How a shift to a ‘knowledge economy’ could transform the Middle East

The Middle East has a long-established reputation for extremism, human rights abuses and underperforming economies.

The region’s leaders tend to point the finger of responsibility for these failings at external actors.

There are, nevertheless, a few who seek solutions to the region’s problems internally. These leaders turn to building “knowledge economies” as a panacea for the Middle East’s chronic problems.

A “knowledge economy” refers to the contemporary post-agricultural, post-industrial global marketplace. Like the related term “information society,” it denotes an economy in which an individual’s professional worth is not gauged by what he or she can make or draw from the ground, but by what that individual knows.

Some seventy percent of the developed world’s jobs are now information-based, and in today’s globalized age, applicants for them are competing not just with residents of their same village, city or country, but with the entire world.

Middle Eastern countries have struggled to adapt to this new reality. Many of their economies are still based on small agriculture and industry, women’s rights are still widely circumscribed, and their national education systems have been slow to introduce critical thinking and an appreciation of knowledge for its own sake.

The average Arab citizen reads just six book pages a year, for example, and the entire Arab world translates fewer books annually than Spain. Likewise, the Arab world has remained woefully behind in scientific and high-tech innovation, lagging the rest of the world in internet penetration and startup creation. Government investment in research and development remains far below the world average.

To address this discrepancy, certain Middle Eastern leaders have turned to “innovation clusters” intended to concentrate local and international entrepreneurs and offer the resources to incubate their ideas.

Abu Dhabi’s Masdar City, Dubai’s TechnoPark, Doha’s Science and Technology Park and the King Abdullah University of Science and Technology in Saudi Arabia represent prominent examples of that effort.

It’s a commendable idea, but one whose success will remain limited without first investing in something the Middle East sorely lacks: soft infrastructure.

Soft infrastructure refers to those institutions required to maintain the economic, health, cultural and social standards of a country — everything from its financial system, governance and schools to police, library and park services.

Creating soft infrastructure remains the most important obstacle towards building sustainable knowledge economies in the region. The building blocks of the knowledge economy — creativity, freedom of expression, social inclusion, and interaction with global cultures — are much more difficult to realize than the bricks and mortar of hard infrastructure. It is, therefore, an empty dream to expect sustainable results from investment in the knowledge economy while maintaining the authoritarian and patriarchal status quo.

One key to strengthening soft infrastructure is building cultures that embrace risk taking. This necessitates cultural transformation in a region where failure is perceived as warranting punishment. Unless Middle Eastern societies learn to see failure as a key to learning, innovation and entrepreneurship, it will be impossible for individuals who fear failure in the short term to transform into successful entrepreneurs in the long run.

Residents of the Middle East, like most people in the world, want what comes with the knowledge economy. Their leaders, however, rarely wish to see the drastic social transformations that accompany it.

Knowledge economies give rise to heated policy debates around good governance, accountability, multiculturalism, gender equality, and worker’s rights among other topics. It is, therefore, impossible to seek a knowledge economy but reject the fundamental rights and freedoms that accompany it.

As those leaders seek to replicate the success of the West, they need to understand that Western prosperity relies just as much on the soft infrastructure of pluralism, rule of law, and rights and freedoms as it does on the hard infrastructure of cement, steel, and asphalt. After all, it is not only relative wages but quality of life that draw creative classes to innovation hubs like Silicon Valley or aspiring “clusters” like Dubai.

Every investment into a knowledge economy brings societies a step closer to opening the floodgates of social and political transformation from an authoritarian political culture to an open one.

After all, Middle Eastern leaders may fear taking the steps to build knowledge economies, but it’s the one thing their long-suffering peoples need most.

This article is published in collaboration with Business Insider. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Aykan Erdemir is a former member of the Turkish parliament and a nonresident fellow at Foundation for Defense of Democracies. Oren Kessler is a deputy director for research at the Foundation for Defense of Democracies.

Image: A view of Jumeirah Beach Residence in Dubai, with the Palm Island Jumeirah in the background. REUTERS/Steve Crisp