The Intellectual Capital Development in the UAE

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Executive Summary

The Intellectual Capital (IC) of an organization refers to all aspects of human capital, relational capital, and structural capital. These intangible assets provide a competitive advantage to organizations as they show differences in performances among organizations in the same industry. They help an organization control both internal and external relations. Thus, it is necessary that organizations take interests in measuring, monitoring and reporting their IC development.

For a long time, UAE has not been keen on developing its IC. As a result, UAE has depended on foreign expertise in driving its national growth. However, experts caution that this trend cannot sustain national development of a country. Thus, the federal government has realized the need to develop its IC. UAE has poor education system that hardly meets knowledge and skills needed in driving modern economy. Therefore, the federal government of UAE has focused on developing education at all levels to meet these needs.

The need for both public and private sectors to participate in IC development is inevitable. As a result, organizations such as DIT, Deloitte, Fraunhofer IPK and others have formulated strategies for IC development in UAE through provisions of professional training.

In conclusion, we note how IC development can create competitive advantage for employees, organizations, and the entire country. Therefore, any country that needs to remain competitive must invest in IC development.

We recommend that the UAE must focus on its education sector in order to create skills and knowledge necessary in the modern economy. At the same time, it must also develop a database for tracking IC development. UAE needs to develop other aspects of structural capital as its only concentrates on innovation and information aspects. On relational capital, Emiratis believe is strong business relationships. However, UAE has failed to document its IC development for easy reference. Currently, it is difficult to obtain specific information addressing relational and structural capital development in UAE. The country relies on the Human Development Reports from the UNDP as its main sources of human development reports. UAE needs to develop its internal reports to document all aspects IC development.


This research focuses on Intellectual Capital (IC) development in UAE. It traces the history and the emergence of IC management for competitive advantage. It also shows concepts and theories that aim at guiding IC as a discipline. However, scholars note that IC is an evolving field. Thus, no concrete theories exist yet. However, approaches to IC concepts and theories involve financial, investors’ perspectives, and practical applications in firms.

The research highlights IC development in the UAE. It shows that the country has not been keen on developing its IC. However, it has recognized the need to focus on IC development. In conclusion, we focus on values of IC development and make recommendations on how UAE can enhance development of IC.



Intellectual Capital consists of all intangible assets of an organization. IC has three sub-categories. These are “human capital, relational capital, and structural capital” (Ingram, Albright, and Baldwin, 2004). Developing IC is mandatory for organizations as working conditions have become dynamic. Therefore, organizations must develop and realize their competencies and capabilities in order to realign themselves to market conditions. In relation to these changes, human resources and organizational strategy and management are critical elements of success. Thus, knowledge is a significant asset for an organization.

IC components concentrate on intellectual resources and capabilities of an organization and effects of management processes on IC development.

Components of IC

Human Capital

Organizations usually refer to their employees as their greatest assets. Employees as assets of companies are the human resources or capital. In this case, we look at skills, experience, knowledge, motivation, attitude and competence among others characteristics that employees possess. Human capital is responsible for organizational productivity and creation of new products, which drive sales and maximize shareholders’ returns.

Structural Capital

This refers to knowledge usages, information systems, procedures, policies, publications, manuals, database, processes and other infrastructure of an organization that aid in executing organizational strategy. These features are deep within the organization and employees can easily share and reproduce them. However, organizations guard ownership of these assets through copyright laws, patents, and internal processes of controlling flows of information.

Relational Capital

This refers to external relationships an organization has with its customers, suppliers, and other stakeholders with whom it conducts business. This is important for an organization due to production of products and services for generation of revenues. Relational capital remains a highly intangible form of IC. As a result, organizations spend many resources in forms of marketing strategies so as to encapsulate relational capital and create a brand in the market.

Scholars have concluded that IC has become significant in driving organizational growth in the knowledge-driven economy. Currently, knowledge has started to replace machines and workers. This means companies have evolved in terms of knowledge, and now the workforce consists of knowledge workers. This implies that organizations, which shall grow in the future, must best manage their knowledge workforce and IC.

