ALKHOBAR — “Knowledge economy” is a phrase that seems to be on everyone’s lips. A recent conference in Saudi Arabia discussed it for days. One would think that this was a new concept, but the fact is that it’s an idea which was first put forward in 1969, by university professor and business consultant Peter Drucker, in his book “The Age of Discontinuity.”
According to the UK’s Department of Trade and Industry, “a knowledge-driven economy is one in which the generation and exploitation of knowledge play the predominant part in the creation of wealth.” In a knowledge economy, knowledge gained by experience is as important as formal education and training. This does not diminish the value of education. However, it is assumed that in a knowledge economy, life long learning is vital for organizations and individuals. It may sound strange that learning would be important for an organization, but in a knowledge economy, intellectual capital is a firm’s source of competitive advantage.
For decades, it has been understood that information and communications technologies (ICT) are important tools in a knowledge economy. The Organization for Economic Cooperation and Development (OECD) regards ICT as a facilitator of knowledge creation in innovative societies. ICT can release people’s creative potential and knowledge, but without intellectual capital there is no knowledge economy.
As the world’s largest software company, a company built on intellectual capital, Microsoft has long played a role in the development of the concept of the global knowledge economy. Jean-Philippe Courtois leads global sales, marketing and services for Microsoft International, a territory that spans 100 subsidiaries operating in over 240 countries outside the United States and Canada. As president of Microsoft International, Courtois drives strategic planning, global operations and key growth initiatives in developed and emerging markets.
Courtois was in the Kingdom recently and sat down with Arab News to present his thoughts on the development of the global knowledge economy, including the challenges facing Saudi Arabia, as the world moves to a new order that rewards intellectual capital above all else.
“Knowledge economy has been a buzz word in the world for a few decades now,” said Courtois. “It has been a big, big, big focus in Europe for the last ten years. The Lisbon Agenda is all about the EU becoming, as it were, the most competitive knowledge economy of the world or at least catching up with the US. This has been a big driver in Europe.”
Courtois explained that the knowledge economy is first of all, about people and skills.
“It is really about the kind of skills you need to have in a nation to basically be able to create a services based economy — which is a broad definition of a knowledge-based economy,” he advised. “So not just relying on manufacturing or agricultural production. But actually all the people-related jobs where invention, where processes and where know-how are key to make a difference.”
According to Courtois, a nation can have a very broad set of industries and jobs in a knowledge economy. These can be in financial services or retail trade, but when countries discuss jobs in a knowledge economy, they most often are referring to those businesses related to intellectual property (IP). While IP is frequently associated with the software industry, basically all the ICT industries, the media industries, pharmaceutical industries, even manufacturing and oil and gas, are IP industries.
“There is a lot of know-how in patents — around many of the process to explore, (to drill,) etc., in oil and gas,” Courtois said. “Everything that can be associated to ideas, inventions, copyrights and patents is part of the IP world, at least that’s my definition. That all starts with people. Education is key. Wherever I go in the world, and I’ve probably been visiting perhaps 85 countries in the last couple of years, east or west it’s about the higher education in particular and the way that countries are reforming and changing education.”
ICT is important in education because it can expand on the resources available for learning. Courtois cautioned though, that people shouldn’t concentrate too much on the technology. Instead, there needs to be more emphasis on how that technology can enable education.
“It’s not about (setting up) ICT courses in every school in the Kingdom or the world,” remarked Courtois. “It’s about providing the tools for teachers to innovate in the ways that they work. This is one of the big focuses that Microsoft has as a company. We have a program called Innovative Teachers. While we have brought some of the program ideas here, frankly there’s much more that we can do to help teachers create their own curriculum, content and way of teaching.”
Microsoft in Saudi Arabia is planning to expand the Innovative Teachers program. The company sent 30 Saudi teachers to training programs in Sharjah and Jordan last year. This year, Microsoft Saudi Arabia is planning to send another 15 Saudi teachers to Morocco for training on this program and by mid 2008 the Innovative Teachers program will be launched in the Kingdom.
In the interview, Courtois expressed concerns that the Kingdom isn’t doing enough to develop the resources needed to be competitive in a global knowledge economy. His concerns were bolstered by a new report from the World Bank, “The Road Not Traveled: Education Reform in the Middle East and Africa.” The report found that in the key elements required to play a strong role in the global knowledge economy, Saudi Arabia continues to lag — even when measured against countries such as Malaysia and the UAE.
“I was told that in the Kingdom, and this is one of the indicators that we look at, that there are only 500 computer engineers — engineers not technicians — being graduated every year,” noted Courtois. “That’s a super low number compared to the size of the economy and compared to the needs of the economy. I can actually relate to that in a business sense.
The last couple of days I met with many customers and there is a common need (for human resources). There is a strong appetite. They are consuming technology in banking, retail, government, etc. They ask us as Microsoft to basically step up and provide more human capital. This is their words, not my words. They are saying that they need more talented people to help them get the best out of our technologies.”
In another example of how Saudi Arabia lags in the indicators of a knowledge economy, Courtois revealed that in the Kingdom, Microsoft is working with only about 2,500 partners. According to his analysis, that is small number for an economy the size of the Kingdom’s. Typically in a nation with an economy the size of that here in Saudi Arabia, Microsoft would have had at least two or three times as many partners.
Courtois went on to advise that the second key factor in the creation of a knowledge economy is research and development (R&D).
“R&D has been an obsession in Europe for many, many years. There is this magical number which many governments aspire to do and that is to invest at least three percent of GDP in research and development,” he said. “When you look at the number, it’s a composite of private and public investment in R&D. The most important thing is to have this combination, where the government is helping to fund some national or key R&D projects, mixing academia, centers of research and public research with the business community.”
Without a doubt, it is essential that the largest local enterprises invest in the future by creating IP research and development. Last, but certainly not least, a knowledge economy depends on the participation of small businesses in the economy, through their creation of knowledge workers.
“In many of the countries of the world, 80 to 90 percent of the jobs come from the small businesses,” Courtois said. “At the end of the day, if you want to create more IP and more invention, you need to connect between research and entrepreneurs. People who are going to take a risk.
That also requires venture capital, angel investors and incubators, and that needs to be put in place.”
He continued, “Typically it can be a combination. Sometimes financial institutions will bring the funding — it’s just a matter of them finding the right projects to fund. In countries where the culture of investing is not available, the government has a key role to play to start seeding those projects with universities. You need to create a place where young students can flesh out their business plans and further develop their research projects and then have a fund to help students get started in their businesses.”
Perhaps the most important point Courtois made is that creating a knowledge economy doesn’t happen overnight. The Kingdom clearly needs to move faster and work harder to reach the goal. His estimate for how long it will take to make the changes that result in a successful knowledge economy — “ten, fifteen or even twenty years.” The time for talk is over.
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