Wake Up McCain and Obama - We need a future focused infrastructure now
July 22 2008 / by Antonio Manfredi
Category: Economics Year: General Rating: 8 Hot
The recent announcement of a joint venture between GE and Abu
Dhabi to finance and build advanced water and energy infrastructure
highlights where American investment needs to be, and why we are
falling behind. 
An analysis of todays announcement of a massive joint venture between GE and Abu Dhabi offers the most relevant roadmap to date for the future of high tech infrastructure, specifically the development of clean technologies. This global movement offers an amazing view into the future, as the most progressive companies and goverments in the world hash out collaborative plans to deploy the latest and best solutions for the global technology elite.
Throughout history the areas of the world with the best infrastructure have been the dominant forces in global trade and innovation. In the past it meant the best roads, ports, schools, etc. GE and Abu Dhabi show us that it is now a cross pollination of public and private partnership, facilitated by investment authorities and Fortune 500 companies. As we break down this strategic partnership piece by piece, we get a glimpse at the mechanisms in place that are creating the homes, towns, and cities of the future, and how their interplay effects a larger ecosystem of innovation. No one can dismiss this as central planning, rather it is an attempt by government to become more innovative and responsive to the needs of tomorrow. (cont.)
Imagine a city of the future that is entirely carbon neutral. Where homes and buildings harness resources in the most efficient manner. Where the best technologies are being developed, financed, and deployed. Where the most important companies flock if only for good PR alone. This world is being created as we speak, and it is highly relevant to attempt to find out how from a case study approach so we can wake up as a country. The GE/Abu Dhabi deal has several ingredients which we can dissect as components of societal innovation:
1. A strong and well financed investment authority – A major component of the most innovative and fastest growing regions of the world. The Abu Dhabi Investment Authority is classified as a Sovereign Wealth Fund with assets approaching $1 trillion USD representing the surplus of the state economy. The Mubadala Development Company is a state owned company designed to facilitate investment and partnership with companies like GE, under the direction of the ADIA. By investing in future related solutions they have had annual returns in excess of 10%.
2. Intricate Public/private Partnership – A close relationship with the most innovative companies in the world is incredibly important. The GE deal is an intricate relationship. The Mubadala Development Authority will become on of the top ten shareholders in General Electric. Additionally GE will provide solutions for the development of infrastructure, approaching $40 billion USD. On top of that GE will provide $50 million USD for the second clean tech fund under the Masdar Initiative. The companies will also create a clean energy technology center in Masdar City, the carbon neutral city of the future highlighted in previous Memebox blogs. These intricate deals are part of the reason why GE revenue is up 50% in the region year over year. http://biz.yahoo.com/rb/080722/ge_unitedarabemirates.html
3. Venture Funding – One aspect of the GE Abu Dhabi deal is the creation of several clean technology funds that are geographically focused. The first clean tech fund, a 250 million USD fund launched in partneship with Credit Suisse, seeks to direct joint venture investments in the realm of alternative energy. The initial fund sought to invest in companies with products suitable for commercialization in the United Arab Emirates, accelerating the deployement of geographically specific technology. Interestingly the fund utilizes an organic approach whereby seperate investments support one another, creating a nurturing environment for young companies unlike the US. http://www.masdarctf.com/
4. Global appeal – Possibly the most basic component of the development of high tech infrastructure. To become attractive to the global corporate elite Abu Dhabi has become succesful in offering a unique value proposition to companies like GE. Within the Masdar Initiative will be the development of the Special Free Zone (SFV)The Zone will provide up to 1,500 companies with an attractive package of incentives, including a one-stop-shop program of government services, transparent laws, 100% foreign ownership, tax-free environment and intellectual property protectio, according to the website http://www.masdaruae.com/text/spl-free-zone.aspx.
5. Deployment – Where Abu Dhabi is most succesful is in deployment. By creating the proper supportive environment of the best minds, the best infrastructure, and incredible amounts of capital, Abu Dhabi has become very succesful in deploying technology on a massive scale. America does not have an effective system of deployment, even if it develops the technology (We still produce the most patents in the World.) The deployment/adoption dilemma is central to a society, and requires all of the ingredients listed above. Essentially Abu Dhabi has created a fertile nurturing environment that allows for the establishment of advanced tehcnology on a meaningful level.
With these ingredients in place Abu Dhabi has benefited from explosive growth. More importantly it has taken enormous steps fostering a sustainable economy for the future.
As we break down these various components we find that the GE Abu Dhabi deal is part of a larger framework. In fact it is part of the Masdar Initiative, “global cooperative platform for open engagement in the search for solutions to some of mankind’s most pressing issues: energy security, climate change and truly sustainable human development,” according to the website of the same name. By leveraging resources and collaboration on an enormous scale, they are in fact accelerating innovation and deployment. One outcome has been the World Future Energy Summit, a symposium of the worlds renewable energy companies, held annually in Abu Dhabi. An analysis of the Masdar Initiative will be Part 2 of this Blog Post. http://www.masdaruae.com/index.aspx
(Image courtesy of Phillip Capper, CC 2.0)
Comment Thread (2 Responses)
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Wow. I don’t know a lot about financing technology and deployment, but I think I know a little more after reading this post and it seems to me you are right. The US has to change it’s approach finding, developing and deploying the best new technologies and especially a new infrastructure for energy.
What do you think the first step should be?
Posted by: Mielle Sullivan July 23, 2008
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The idea of a carbon-neutral city sounds too good to be true but it’s an ideal we should strive to obtain. Thanks for the informative article!
Posted by: fantasywriter July 23, 2008
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