History of IC Development

We can trace the development of IC management as a discipline through patterns understandable from hindsight. However, earlier studies did not establish any particular pattern at the time. Studies have established three different sources of today’s Intellectual Capital development. The first source originated from Japan. This was from the work of Hiroyuki Itarni. Itarni focused on the impact of invisible assets on the administration of Japanese organizations. Second, there were some economists who wanted to propose new ideas and theories about organizations.

These economists consisted of Rumelt, Penrose, and Wemerfelt among others. It was David Teece who combined these works in an article of 1986 on technology promotion. Third, it was the work of Karl-Erik Sveiby that changed Intellectual Capital. He focused on human capital by addressing the potential value organizations can derive by focusing on the competence and knowledge of their workforce (Sullivan, 2000).

Intellectual Capital development has evolved from 1959 to 1997 as economists and researchers shifted their focus on new studies about business strategy. This strategy sought to identify the importance of resource efficiency instead of common, competitive forces. The resource-based view posits that organizations possess diverse and unique resources, ranges of abilities and qualities. In addition, the resource-based view emphasizes the importance of using resources available within an organization. These resources include intellectual capacities of employees. Therefore, matters related to acquisitions of skills, technical know-how, competence, knowledge management, and learning are crucial for business strategic objectives. This explains why management of human capital has become an important business strategy.

We can credit modern Intellectual Capital to Thomas Stewart. Stewart focused on management of knowledge, which led to the idea of Intellectual Capital. He concentrated on brainpower and management of knowledge in organizations (Sullivan, 2000).

Importance of IC development to an organization

IC development is important to organizations due to increasing demands for knowledge workers, improving customers’ values, and increasing interests on innovation and learning in the new knowledge economy.

Employees have gained considerable knowledge about their jobs. However, employees are reluctant to share their knowledge. Thus, organizations have limited means of capturing, storing, and transferring knowledge to others. This implies that organizations lose knowledge in a case a knowledge worker leaves an organization.

Developing IC can help human resource (HR) managers obtain and store information related to employees’ key skills, experiences, core job functions, training, performance review, developing successive system and creating effective leadership and management programs. HR department must ensure effective knowledge management in order to capture and use workers’ knowledge so as to enhance and preserve IC development.

Theories and practices in IC development

Intellectual Capital is an emerging field. Thus, its theories and practices have not achieved a developed status (Danish Trade and Industry Development Council, 1997).

On the other hand, practical implications of IC development show how scholars and professionals can integrate different views from IC development into a whole and basic theory, and formulate a standard definition for theoretical concepts of IC development.

First, the focus is on relating financial growth with the IC development using statistical methods. This approach aims at establishing factors of IC management that can work best in predicting financial position and profitability of an organization. Researchers rely on surveys, and statistical approaches to conduct studies on organizations practicing IC development. The challenge facing this approach is how to know whether or not contents of IC development in organizations have information that can predict or show financial performance of an organization. This implies that it is impossible to make any conclusion on this approach.

Application of this approach on predicting financial position of an organization based on IC management can only restrict information collected to internal, unique and structural capital of different organizations. This is due to various practices and abilities of predicting long-term financial results.

Second, we can also look at theories and practices in IC development based on investors’ perspective. The focus is on behaviours of investment brokers and banks. This attempts to get investors’ perspectives on accepting or rejecting capital needs of firms. For instance, UBA Plc (United Bank for Africa) uses IC as one of its key lending criteria. This covers key management skills, years of experiences, competence in the position, and attrition in the company. This helps the organization to identify how firms manage their human resources and determine firms’ interests in managing IC information. This information is necessary in determining how IC is important to firms seeking credit and investment opportunities.

Third, scholars also study the willingness of organizations in developing IC accounts for their operation. This method originated from Danish firms. In this context, organizations provide their experiences with IC contents and approaches applied. Other organizations can then borrow and implement such approaches in IC development. However, the challenge with this approach is whether to apply IC accounts as a whole or unit. The aim of this approach is to attempt and make IC development a holistic part of organizational management.

