). Other studies have also shown that innovations have changed the demand for human capital. The focus has been on well-educated employees because of advantages they provide when dealing with new technologies. Technological changes have also created many white-collar employees who need relevant skills to remain in organisations. Such studies have also indicated that organisations must continue to train their workers even during worker mobility. They also demonstrate that training is mandatory for organisations willing to develop their knowledge base.

Technical change theory

Studies have also concentrated on technical change or innovation and its impacts on intangible investments. They show that such changes result from economic agents reacting to market incentives. In this sense, countries and organisations have realised the value of innovation as a key element of competitive strategy. As a result, most countries have formulated “national science and economic policies to enhance innovation for global competitiveness and economic development” (Ducharme 7).

Technical changes have influenced economic growth in organisations. Technological changes in organisations have focused on research and development (R&D) areas. Studies have attempted to link R&D with other factors of production like labour, physical capital, and inputs. They established that technological innovation focused on wider areas other than R&D activities. Organisations have noticed that innovative results consist of cumulative body of knowledge acquired over time. This has created a learning process in most organisations as they strive to capture, store and transfer such knowledge. The ability to learn defines competitiveness of a firm.

Innovation extends to others areas like protecting information and specific knowledge of an organisation (public and proprietary). At the same time, it has created intellectual property rights, joint ventures, strategic alliances, trademarks, and mass production. These factors have contributed to intangible investments of organisations. This is how technical changes in firms influence IC development.

Intellectual investment

This theory posits that the efficiency of a firm depends on “the mobilisation of resources including the general knowledge and culture of the firm to appropriate technology and market opportunities” (Ducharme 6). Intellectual investment tries to emphasise social interactions and industrial cultures.

This theory highlights the importance of external relationships with clients, employees, alliances, industrial and multinational networks, and market intelligence among others. Intellectual investment goes further to define a culture of an organisation. Some studies indicate that intellectual investment must create a favourable environment that can promote innovation in firms.

New growth theories

There are two approaches under this theory. These are “endogenous growth theory and evolutionary theory” (Ducharme 7). Endogenous growth covers other fields of economics to explain intangible investments. It shows that knowledge accumulation is the basic factor for economic prosperity. In this respect, knowledge includes “human capital, organisational capital, and physical capital together with technical changes” (Ducharme 7).

Evolutionary theory looks at how routines influence behaviours of organisations and technical changes in organisations. These theories give insight into elements of knowledge-based economy where intangible assets have become the main factors for economic growth.

IC development in UAE

For a long time, United Arabs Emirate (UAE) has not focused on developing its IC. This could be due to over dependence on oil resources. As a result, the country has relied on qualified foreign workers for its national growth. Bontis’ work shows that there has never been IC development report for the Arab region (Bontis 15). However, the World Bank and the UN have conducted studies on various components of IC especially human capital. They show that Arab states should focus on three areas. These are education and training, regarding employees as intellectual assets, and adopting innovative strategies, cost-cutting, and nurturing behaviours in both public and private firms. These principles should result into teamwork and cooperation among people for effective performance.

The oil-rich UAE is undergoing changes from non-oil sectors due to investments from private and public organisations, consumer demands, increasing levels of educations, and the emergence of new technology companies. As a result, UAE must account for its IC development.

Therefore, the necessity for UAE to transform its human resources for national growth relies on intellectual abilities of its populations. Thus, demands for knowledge workers are essential for success of both public and private organisations in the UAE. This is because diversification has developed to the main factor in the knowledge-driven global economy.

The development of knowledge-driven economy and the need for new ways to respond to economic agents have forced UAE to look for ways of developing its Intellectual Capital.

Human capital

Countries in the Arab region have serious problems relating to developing their human expertise and technical skills (human capital) to enable them compete in the modern economy. UAE is among these nations. However, it has implemented some changes to develop its human capital.

The UN released its first report on Human Development in 2011. This shows that the country has not been able to account for its human capital development against other countries in the world. According to this report, UAE has a “very high human development” rate compared to other countries in the Arab region. The report puts UAE in the first position among States of the Arab region. This shows that the federal government initiatives to reform human capital of Emiratis have positive impacts. Education sector in UAE is responsible for this growth.

