Apart from diversifying its income stream, the Saudi government’s wider objective is to foster more private-sector jobs at home and reduce the amount of money it pays to subsidize education, health, gas and water. But if it’s striving to create the next Silicon Desert in Saudi Arabia, the realization of that ambition will be a long time coming.
“You don’t magically start Silicon Valley in Saudi Arabia,” Kane remarked. “You won’t have the people to implement it.”
Engines of innovation like Boston and Silicon Valley are driven by local research universities that graduate resourceful entrepreneurs and attract the venture capitalists looking to fund them. This combination doesn’t exist in many countries and certainly not in Saudi Arabia, where most students attend religious schools and the talent at private companies is typically imported, said Andreas Schotter, a professor of international business at Canada’s Western University who has focused on the Middle East.
To help reform the Saudi economy, the government is pursuing a strategy of shifting educational priorities toward engineering and technology, but this will take time to bear fruit, according to Zubair Iqbal, a scholar at the Middle East Institute and the former assistant director of the International Monetary Fund’s Middle East and Central Asia department…
…Among the possible shortfalls of such a massive fund, throwing billions of dollars at various tech startups could artificially inflate their value and produce a sector bubble — a concern that has already been raised about the current state of the tech market. And unlike the dot-com era of the late 90s and early 2000s, where executives longed for the initial public offering that would make them overnight-millionaires, today’s big startups are staying private longer, which can have the effect of weakening oversight and transparency.
But with all of that money, what worry does Saudi Arabia have of a bubble bursting?
“They may lose money on a bubble bust, but if they’ve created some sort of influence within their country with technology, then mission accomplished,” said Kane. “Even if it’s not a good investment as far as the money goes.”
For a country focused on sovereign success, shaking up the economy may be the least of their concerns.
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