Application of IC management in organizations

Accenture’s High-Performance model

Specifically, Accenture uses High-Performance Business program in its marketing strategy. In this model, it relies on Intellectual Capital development for promoting its marketing strategy by leveraging its expertise, experiences, long-established relationship, and easy access to information systems. IC highlights innovative thinking of its management. Accenture is a global consulting service firm. The company provides services related to strategy, supply chain, customer relationship management, human resources, and financial management.

The company uses IC as a base for other marketing programs in order to enhance delivery of effective marketing campaigns. Accenture discovered that High-Performance Business strategy is a key for future success. Companies, which practice IC, outdo others in revenue and profit growth.

However, the challenge in IC development is formulating and developing an effective content that organizations can rely to measure the effect of their IC development on business strategies. Accenture strives to measure its Intellectual Capital development using three approaches. First, it uses business return on investments whereby the focus is specifically on sales and revenues. Second, it also looks at impacts of marketing strategies on customers. Finally, the company also uses all marketing resources to determine the effectiveness of its IC development. These resources should yield values to the company.

Dow’s ICM Model

Currently, Dow aims at “creating value from its intellectual assets” (Al-Ali, 2003). As a result, Dow was able to perceive IC as a critical tool in value creation and maximization of returns. Dow based IC development on “knowledge management, communities of practices and IAM Teams, a culture of e-learning, knowledge base and IT, innovation management, labs as competence centres, the 42 plus alliance portfolio, and innovation culture and a central idea bank” (Al-Ali, 2003).

The company managed its IC model under knowledge management (KM) process whereby each business unit manages its KM initiatives based on needs. However, the challenge is how to spearhead this initiative in a single business unit and at the same time act as a tool for change for the entire organization.

Dow based its IC model on communities of practice adopted from its IAM Teams. This is to meet certain business requirements by exploiting IC and technology from start to the end of the project. The company strives to keep its processes simple and effective by capturing knowledge from employees who know and transferring to employees who need to learn. Thus, sharing information has been significant in enhancing IC development in Dow. This is a process of promoting a culture of learning in the organization.

The company has also developed a Knowledge Base aligned with IT strategies that focused on overall enterprise computing needs, decision-making, information sharing, and customer relationship.

The UAE region and IC Development

We know the region for its vast oil resources. However, the region has never produced any concrete report on its IC development. IC development has become a significant part of policy formulation among organizations of the Arab region. The World Bank and the United Nations have assessed UAE IC development in the region and expressed their concerns about the poor process of IC development. These reports indicate that UAE should adopt three programs to spearhead its development agenda. These include training and education of its population, focusing on intellectual values of workers, and promoting and nurturing cost-cutting habits and innovation in both private and public organizations (Bontis, 2004).

Modernization programs should enhance the corporation among employees in order to promote collective performance and knowledge sharing. UAE has depended on oil resources for a long time. This has contributed to its massive wealth. However, there is a rapid growth of organizations that do not depend on oil resources. These organizations emerge from modern technologies, governments and private sectors investments, demands for new services and products, and changes related to increase in levels of education in the region.

Therefore, the need for UAE to translate its resources for domestic growth depends on intellectual abilities of its citizens. Thus, the supply of knowledge workers is necessary to UAE organizations. This happens because industrial diversification as become a key factor in the knowledge-based economy.

The growth of knowledge-based economy and the need for diversification have pushed UAE to look for means of developing its Intellectual Capital. We can support IC development in UAE because of the need to establish reliable supply of knowledge workers in the modern economy.


IC development in the UAE needs support in order to develop human resources, relational capital, and organizational capital. However, we must note that these are specific areas of IC development, which need specific approaches. Thus, we should formulate certain metrics that focus on every component of IC. This is because measuring IC remains the biggest challenge facing organizations. However, effective evaluation of selected IC metrics can aid the region measure its IC development and adjust its strategies based on emerging needs of organizations. It is only monitoring processes of IC development that can help nations determine outcomes of their policies. Monitoring of IC development also enables countries to tap knowledge of their workforce.

