This research project has characterized the main trends taking place in Arab countries, in relation to different components of the knowledge economy. Its main objectives is to suggest new economic and social policies that are likely to enhance the benefits from the knowledge economy in countries and in the region while ensuring a benchmarking with Central and Eastern European economies.The conduct of this research is based on the analysis of series of issues related to the knowledge economy in both Arab and Eastern and Central Europe. These issues are grouped into four major interdependent areas:
- Methodological matters, where more emphasis is placed on the central research questions, the methods pursued and the data used. It also underlines the main reasons for choosing the benchmark with Eastern and central Europe.
- Characterization of the situation of knowledge economy in both groups of countries while accounting for global, local and regional development.
- Main Issues related to knowledge economy in education, production, trade and energy the Arab countries
- Directions of economic and social policies that, are likely to be promising for the enhancement of the benefits from the knowledge economy.
The methods used in this study include descriptive statistics, trend analysis, regression analysis, principal components approach and panel data estimation with comparisons of results using the appropriate statistical tests, including that of Chow. The empirical applications vary with the issue discussed for each dimension where a specific analytical tool is used. The data used are mainly secondary and provided by international, regional and national organizations. But most of the data is from international organizations. More details about the methods and data are provided under each specific section in each part of the report.Several hypotheses are tested based on the above empirical methods and data. All focus on comparisons between Arab and EEE countries. They cover the determinants of migration of students, the links between economic and social outcomes with the variables of the knowledge economy and other hypotheses related to the effects of socioeconomic policies as well as the link between IPRs and development with focus on software as an ICT component.The results attained include:
- The highly imperfect adoption and diffusion of the knowledge economy in every country but with a promising trend shown by the oil producing and exporting countries in contrast with North African economies, Jordan, Syria and Yemen. These latter countries and especially Morocco, Tunisia, Jordan and Egypt may need more financial support to accelerate their engagements in education, research, innovation and enterprise creation. The attempts made by these countries towards knowledge economy seem to be constrained by the absence of resources. But, Algeria with abundant resources from oil has made only few steps towards the knowledge economy.
- The resilience of rent based economies with regard to further adoption of knowledge based activities including the limited creation of new smart enterprises could be changed under new political transformations that lead to further openness to new technological, institutional and social innovations.
- The clear negative relationships between rents and knowledge economic variables show that abundant financial resources can also be targeted to new knowledge economic based projects and ventures.
- The great need for a new growth path is clearly expressed for these countries as unemployment is at very high levels, except in countries with limited employment problems (Qatar, UAE and Kuwait). The social and economic needs of the younger generations require changes in the growth and development visions with focus on knowledge economic dimensions. North African countries besides Jordan, Yemen and Sudan need full shifts of their current policies towards the new knowledge path.
- Local and regional development could be further promoted through knowledge economy as currently there is concentration of growth in major global urban agglomerations. The expansion of knowledge to territories is likely to generate new opportunities for local and global development.
- The promotion of the political, economic and social policies in favor of knowledge economy are important drivers to researchers and innovators to engage further in technological, institutional and social innovations. These include political accountability with the creation of democratic institutions.
- The expansion of the intellectual property rights at levels of institutions, groups and researchers globally and at the level of territories constitutes an important facilitator for development incentives. This applies also to enterprise creation and development.
- There are similarities in some areas of knowledge economy between EEE and Arab countries but there are also promising experiences to be learnt by Arab economies.
- These experiences include education, research, enterprise incubation and development. Territorial initiatives in EEE are also important sources that show the promising effects of engagement in knowledge economies.
10. Inclusion of all the segments of the population is very concrete process where all find opportunities that they can value and that enhance the welfare, the growth and development of each of the economies.The prevalence of social and economic imperfections in Arab economies leads to further imperfect adoption of the major ingredients of the knowledge economy. The signals exhibited by some of the countries in relation to the progress in knowledge economy are not consistent with the signals of enterprise creation and employment of skilled labor. Even, skilled labor deficit economies appear to be limited in generating employment for their own graduates. Enterprise development appears to be also lagging but in all Arab countries. The younger generations are those that are paying the costs of the on-going imperfections. They often do not see the immediate and the medium run impacts of the on-going development strateies. This leads to the development of the perception of implicit exclusion as older generations and their international partners enjoy the rents that are dissipated from traditional development modes and the on-going ways of dealing with knowledge economies. This may generate further frustrations as the likely benefits that could be generated from further progress in production, adoption and diffusion of the new knowledge economy components are not attracting the attention of the on-going systems of governance.Besides these overall results, some specific matters are also attained in this study. They account for the following elements:
- The advancement in knowledge economy requires more openness and more transparency
- Knowledge economy provides new alternatives for participative development
- Enterprise creation needs to be promoted
- Research and innovation besides the culture of IPR protection is unavoidable source for accelerating investments and then generating new types of growth in the Arab region
- While EEE countries appear to be smoothly engaged in knowledge economy, their experiences are important for some Arab countries for both global and local engagement in research innovation and enterprise creation
- There are policy frameworks and initiatives that need further monitoring through global and local engagement of Arab countries in vision setting and pursuit of knowledge friendly development.
There are international institutions and organizations besides countries such as those of the EU that could accompany as partners, the processes of further engagement in knowledge economy of the Arab countries. The frameworks provided by ISESCO, UNESCO as well as World Bank and the European Investment Bank are very promising. These need to be furthered in relation to the existing and potential framework already developed to include GCC, Arab League, Maghreb Arab Union besides the Union for the Mediterranean region and the existing bilateral and regional trade agreements. The Barcelona system of the EU is also promising for the pursuit of the shifts towards new knowledge economy for the Arab economies. New economic and social policies that are targeting the use and contribution to knowledge economy in the Arab countries appear to be possible as each of these economies is facing major challenges of employment, investments and new growth paths.