Report on Knowledge Based Industries

For the Manual of the 13^th Gulf  Industrialists Conference

Introduction

Knowledge represents one of the basic requirements of production in today's world, thus placing it as one of the key drives of economic growth and sustainable development. It is acknowledged that the application of knowledge has led, not only to growth in of industrial production, but to radical changes in modes of production and consumption. Moreover the effects of  investment in knowledge have spread to include fundamental changes in the efficiency of the utilization of all inputs including manpower, raw materials, energy, operational management and other production elements.

The business model in traditional industry depends primarily on human resources , capital and raw materials, while the business model of the knowledge-based industry depends on human capacities and skills developed through education, training, culture and experience, on the other hand the later depends on the intersection of sciences. Moreover, the knowledge-based  industry largely relies on information processing, and on integration to transform information into other activities and on generation and dissemination of new types of knowledge and products.

In addition, the KBI relies heavily on provision of advanced system of information, on processing of information and on driving out indicators and knowledge, which can be applied to various types of economic activities.

KBIs are characterized by three key elements:

- Advanced technological infrastructure that includes scientific research and ICT centers.

- Tools and means of innovation, which include programs on research and development, changes in business models, integration with customers and on other means.

-    Highly trained scientists, specialists and technicians.

The move towards KBIs is an important strategic choice of the GCC states in its quest to build diversified and sustainable economies.  Furthermore, it will help to build  economies based on high value-added activities that encourages the spirit of investment of the private enterprises and individuals, and economies that  are highly integrated into the global economy.  In the process of diversification, the GCC states have formulated ambitious goals for the development of non-oil sectors, particularly the manufacturing, as a part of their efforts to promote successful and stable economic structures that are cushioned against cyclical global recessions and downturns. The reliance on consumption and non-tradable activities - such as construction - in the GCC states must be replaced by genuine  economic activities, like the manufacturing industry, that are based on knowledge and as a strategic choice for the economic diversification of the GCC.  

During the past five years, global changes have made the knowledge based industries as one of the pillars of economic growth, bringing into focus the need to adopt advanced techniques as a source of high value-added.  In this respect, the GCC states have paid particular attention to knowledge-based industries, as it was highlighted in their national and economic visions and in  the development strategies of the GCC states. However, despite of this acknowledgment and the setup of a number of related projects and policies, the implementation remains slow and progress remains modest and short of the desired ambitions.

The  limited progress in the transition towards the knowledge based economy in the GCC states could be observed by several indicators:

·      The modest ranking of the GCC states as described in the knowledge assessment score of the year 2009, issued by the World Bank, which indicates one of the scientific advances in each country. As regard to ranks among the GCC in this report, the State of Qatar is ranked the highest follow3ed by the United Arab Emirates. The UAE and the State of Qatar recorded the highest rate of knowledge based economy index with about 6.73 points each, as shown in the table below. 

Table of indicators of the knowledge based economy and knowledge based industries for the year 2009
 

Source: Report of "knowledge assessment methodology-KAM 2009" by the World Bank

·      The generally modest allocations to R&D in the GCC countries – notwithstanding Qatar which allocated 2.8% of GDP in 2009 and Saudi Arabia which spent SR150 billion on education in 2010. It is estimated that developed countries allocate approximately 2.5% of their GDP for R&D activities, of which approximately 80% is made by the private sector.  In the GCC, the share of spending on R&D does not exceed 0.2% of GDP according to the estimates of UNESCO report for 2010 with near-absence of private sector role in the GCC.  This in contrast to developed countries such as Finland (3.5%),  Japan (3.18%), Sweden (3.7%) and Israel (4.7%). 

·      All high technology products require investment on R&D to keep pace with new developments and to remain competitive. Therefore, industrial companies in the developed countries earmark significant parts of their revenues to fund scientific researches, in order to maintain competitive edge and high quality products. As for the GCC countries, the majority of the industrial firms and institutions prefer quick ready solutions with low risk. They are reluctant to invest in risky R&D processes that could lead to solutions to technological problems or improving productivity.  The mindset of many GCC industry segments is not oriented towards R&D, and it needs radical changes in business culture of the entrepreneurs. This makes it imperative on  us to emphasize that the question of research and development and building a creative education system to be addressed as the primary task of the Governments. 

·      The current educational and the curricula system in the GCC suffers from notable weakness underlying several reasons:

Ä  Adoption of an educational process based on the pattern of indoctrination and time bound learning, which leads only to skip the stage.

Ä  The outdated and regimented educational process, including the learning modes, learning processes, methods of study, teaching syllabus and trends of the educational objectives. This system is not suited to conditions marked by variations of human capabilities and different levels of intelligence .

Ä  Although application of the educational process based on learning, motivation, the redressing, observation, analysis, criticism, behavior and organization have been largely long ago applied in the West, yet it didn't  affect the educational process in the GCC.

It must be emphasized that education, especially for the early stages, is a public good that must be provided by the government and not the private sector.  It should also be noted that some GCC States have introduced what is known as the trends of the "education for a new era." These are sound steps, which if applied correctly then it will lead to improved educational process and experience, especially those which are based on clear vision and goals to achieve society based on knowledge .

 Using new methods based on science and accumulated experience must come  through:

1.     Establishment of strong foundations for knowledge. Learning must utilize and benefit from the pioneering and successful experiences and  attempt to integrate them in the existing system.

2.     Implementation of reforms while recognizing  the slow nature of gains,  and preparing the society, the media and the public opinion for the process of  change.

3.      Gradual implementation and establishing a system for monitoring and evaluation and correction of the mistakes in the educational process on ongoing basis.   Reforms were supposed to be piloted at the preparatory and primary schools only" and by setting up programs for development of the secondary schools" then the generalization of the most successful experience.

4.     Starting from the kindergartens based on a high level of scientific foundations, which targets capacity development, motivation, personality building, development of  the social skills and the importance of reviewing the existing "private" kindergartens which adopt the teaching method  based on the same method of any other schools, which rely on memorization at an early stage.

5.     Change of the educational curricula to ensure that aims to provide the requirements of the development of the various  behavioural, organizational and cognitive skills.

6.     Importance of drawing up professional and practical curricula presented in simple and attractive ways based on respect for the value of work and on development of the different skills and crafts.

·      Finally, it is worth mentioning that the GCC States have opportunities to move towards the knowledge based industries for several reasons:

-         Large financial resources which enable them to fund many centers of R&D , particularly in the industrial field.

-         Good accumulated experiences in some of the research centers in GCC member states, which are endowed with rich diversity, experience and ability to attract many international expertise, whether as individuals, or institutions

-         Engagement in international partnerships in R&D, as many research and development centers in the GCC countries and especially in Saudi Arabia and Qatar, have developed excellent international partnerships in research and development areas, as well as local partnerships with industrial institutions allowing them to take the lead in some areas, such as medicine, energy, petrochemical and others areas.

Prepared by the Technical Committee of the Conference