INDUSTRIALIZATION IN

MIDDLE EAST

Presented by

Just & Fair ConsultantsIndustrial Consultants & Engineers

(A Member Firm of AGN International)

P.O. Box: 124600, Dubai – U.A.ETel: +971 4 3354233, Fax: +971 4 3351711

Email: mago@agnintl.comWeb: www.jfc-group.com

WHAT IS INDUSTRIALIZATION?

• Industrialization is a process of social and economic change whereby a human group is transformed from a pre-industrial society into an industrial one.

• It is a part of a wider modernization process, where social change and economic development are closely related with technological innovation, particularly with the development of large-scale energy and metallurgy production.

• Industrialization also introduces a form of philosophical change, where people obtain a different attitude towards their perception of nature.

INDUSRIALISATION HISTORY - COUNTRIES

• The industrial revolution had started first in Britain in the 19 th century which spread to other countries during 19th and 20th century.

• This created major changes in agriculture, manufacturing and transportation which had a profound effect on the socio-economic and cultural conditions in Britain and other countries.

• The world’s most industrialized democracies of United States of America, Japan, Canada, France, Germany, Italy, United Kingdom and Russia are popularly called Group of Eight (G8) Nations.

• Together, the G8 countries represent about 65% of the Gross World Product, the majority of global military power (seven are in the top 8 nations for military expenditure), and almost all of the world's active nuclear weapons.

• The eight countries making up the G8 represent about 14% of the world population, but they account for 65% of the world's economic output measured by gross domestic product

GDP & INDUSTRIAL GROWTH IN MOST INDUSTRIALIZED NATIONS

COUNTRIES GDPin bln USD

Per capita incomein USD

Ind. GrowthRate (%)

United States 13,780 45,800 -1.70%

Japan 4,272 33,500 1.30%

Germany 2,807 34,100 5.20%

United Kingdom

2,130 35,000 0.50%

Russia 2,097 14,800 7.40%

France 2,075 32,600 1.80%

Italy 1,800 30,900 0.60%

Canada 1,271 38,600 0.30%

POPULATION & LABOUR FORCE IN MOST INDUSTRIALIZED NATIONS

COUNTRIESPopulation(In Millions)

Labour Force(In Millions)

United States 303.82 153.10

Japan 127.29 66.69

Germany 82.37 43.54

United Kingdom 60.94 30.89

Russia 140.70 75.10

France 64.06 27.91

Italy 58.15 24.74

Canada 33.21 17.95

INDUSTRIALIZED Vs DEVELOPING COUNTRIES

• The industrialized country is called & known as developed country. The concept of “Industrial Countries" is to be preferred to “Developed Countries".

• There is a striking difference in the employment figures when comparing the industrial and developing countries.

• The industrial sector accounts for 33% of the workforce in the industrial countries but only 10% in the developing ones.

• Agriculture employs 61% of the working population in developing countries but a mere 10% in the industrial ones.

• The service sector occupies a great proportion of the workforce in industrial countries, which is 57%, while it is only 23% in the developing countries.

ECONOMIES OF INDUSTRIAL SOCIETIES

• The Urbanization of Production

• Rise in Productivity leads to rise in living standard.

• The Shift from Labor-Intensive to Capital-Intensive Industries

• Changes in the Labor Force

• The Rise of Market Economies

• Moves Toward Mixed Economies

• Evolution of the Modern Corporation

OUTLOOK OF INDUSTRIALIZED ECONOMIES Vs ECONOMIES IN THE REGION

• The growth momentum of the world economy is clearly slowing from the second half of 2008 and growth is likely to remain subdued during 2009 and few years thereafter.

• Barring major catastrophes affecting the world economy, a modest upturn is likely to start in the second half of the year 2009 in response to additional policy stimulus in industrial countries, particularly in the US, Euro area and Japan.

• Consumption demand has played an important role in the past few years in supporting economic growth in industrial countries, particularly in the US.

• The upturn in industrial countries is projected to further strengthen in 2009 as uncertainties in the world economy abate.

• In contrast to the substantial slow down in industrialized countries, economies of Middle East world likely to grow at much faster pace.

• GCC countries and Iran in Middle East are implementing big agenda for substantial industrialization and growth.

DRIVING FACTORS OF INDUSTRIALIZATION

• Liquid Capital

• Natural Resources

• Infrastructure

• Technological Advancement

• Cheap Labor

• Sources of Energy

• Markets

• New forms of Business Organization

RESULTS OF INDUSTRIALIZATION

• Overall economic growth.

• Rapid growth of cities and increased immigration

• New emphasis on Scientific Research and Development

• Beginning of Mass Marketing

• Employment opportunities and better living conditions

• Exploitation of natural resources

MIDDLE EAST REGION

Middle East Countries

Kuwait

Bahrain

Oman

Qatar

Saudi Arabia

United Arab Emirates

Yemen

Egypt

Turkey

Syria

Jordan

Lebanon

Iran

Iraq

Industrialization in Middle East

• Given opportunities and emerging economic factors, the Middle East region is being considered for investment and commerce especially the GCC Countries.