Human Development Index: UNDP Report 2010

Country ranking Human Development Index (HDI)a Life expectancy at birth Mean years of schooling Expected years of schooling Gross national income (GNI) per capita
PPP (US$)
GNI per capita rank minus HDI rank Non-income HDI value
1 Norway 0.938 81.0 12.6 17.3 58,810 2 0.954
32 United Arab Emirates 0.815 77.7 9.2 11.5 58,006 -28 0.774
38 Qatar 0.803 76.0 7.3 12.7 79,426 -36 0.737
39 Bahrain 0.801 76.0 9.4 14.3 26,664 -8 0.809
47 Kuwait 0.771 77.9 6.1 12.5 55,719 -42 0.714
Others Oman 76.1 —- 11.1 25,653

Source: The Human Development Report 2010

This report also shows that UAE has significant improvement in economic and social conditions. However, the growing population has created a wider gap between the employed and unemployed masses. Education remains the pillar to IC development in the country. Therefore, measuring literacy allows UAE to appreciate its intellectual growth and competitive advantage of Emiratis on a global scale. In a knowledge-driven economy, literacy goes beyond basic skills education provides. Consequently, interest has changed to improving key skills in technical areas, information technology, relationship management, personal growth, and adaptability of workers. For that reason, UAE must alter its strategy to literacy in order to create effective human capital for the knowledge-based global economy. The fundamental areas to evaluate are merits of education that trainees get for development of their intellectual capabilities. Nevertheless, lack of up-to-date information in the sector has hampered the growth of education in the UAE. Thus, shortage of information on education shows the necessity for improvements in the provision of education services.

There are countries that pioneered IC development. Therefore, UAE can rely on such countries when developing its IC. These may include the US, Sweden, Denmark, and Israel. Such elements of measuring IC developments allow these nations to develop competitive education systems by making direct investments where needs for skills are high. Such gaps in labour markets act as incentives for both educators and learners when pursuing such programmes.

The country must focus on formulating its IC development strategies and using current methods of education developments. UAE must develop its own IC development programmes for effective implementation. In this context, private organisation must support IC development the country. For instance, such professional bodies in UAE can provide professional opportunities to trainees to allow them gain experiences needed in practice. This shall ensure that trainees get opportunities to learn various skills, which allow them to become competitive in the labour market. This strategy works best if learning institutions and professional bodies form partnership to allow students get experiences.

This is a knowledge exchange strategy, which promote the development of IC asset in order to enhance the value of skilled human resources. This demonstrates how such relationships can promote general values when developing IC by capturing and transferring knowledge to trainees. This is the major aim of knowledge management initiatives. At the same time, the country must also encourage private organisations to develop and manage IC by capturing and storing relevant information.

Changes in the education system in UAE shall ease the exit of skilled workers from UAE. In addition, it will also ensure that only qualified employees come to UAE, which can improve the development of IC. Therefore, the country should use economic strategies, which encourage foreign investments and improve business.

Relationship capital

This is an area with limited studies in UAE. However, Awadhi notes that UAE society has “tolerance, diversity and a pro-business attitude” (Awadhi 1). Tolerance and attitude have enabled people from various parts of the world to establish and conduct business in UAE. This reflects relationship capital development in UAE.

The World Bank also ranks countries with ease of doing business to reflect relationship and other factors influencing a country’s relationship with investors.

Economy Ease of
Doing
Business
Starting a
Business
Dealing with
Licenses
Employing
Workers
Registering
Property
Getting
Credit
Protecting
Investors
Paying
Taxes
Trading
Across
Borders
Enforcing
Contracts
Closing a
Business
Saudi Arabia 13 13 33 73 1 61 16 7 23 140 60
Bahrain 20 63 26
United Arab Emirates 33 44 27 50 7 71 119 4 5 134 143
Qatar 39 68 28 68 55 135 93 2 41 95 33
Kuwait 61 137 81 24 89 87 27 11 109 113 69
Oman 65 62 130 21 20 127 93 8 123 106 66
Tunisia 69 47 107 108 59 87 73 118 40 77 34
Yemen Rep. 99 53 50 74 50 150 132 148 120 35 89
Jordan 100 125 92 51 106 127 119 26 71 124 96
Egypt 106 24 156 120 87 71 73 140 29 148 132

Source: World Bank Doing Business 2009

Organisational capital

Organisational capital reflects processes and practices within organisations. In this sense, studies tend to concentrate on technology changes in organisations when referring to IC development. The Global Innovation Index (GII) 2012 shows that UAE is among the best country in the Arab region based on its innovation capabilities.

The GII shows countries’ innovation capabilities using on innovation activities in a country. It relies on human capital and research and development, knowledge and technology results, and creativity to rank countries on innovation.