We have seen how developments in technology have transformed global business systems. Such developments have significant opportunities for workers. However, they also present serious challenges to countries which are not competitive in the knowledge-driven economy. This shows the need for information and knowledge sharing among employees. At the same time, it shows the need for diversification, competitiveness, and integration in the modern information-driven economy.

Applications of technology in both private and public institutions in provisions of services have demonstrated the importance of organizational capital. However, UAE experiences serious challenges related to human capital due to the increasing number of enrolments in limited facilities, challenges that exist between rural and urban education access, promoting education for career growth, eliminating illiteracy, and enhancing the quality of education. Thus, tracking of developments in education systems that promote human skills, knowledge, and attitude is necessary.

Human capital

Human Development Index and its components

Very High Development, 2010 UNDP Report.

Country Position Human Development Index (HDI)a Life expectancy at birth Mean years of schooling Expected years of schooling Gross national income (GNI) per capita
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

The Human Development Report 2010 classifies UAE as having “very high human development”. It is among the 42 nations under this category. UAE is the first country among all the Arab countries. Emiratis have shown interests in learning. However, this trend shows regression because most adults have low-levels of education. Educator sector of UAE has grown over the last 40 years.

The Report also classifies UAE among countries with the highest rate of human development. Changes in social and economic situations have resulted into large populations of employed and unemployed people. For instance, in 1975 the number of the working population was 12,000 (96 percent of the national labour force). This increased to 93,000 in 2010 (83 percent of the national labour). On the other hand, the rate of unemployment increased from 450 in 1975 to 127,000 in 2010 of the national labour force. The percentage increased from 4 percent to 12 percent.

Regional Ranking: 2012 Index of Economic Freedom

Source: The Heritage Foundation, 2012.

Rank country overall score change from previous
1 Bahrain 75.2 -2.5
2 Qatar 71.3 0.8
3 Jordan 69.9 1.0
4 United Arab Emirates 69.3 1.5
5 Oman 67.9 -1.9
6 Israel 67.8 -0.7
7 Kuwait 62.5 -2.4
8 Saudi Arabia 62.5 -3.7
9 Morocco 60.2 0.6
10 Lebanon 60.1 0.0

Measuring literacy enables us to understand intellectual capabilities and characteristics of a nation’s workforce. In a knowledge-based economy, literacy goes beyond basic skills education provides. Thus, attention has shifted to developing key skills in information technology, technical areas, relationship management, and problem solving. Therefore, countries must change their approaches to literacy in order to development human capital for the knowledge-based economy. The important factors to monitor are qualities of education that learners receive for development of the intellectual capabilities. However, not all emirates have up-to-date records regarding the quality of educations they provide. Thus, scarcity of information on education suggests the need for improvements in the delivery of education services.

UAE can borrow management of Intellectual Capital development from countries like Sweden, Denmark, and Israel. These countries have developed their systems of measuring IC development. These metrics enable these countries to create competitions within the education sector and direct resources in science and technology where demands are high. Studies have shown that education systems have encouraged uptake of computer and technology studies through providing incentives for students and teachers to adopt the system.

The region should concentrate on formulating its IC development strategies and engage modern forms of ICT developments. The content of such education programs should focus on unique features of the region. The private sector must show their support for IC development. For instance, Deloitte Dubai office provides professional opportunities to students to enable them become chartered certified accountants. This program ensures that students get chances to acquire auditing, financial, and management skills, which allow them to get internationally recognized qualifications. This is encouraging partnership between learning institutions and private sectors where students get experiences.

This is how promotion of IC asset works in order to drive the value of qualified human resources. This shows how such partnership can drive overall value in developing IC through capturing and transferring knowledge to learners. This is the main idea behind KM practices. In addition to private sectors’ participation in the development of IC, the UAE should also encourage its professionals to take part in promoting IC management.

