Beyond the tech sector

Fostering entrepreneurship in budding non-tech sectors could create jobs and boost Lebanon’s economy

This article is part of an Executive special report on entrepreneurship. Read more stories as they’re published here, or pick up November’s issue at newsstands in Lebanon.

 

We live in an age where technological discoveries, innovation and entrepreneurs finding uses for these discoveries are changing the way we do things, the way we understand the world and how we are connected to it. In many ways the changes brought on by information and communication technologies (ICT), like the groundbreaking inventions of the past that brought on the Industrial Revolution, have had highly positive consequences. Tech has brought down a lot of barriers — from inexpensive global communications to starting a business with minimum upfront costs. It has created high value jobs that offer higher pay to an increasingly specialized segment of the population. It has automated many repetitive manual processes, squashed out inefficiencies and provided advancements in many fields.

But it also has a downside in that it disfavors those who are not connected or who are not part of a specialized segment of the working population. “When you have this big of a mass assumption that connectivity is available for everyone and you start building around that, then those who don’t have connectivity are at a major disadvantage,” says Habib Haddad, CEO of Wamda.

Tech has also had a mixed impact on the labor market. When unskilled laborers do find a place in tech economies, they are given the short end of the deal. In Silicon Valley, blue-collar workers who work around the tech economy — as drivers and cooks — have begun to mobilize, calling out the practices of the tech giants who give them an unfair deal and prevent them from unionizing.

While anecdotal evidence seems to point to tech as a job-killer, it is harder to get a broad picture, and the overall impact of the tech boom on the global economy is hotly debated. A 2011 McKinsey report points to the role of the web in increasing the amount of global GDP. In a study it conducted surveying 4,800 small and medium entreprises (SMEs), it found that “the internet created 2.6 jobs for each lost to technology-related efficiencies.”

However, a 2014–2015 World Economic Forum report points to increasingly polarized societies with a “structural decline in the share of GDP accruing to labor, mainly driven by skill-biased technological change related to globalization.” The report cautions that this may lead to a high concentration of wealth “similar to that experienced by Western economies in the earlier stages of industrialization.”

Lebanon’s tech sector is still far from having a drastic macroeconomic impact on the country, unlike the US. Many institutions have popped up to foster tech entrepreneurship, which they hope will boost the creation of jobs. In fact, the larger part of the entrepreneurship ecosystem in Lebanon revolves around tech. “If you look at the competitions, the programs and investment — it’s all focused on tech,” says Allyson Jerab, program manager at the AMIDEAST Entrepreneur Institute in Lebanon, noting that there were very few exceptions.

If the sector is to grow, as many enthusiasts hope, the question of whether or not the tech sector can provide enough jobs for an economy will be of increasing importance. Lebanon will be interested in promoting policies that keep the flight of talent at bay.

There is a strong case for promoting a tech sector. Lebanese talent is highly skilled and educated, and the costs associated with doing business in Lebanon are much lower than they are in, say, the US. Moreover, having a digital business, being no easy target for physical security attacks, negates some of the more traditional challenges of setting up a business in Lebanon.

While creating a tech hub in Lebanon would be an immense development for the country, going beyond the tech sector and fostering entrepreneurship in other budding industries could lead to a greater production of jobs for a more inclusive segment of the populace. “Now I’d love to see the same happening in other sectors,” says Sadi. “There are plenty of more traditional businesses that can also create jobs,” adds Jerab.

“I think there’s a huge opportunity in Lebanon to rebuild and develop the crafts sector,” points out Sadi. “I think that’s just like Italy or Spain, countries of economies that were built on the backs of SMEs with very high level craftsmanship. If you look at the handicraft that is here, it’s huge. And not so far back, if you look at the 60s and 70s, Prada used to produce their shoes in Lebanon.”

Focused initiatives to help promote industries beyond tech will likely create more viable means of living for people who are not as plugged in. Though perhaps requiring less hard training than our bound and determined engineers, it might have a greater macroeconomic impact in terms of number of jobs created, and thus of livelihoods improved. “Lebanon can build a great tech sector … But we’ll never be a tech economy,” says Sadi.

Livia Murray

Livia covers business, finance and economic policy for Executive.

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