By including organisational capital, R&D, and other policies in innovation, UAE has realised the need to remain competitive by using technology and innovative skills of Emiratis. Nevertheless, UAE must concentrate its agenda on a logical and concrete system that can guarantee a steadfast and sustainable development of IC. In this sense, UAE must identify its organisational capital development clearly, consider systems of classifying organisational capital, and establish benchmarks, which control IC development. The country can achieve competitive advantage in the region if it improves its IC development.

The country must also protect its knowledge, information, and innovative ideas within its organisational capital. At the same time, it must also allow its citizens to gain access to such information for personal developments and economic growth. A major reason for poor IC development in the region results from lack of data. Thus, such data are useful for people considering making changes in organisational capital.

MENA Ranking
Country/Economy
World Rank 2012 World Rank 2011 Change
1 Qatar 33 26 -7
2 United Arab Emirates 37 34 -3
3 Bahrain 41 46 5
4 Oman 47 57 10
5 Saudi Arabia 48 54 6
6 Kuwait 55 52 -3
7 Jordan 56 41 -15
8 Tunisia 59 66 7
9 Lebanon 61 49 -12
10 Morocco 88 94 6

Source: Global Innovation Index 2012 (GII) Arab countries

Issues with IC development in the UAE

Najla Al Awadhi and Randeree note that UAE cannot sustain its national develop if it relies on external expertise and labour. Awadhi argues that this is what “makes emiratisation so critical to UAE national policy” (Awadhi 1; Randeree 71). The objective of emiratisation is to eradicate unemployment among Emiratis and over-dependence on foreign labour.

Scholars have demonstrated that Emiratis like jobs in the public sector where salaries are high with job security (Awadhi 1). Therefore, private organisations turn to foreign labourers because of high skills and low pay. The condition is poor because the growth of the country is faster than the development of human capital among Emiratis.

The position of UAE’s IC development is unfortunate due to underdevelopment in the education sector. The national curriculum does not cater for the current demands of skills and competence necessary for competitiveness in the global knowledge-driven economy. As a result, UAE has recognised the need to put resources in the education sector and introduce control systems in the finance sector.

The government of UAE also adopted “Federal Human Resources Authority and the Emirates Council for Emiratisation” (Awadhi 1). In addition to this initiative, UAE also has initiatives like Emirates National Development Authority and other councils to improve IC development in the country.

The country relies on the premise that emiratisation policy is a holistic programme that will ease the country’s wanting human capital. Therefore, emiratisation policy focuses on many sectors in order to achieve growth among organisations. The focus on emiratisation policy has led the government to adopt several strategies. First, UAE has turned on all organisations controlling the education sector at federal, local, and private level to realise its emiratisation programme. Second, the attention is also on trustworthy, certified training institutions, which offer education opportunities. Third, realisation of the emiratisation policy also depends on federal and local organisations, which are accountable for creating human development policies. Fourth, UAE is also enthusiastic on using private sector to execute its emiratisation policy. Lastly, emiratisation policy shall also rely on government institutions and partly government-owned institutions.

The emiratisation policy aims to achieve given goals in developing IC in the country. First, emiratisation policy aims at making Emiratis occupy most leadership positions in strategic organisations. However, the country must base this strategy on abilities of Emiratis using performance indices of Human Capital Development. Second, the emiratisation policy also aims to instil a sense of national identity through emphasising the value of civic duty among Emiratis. This shall develop innovation and encourage a tradition of work ethics. Third, most Emiratis prefer government jobs for various reasons. However, the government has decided to introduce competition by “eliminating short working hours and redefining its working conditions” (Awadhi 1). At the same time, the government aims at making the public sector by revising its targets, performance indicators, and incentives. This new strategy aims at enhancing innovation, interests, competition, and result-oriented approach just like in the private organisations. This approach shall also make sure that the emiratisation policy creates and attracts the best talents in the labour market. Fourth, the strategy also strives to create chances for fostering skills development through vocational training in order to decrease existing knowledge gaps. Fifth, the policy strives to make human capital development a part of its national agenda. This shall make sure that all Emiratis have equal opportunities to gain access to high standards of intellectual development. Sixth, emiratisation policy shall also introduce counselling programmes in schools so that learners can recognise areas they aspire to prosper based on their performances. Thus, the country shall have informed learners on how public and private organisations function. Seventh, the government must develop a national and centralised database for managing its human, organisational, and relationship capital. Lastly, UAE shall also focus on science and technology in order to predict trends of population changes, demands in the labour market, developments in technology, and engage Emiratis to meet such developing challenges.

