Education, more precisely quality education, is at the heart of such a transformation, as development literature highlights the critical importance of building “human capital.” Most of the Gulf countries have concentrated an upgrading the higher education sector in the belief that higher education is important in the establishment of a knowledge-based economy which exercises a direct influence on national productivity, which then in turn will positively determine living standards and a country’s ability to compete in today’s global economy. Qualitative education encourages improvement in all sectors of the economy, as it will incentivize higher-level skilled labor to use new technology and boost productivity. In the final analysis, the ability of any society to produce, select, adapt and commercialize knowledge is critical for sustained economic growth and improved living standards.
Resource-poor countries such as Singapore, Malaysia, South Korea or even Taiwan have produced for more commercial patents than comparable oil and other resource rich economies, as they realize that economic growth is as much a process of knowledge accumulation, as one of capital accumulation. As such, some developing countries and others in the developed world like Finland, Switzerland and Sweden, devote more of their investment expenditure to knowledge-based intangibles such as training, research and development, patents, licensing and design. Their strategic objective is simple: to gain a competitive edge over others in the global economy. It is not a coincidence that the savage cuts in the UK’s education sector and planned rise in student fees has made the normally reticent Gordon Brown warn of a social time bomb and a vision of wasted youth talent and rising unemployment in the UK if the cuts are not reversed, and urged Britain to also follow in Germany’s footsteps to encourage more technical apprenticeship schemes.
Saudi Arabia is trying hard to diversify its economic base to ensure that it becomes less dependent on the vagaries of one commodity: Oil. Education spending and reform in this sector is increasingly taking a central plank in Saudi development plans and forecasted expenditures, with the lion’s share of the new SR1.4 trillion Ninth Five Year Plan allocated to human resource development. New universities have sprung up, both governments owned and private sector, as well as the establishment of world class universities such as King Abdullah University of Science and Technology (KAUST). For Saudi Arabia, education plays an important unifying and nation-building role by promoting greater social cohesion, trust in social institutions, national participation and the appreciation of diversity.
However, despite such laudable goals and massive expenditure on the education sector, there is still an imbalance between the quality and quantity of the occupational expertise produced by the Saudi education system, as opposed to the occupational structure demanded by the economy represented by present and future employment opportunities, especially a growing shortage of technical and scientific graduates to meet the demand of the mega projects in the pipeline.
At the same time, the educational sector as a whole, not just at the graduate level, is increasingly challenged by the rapid pace of scientific and technological developments which requires a continuous review of the educational curriculum so it stays current to latest developments. This also requires improving the technical capabilities of teachers, instructors and other educational professionals, as well as enhancing educational governance and management. The “spill-over” effect of such changes can be far reaching, but one has to be realistic, as best practice benchmarking and their application will take time to assimilate, as this involves a paradigm shift in the manner and mode of teaching and learning.
According to World Bank studies, there are four complementary roles of strategic dimensions that can guide countries in the transition to a knowledge-based economy: an appropriate economic and institutional regime, a strong human capital base, a dynamic information infrastructure, and an efficient national innovation system. Saudi Arabia has taken steps on all four fronts, but not all are advancing at the same pace, with building a stronger human capital base probably the most impressive, but establishing an efficient national innovation system and culture still lagging behind. To try and catch up, a mixture of strategies has evolved, including the establishment of a world-class university such as KAUST, while empowering and upgrading existing universities that have the potential to excel. Overall, these are exciting and challenging times for Saudi Arabia which has made an explicit commitment to be part of the knowledge based economies of the world, whatever the obstacles. The alternative is to remain an importer of goods and services at the mercy of shifts in global energy demand and its composition, whether renewable or depleting.
— Mohamed Ramady is a former Banker, and currently a Visiting Associate Professor, Finance and Economics at King Fahd University of Petroleum and Minerals.