Knowledge Economy and Economic Development in the Arab Region

This paper aims to discuss the relationship between knowledge, knowledge economy and economic development in the Arab region. It aims to contribute to improve understanding and provide valuable contribution to the increasing debate in the international literature concerning the relationship between knowledge economy and economic development in the Arab region. We use the descriptive and comparative approaches and methods of analysis and use the conceptual framework and indicators often used in the international literature to discuss the relationship between knowledge, knowledge economy and economic development in the Arab region. Different from previous studies in the Arab literature, we fill the gap in the Arab literature, we present an in-depth and a more comprehensive analysis of the relationship between knowledge economy and economic development in the Arab region defined by income level using recent secondary data related to knowledge economy obtained from the Global Innovation Index Report (2018) and the World Bank (2012). Our results support the first hypothesis concerning the considerable variation in the promotion of knowledge economy depending on the level of economic development across the Arab countries. Our findings verify the second hypothesis that the relationship between knowledge economy and economic development in the Arab region is determined by several factors including economic development, economic incentives and institutional regime, education and human resources, innovation system and Information and Communication Technology. Our results support the third hypothesis that sound and coherent policies for the promotion of knowledge economy through the promotion of economic incentives and institutional regime, education and human resources, the innovation system and Information and Communication Technology would contribute to accelerate achievement of inclusive growth and sustainable development in the Arab countries. Our results in the Arab region show positive relationship between income level and knowledge index, knowledge economy index and knowledge economy index and most of knowledge economy indicators including knowledge workers, knowledge-intensive employment, knowledge absorption, knowledge and technology outputs, knowledge impact and knowledge diffusion. Our findings in the Arab region show positive relationship between income level and all knowledge economy index pillars (economic incentive and institutional regime pillar, education and human resources pillar, the innovation system pillar, and information and communication technology (ICT) pillar) and all factors facilitating the promotion of knowledge economy including institutions, human capital and research, education, tertiary education, research & development (R&D), infrastructure, information and communication technologies, and innovation. The major policy implication and recommendation that the promotion of knowledge economy depends on promotion of institutions, economic incentive and institutional regime, education, human resources and research (human capital, education, tertiary education, research & development (R&D)), innovation system (innovation input, output and efficiency) infrastructure, and information and communication technologies.