Development of education in UAE shall reduce the exit of qualified workers from the region. Still, it will also ensure that emirates attract qualified workforce and foreign investments that can promote the development of IC. In this regard, the region should adopt open systems, which encourage foreign investments and improve trade.

Relational Capital

Doing Business Report 2009. Source: World Bank Doing Business (2009).

Economy Ease of
Starting a
Dealing with
Closing a
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
Lebanon 108 108 125 66 111 87 93 34 95 121 124
Morocco 128 76 99 176 123 87 165 125 72 108 67
Algeria 136 148 110 122 160 135 73 168 122 123 51
Iran 137 48 141 137 153 113 165 117 134 53 109
West Bank and Gaza 139 176 157 135 73 167 41 28 92 111 183
Syria 143 133 132 91 82 181 119 105 118 176 87
Iraq 153 175 94 59 53 167 119 53 180 139 183
Djibouti 163 177 102 151 140 177 178 65 34 161 135
Middle East & North
91.6 90.1 94.6 85.7 80.9 111.6 92.6 66.2 76.4 114.7 90.9

Emiratis prefer conducting business in person. They value mutual trusts and business relations developed through face-to-face interactions. Emiratis prefer long-established business partnership. Thus, they like business meetings in order build strong relationships.

Doing business in UAE requires contacts. This implies that foreigners might find it difficult dealing with Emiratis. Thus, prior contact is necessary for foreigners in order to establish mutual business relationships.

The UAE business relationships take into account the status of an individual. Therefore, recognition of an individual’s status with the correct title is mandatory. It is important to establish such facts before meetings.

UAE approaches time management in a relaxed manner than in the West. They value individuals and relationships than punctuality, schedules, and meetings. Thus, it is common to find Emirati arriving late for a business meeting.

According to Doing Business Report 2009, business practices in UAE have evolved than in other Arab countries. This is because UAE approach issues with Western ideologies than other Arab countries.

UAE has also extended its business relationship outside the Arab regions to other parts of the globe such as Africa, Asia, Europe, and the US. This is mainly through logistical services and oil trade deals. For instance, trade between UAE and South Korea has developed steadily through public-private partnership from the government of South Korean.

Relational capital can grow in UAE through knowledge coordination. For instance, the region can build various sectors of its economy through coordinating IC strengths for creating synergies aimed at improving financial gains.

Structural Capital

Arab Innovation index. Source: Global Innovation Index 2012 (GII).

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

Most studies concentrate on innovation aspects of structural capital in IC development. According to Global Innovation Index 2012 (GII), UAE performs better in innovation among Middle East countries. However, it is second to Qatar.

The Global Innovation Index measures countries’ innovation abilities based on innovation results. It uses human capital and research, knowledge and technology results, and creativity among other pillars to rank countries on innovation. This indicates how UAE is evolving in developing its IC among other Arab countries.

Through incorporating structural capital, research and development, and other policies in innovation, UAE made progress towards expanding its IC development. However, UAE must focus its agenda on a coherent and tangible approach that can ensure a reliable and sustainable development of IC. In this sense, UAE must define its structural capital development clearly, consider systems of classifying structural capital, and establish standards, which guide IC development using structural capital. UAE can achieve competitive advantage in the Arab region if it manages its IC development in a coherent manner.

In developing structural capita, UAE also strives to protect its valuable information from abuse and unauthorised usages. Both the federal government and the private sector are encouraging access to information. For instance, the government has launched e-government system to allow the public access information easily. Still, UAE also has Global Open Access Portal to enable the public access recent studies on different topics.

Current state of IC developments in the UAE

According to Najla Al Awadhi, UAE cannot sustain its growth if it depends on foreign labour. Awadhi argues that this is what “makes emiratisation so critical to UAE national policy” (Awadhi, 2010). The aim of emiratisation is to eliminate joblessness among citizens and over-dependence on foreign workforce.