• Although major multinationals are in the region, global midsized companies ($200-800 million) are expanding in this region.

• Region is currently stable and governments are investing heavily in infrastructure.

• Real Estate has been the driver of growth in the middle east which has resulted in industrial expansion as well.

• Most governments in GCC and Gulf are keen in developing huge industrial base and there is clear shift in the policy.

• Petro Dollar surplus and thrust for value addition by using energy resources for down stream projects would lead to huge industrialization which can sustain the growth for next two decades.

MIDDLE EAST - ECONOMY

• The Middle East economy is USD 3.36 Trillion economy with an average annual industrial growth rate of 5%.

• The GCC per capita income ranks among the highest in the world due to its enormous oil and gas wealth.

• Having high per capita income of USD 20,000 on an average while Qatar’s per capita income of USD 80,900 is the highest in the world.

• The GCC nations mainly depend on oil & gas and hold almost 42% of world’s proven oil resources.

• The region’s economy is traditionally a trade and commerce based economy due to its excellent geographical location, but given the huge resources and liquid capital, big change is expected for the drive towards industrialization.

POPULATION Vs LABOUR FORCE

Population Vs Labour Force

3.10 0.66 3.20 1.41

23.51

4.50

18.70

77.50

70.59

17.16

5.31 3.68

71.21

24.00

-

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

Countries

Po

pu

lati

on

in

Mln

Population

Labour Force

GDP & INDUSTRIAL GROWTH IN MIDDLE EAST REGION

CountriesGDP

in bln USD

Per capita income in USD

Ind. growth rate (%)

Kuwait 130 39,300 1.7%

Bahrain 25 32,100 5.2%

Oman 62 24,000 3.2%

Qatar 58 80,900 8.0%

Saudi Arabia

565 23,200 2.9%

U.A.E 167 37,300 4.3%

Yemen 52 2,300 3.2%

Egypt 404 5,500 7.5%

Turkey 888 12,900 5.4%

Syria 87 4,500 2.5%

Jordan 28 4,900 7.7%

Lebanon 42 11,300 -

Iran 753 10,600 4.8%

Iraq 102 3,600 7.9%

EASE OF DOING BUSINESS- GLOBAL RANKING FOR MIDDLE EAST

Ease of Doing Business- Global Rank

1 2 3

16 18

3746

5257

98 99 101

114

137

152

0

20

40

60

80

100

120

140

160

CHARACTERISTICS OF MIDDLE EAST MARKET

• Young societies

• Rapid economic growth

• Continuous inflow of foreign capital

• High standard of living

• Countries competing with each other

• Economic link between Europe and Asia

DRIVING FACTORS FOR INDUSTRIALIZATION IN M.E.

• Population growth

• Diversification from oil and gas

• Regional growth/Intra Port trade

• World trade organization membership

• Oil and Gas

• Tourism

• Freehold ownership for expatriates

MIDDLE EAST OUTLOOK

• The Middle East countries are going to play the key role in reconstruction of the current global financial turmoil especially, the GCC Countries.

• The Industrial Products sector is large and diverse in the Middle East, but most sector players face similar challenges.

• Increased costs for oil, natural gas, steel, copper and plastics are squeezing margins, unless offset by pricing and surcharge increases.

• There is significant pressure as competition increases, particularly from low-cost manufacturing centers such as China.

KEY SECTORS

Building & Construction

(including interior furnishings)

Energy &Power

Manufacturing, Consumer

goods, Pharmaceutical

s, Food & Beverages

Petrochemicals in downstreamTransport &

Logistics services

POTENTIAL SECTORS IN MIDDLE EAST

• Petrochemical & Energy Sectors• Electricity and Power Generation• Manufacturing of FMCG, Pharmaceuticals &

others.• Banking & Islamic finance• Environmental Equipment & Services• Automotives• Railroad & Locomotive Equipment• Medical Equipment• Hotel & Restaurant Equipment

THANK YOU

Prepared By

JUST & FAIR CONSULTANTSIndustrial, Business & Management Consultants

(A Member Firm of AGN International)

DUBAI ABU DHABI# 3 Oud Metha Building, 1102, Al Ahlia Insurance Building,8/319, Oud Metha Area, Hamdan Street, P.O. Box 124600 P.O. Box 29236Dubai- UAE. Abu Dhabi, UAE.Tel: +971 4 3354233 Tel: +971 2 6260480Fax: +971 4 3351711 Fax: +971 2 6260490

Email: mago@jfcintl.com, Email: krish@jfcintl.comWeb : www.jfc-group.com