Tech industry is looking to Middle East, says guru

Dubai is the next tech powerhouse, according to Ghazi Benothman - a founding partner in Minah Ventures, a venture firm specialising in companies from the Middle East, north Africa and central Asia.

The Gulf state, which is part of the United Arab Emirates, is laying the groundwork to become a development centre for advanced semiconductors, decompression algorithms and other high-end products, said Benothman.

"The next market to emerge behind India and China is the Middle East," Benothman said.

Dubai's office parks and free-trade zones have already attracted Daewoo, General Motors, Hewlett-Packard and Microsoft among others, and it has one of the fastest-growing airports in the world. Some of the recent projects in Dubai include building what aim to be the world's tallest hotel and the world's largest artificial island. Minah, meanwhile, is in the midst of raising a $100m fund, a substantial portion of which will likely come from government agencies.

The plans forged by Minah and Dubai essentially call for Middle Eastern tech professionals to follow the trail blazed by Israeli entrepreneurs. Silicon Valley has become home for many of the top technical graduates out of schools like Sharif University of Technology in Iran and the American University of Beirut.

Entrepreneurs such as chip executive Atiq Raza and eBay's Pierre Omidyar can also trace their roots back to the Middle East. Minah hopes to connect investors with recent graduates there to form start-ups in the region. Right now, a lot of these graduates get stuck in dead-end engineering jobs for the government in Egypt or Jordan, or can't find jobs at all.

"When you look at them as individual countries, it adds up to nothing. But in the region, there are 100,000 college graduates a year. Half are in engineering, and the other half are in medicine," Benothman said.

The Middle East is also benefiting from a blend of oil money and US higher education. Carnegie Mellon University, Texas A&M University, Virginia Commonwealth University and the Weill Medical College of Cornell University have all set up campuses in Doha, the capital of Qatar, which has similar goals to Dubai.

Political instability and corruption, unfortunately, remain common facets of life in many Middle Eastern nations, which is where Dubai comes in. Although a monarchy controlled almost entirely by the Maktoum family, the 2,000-square-mile city state is quite modern. The population has grown from about 100,000 in the 1960s to about one million today. The majority of the country's current residents come from outside the Emirates.

Rather than start companies in Jordan or Lebanon, Minah's idea is for local entrepreneurs to put the headquarters in one of Dubai's industrial parks, keep the developers in their home country, and then open sales offices in Europe and the US.

In the Middle East, government regulations do not promote or protect capital investment. Pirooz Hojabri, co-founder of Plato Networks, a Silicon Valley-based networking chip company, said: "Dubai is an exception. I believe the first wave of investments will be in semiconductors by Taiwan/China and Middle Eastern VCs."

Michael Kanellos writes for CNET News.com