The region has recognized the need to work with foreign employees in order to build IC. This calls for tolerance, diversity and business-oriented approach. This is how foreigners have thrived in UAE.

The latest figures on joblessness from the region indicated that the region had 10 percent unemployment rate. About 14 percent of the unemployed population is in Abu Dhabi. In addition, citizens only represent one percent of private organizations’ workforce (Awadhi, 2010). This implies that the region has alarming challenge in creating sustainable IC development.

Studies indicate that UAE local populations prefer government jobs where salaries are high, and there is job security. As a result, private firms turn to expatriates because of low pay. The situation is worse because the growth of UAE is faster than the development of human capital among UAE citizens.

The situation of UAE’s IC development is poor because of the education sector. The curriculum does not meet the current demands of skills and competence required for competitions in the global knowledge-driven economy. Consequently, the government of UAE has realized the need to invest in the education sector and introduce quota systems in the finance sector.

The federal government of UAE also introduced “Federal Human Resources Authority and the Emirates Council for Emiratisation” (Awadhi, 2010). Apart from these, there are also other initiatives such as Emirates National Development Authority and other councils to promote IC development in the region.

The government believes that emiratisation policy is a holistic approach that will solve the region’s underdeveloped human capital. In this regard, the program targets several sectors in order to achieve synergies among organizations. Some of the institutions the government has turned to include the following. First, the government has turned on all institutions regulating the education sector at federal, local, and private level. Second, the focus is also on credible, professional training institutions, which provide training opportunities. Third, implement of the policy also focuses on federal and local institutions responsible for creating human development policies. Fourth, the government is also keen on using private sector to implement its emiratisation policy. Finally, emiratisation policy shall also depend on government institutions and partially government-owned organizations.

This approach strives to achieve certain goals in developing IC in the region. First, emiratisation policy aims at making citizens occupy majority seats in leadership positions across strategic sectors. This process shall rely on abilities of an individual based on performance indicators in Human Capital Development. Second, the policy shall also instil a sense of national identity through reinforcing the value of civic duty among citizens in every emirate. This shall enhance innovation and encourage a culture of work ethics. Third, most of the local populations work in the government organizations. As a result, the government has decided to introduce competition by eliminating short working hours and redefining its working environment. At the same time, the focus shall also be on revising simple target and performance indicators so as to make the sector competitive.

The new work environment aims at promoting innovation, involvement, competition, and result-oriented approach just like in the private sector. This strategy shall also ensure that the policy creates and attracts the best talents in the job market. Fourth, the approach also aims at creating opportunities for nurturing skills through vocational training in order to reduce existing knowledge gaps. Fifth, the policy aims at making human capital development a part of its national agenda. Sixth, this policy shall also introduce career counselling programmes in schools so that students can identify areas they aspire to prosper based on dedication.

This strives at reducing cases of career mismatch in schools. Seventh, the federal government also wants to create a national and centralized database for managing its citizens’ talents and developing human capital irrespective of gender. Finally, the UAE shall also focus on R&D so as to predict trends of demographic shifts, demands in the job market, improvement technology, and engage its citizens to meet such evolving challenges.


Recent trends associated with recessions have shown employees and employers the need to develop their Intellectual Capital through their HR departments. All stakeholders in organizations should participate in developing human capital. This is the base of IC development. We can realize effective IC development through employees, external relations and KM. These factors affect sustainability and success of a firm.

Firms that have adopted IC development such as Accenture and Dow Chemical have noted significant improvements in creating marketing synergies, efficiencies and increased revenue. This creates value for their stakeholders. In fact, Accenture claims that IC controls all its marketing aspects. The focus on IC development has made Accenture a global leader in provisions of IT services.

The region has realized the need to reduce dependence on foreign labor and diversify areas of focus for the emiratisation policy. In this regard, the federal government, Dubai Institute of Technology (DIT) and private organizations like Deloitte and Fraunhofer IPK have concluded that there is an urgent need for developing IC in UAE.