Conclusion

In the past, organisations experienced challenges when accounting for their intangible assets. However, recent studies show how organisations can account for their intangible assets. Given the importance of IC for organisations, it is imperative for all stakeholders in organisations to take part in developing intellectual capital. This is the basis of IC development in organisations. UAE can achieve effective IC development through developing employees’ skills, external relations, and knowledge management.

Organisations and countries, which have adopted IC in their management programmes, have realised improvements in improving marketing synergies, efficiencies, effectiveness, profits, market share, and increased revenue among other benefits. Such organisations have been able to expand their activities beyond their home countries to create subsidiaries across the world.

The country has recognised the need to ease dependence on foreign expertise and expand areas of focus for the effective execution of the emiratisation policy. This strategy has created teamwork among various sectors of the country for successful implementation of the policy.

The research indicates that technological developments in knowledge-based economies require knowledge-based skills for adoption, measurement, usages, and further developments. As developments in the economy improve, IC will remain the major source of competitive advantage for employees, organisations, and countries at large. Organisations with relevant IC development programmes have noted high standards of growth, income, and living statuses among others.

UAE must exploit its Intellectual Capital in order to realise long-term growth. However, UAE still lacks a method of linking and appreciating intellectual capital with the national development. Consequently, there is always discrepancy between IC development and national growth. However, UAE has opportunities to manage its organisational, human, and relational capitals in order to develop IC.

The growth of IC reflects future aspirations UAE should strive to achieve in order to capture its intellectual wealth. IC has evolved to be the main influential factor and basis for social and economic growth of countries. This means that there is a purposeful move from established methods of measuring human potential and success of a nation. Further, UAE should also concentrate on other structural areas that improve the development of IC. A nation with a high IC development can promote its intellectual resources in order to draw talent, investments, sharing of information, and other factors that improve national growth.

Recommendations

This study has demonstrated that IC is underdeveloped in UAE. However, UAE has instituted reforms to develop its IC through emiratisation policy. These reforms aim at transforming the education system and enhancing acquisitions of knowledge. Eventually, it will improve skills of Emiratis and make changes in the labour market and economy. This shall facilitate the use of human capital in different parts of the economy.

However, UAE experiences disconnect between implementing IC reforms and evaluating such reforms to find out if they have achieved the planned outcomes. At the same time, there are also problems of orderly evaluations, which originate from lack of data necessary to evaluate such changes. This implies that if such data are available, then Emiratis shall have the right information they require to make the best investments in human capital.

It is obvious that UAE has realised the need to fill the gap in IC development. Therefore, it has developed emiratisation policy as a strategy to enhance IC development. Nonetheless, the policy will not succeed without contributions from all concerned bodies. This implies that implementation of emiratisation policy requires teamwork from both the public and private sectors to ensure that the policy succeeds. The current state of the IC development in UAE needs urgent attention. The country must concentrate on IC development for its future competitiveness in the knowledge-based global economy.

UAE has shown stable developments in its human capital. In fact, the country ranks higher than any other Arab States. This resulted from massive investments in education. However, the country still experiences low-levels of adult literacy. Therefore, the country must also introduce programmes, which aim to develop education levels of senior citizens.

Organisational capital is still a challenge to IC development in UAE. The country lacks up-to-date data about its development of organisational capital. However, some studies suggest that the country concentrates on technological changes and neglects other areas like database development and information protection policies. Future studies should concentrate on organisational capital development in the country because this area lacks sufficient data for asserting UAE position.

The country also needs to develop its relationship capital. This is because the current data only reflect informal statuses of relationship development. However, UAE shows growth in its relationship capital than other Arab states based on ease of doing business, attitude, tolerance, and pro-business tendencies. The country must also encourage a strong partnership across international borders to enhance globalisation for effective competitions.

References

Awadhi, Najla. 2010. Web.

Bontis, Nick. “National Intellectual Capital Index: A United Nations initiative for the Arab region.” Journal of Intellectual Capital, 5.1 (2004): 13-39. Print.

Ducharme, Louis-Marc. Measuring Intangible Investment-Introduction: Main Theories and Concepts. Canada: OECD, 1998. Print.

Randeree, Kasim. “Strategy, Policy and Practice in the Nationalisation of Human Capital: Project Emiratisation.” Research and Practice in Human Resource Management, 17.1 (2009): 71-91. Print.

Sullivan, Patrick. Value-driven Intellectual Capital; How to convert Intangible Corporate Assets into Market Value. New York: Wiley, 2000. Print.

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