We have realized that technological developments experienced in knowledge-driven economies need knowledge-based skills for measurement, utilization and further improvement. As changes in the economy escalate, IC will be the main competitive advantage for employees, organizations, and countries. Countries with sound IC management have recorded high standards of growth, income and living standards among others.

Countries must harness their Intellectual Capital in order to ensure long-term growth. However, most countries do not associate knowledge with the national development. As a result, there is always disparity between IC development and national growth. We have noted that the region can manage its structural, human, and relational capitals in order to develop IC.

The development of IC represents the focus towards the future UAE should aim for so as to capture its intellectual wealth. IC has developed to be the major determining factor and base for social and economic growth of countries. This implies that there is a deliberate move from traditional methods of gauging human potential and prosperity of a nation. In addition, countries should also concentrate on other structural areas that enhance the development of IC. A country with high IC development can market its intellectual resources in order to attract talent, investments, sharing of information, and other resources that promote national development.


Development of IC can create financial power and wealth for any country. This implies that UAE must concentrate on developing its IC in order to enhance the region’s knowledge base for developments and investments.

Investment in human capital is mandatory for UAE to realize meaningful creation of intellectual wealth. UAE IC development is poor due to its system of education, which cannot inculcate skills needed in the modern knowledge-driven economy. As a result, UAE mainly depends on expertise of foreigners for its national development. Professionals and scholars have noted that such dependency cannot sustain national development agendas.

UAE has a poor record regarding its IC development. The region should develop a common database that indicates achievements in the area of IC development. This is the best way for capturing and transferring national IC among employees.

We have noted contributions of private firms in promoting IC development in UAE. Obviously, this is not adequate. Therefore, the federal government should encourage participation of many private organizations in IC development. In this regard, the federal government should also promote IC development through cooperation and sharing of information with countries like Sweden and Denmark, which have developed indices for gauging IC development. This is where DIT should collaborate with other professional bodies and incorporate training course that promote the development of skills and knowledge in relevant areas.

It is clear that the federal government has recognized the gap in IC development and the need to develop it. As a result, it has formulated emiratisation policy. However, this policy will not succeed without inputs from all stakeholders. Therefore, stakeholders from both public and private sectors must work together to ensure that the policy succeed. The current situation of the IC development in the region requires immediate attention. The region must pay particular attention to IC development for its future competitiveness in the world.

UAE has demonstrated steady growth in its human capital development. In fact, it ranks higher than any other Arab nation. This has happened due to increased government spending on the education sector. However, the challenge is low-levels of adult literacy. Therefore, UAE should introduce programmes, which focus on developing education levels of its senior citizens.

Structural capital remains a challenge UAE to develop. The country lacks clear information regarding its development of its structural capital development. However, a further analysis shows that UAE concentrates on innovation and neglects other aspects like database development and information policies. This area needs further research on both private and public sectors. In fact, structural capital lacks sufficient data to support it in the UAE context.

On relational capital, UAE shows high-levels of relationship management than other Arab nations. We can attribute this development to influences of Western ideologies. However, UAE remains a closed society to outsiders. This is a challenge to developing international business contacts. Emiratis prefer conducting business with people well-known to them. However, foreigners must learn that Emiratis value mutual relationships and prefer frequent meetings to strengthen such relationships.


Al-Ali, N. (2003). Comprehensive Intellectual Capital Management: Step-by-Step. New York: John Wiley & Sons.

Awadhi, N. (2010). UAE must develop its human capital. Web.

Bontis, N. (2004). National Intellectual Capital Index: A United Nations initiative for the Arab region. Journal of Intellectual Capital, 5(1), 13-39.

Danish Trade and Industry Development Council. (1997). Intellectual Capital Accounts: Reporting and managing intellectual capital. Copenhagen: DTIDC.

Ingram, Robert, Albright, Thomas, and Baldwin, Bruce. (2004). Accounting: Information for Decisions (3rd ed.). Boston: South-Western College Pub.

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

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