Whither the Gulf? Towards Knowledge Economy

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Whither the Gulf? Towards Knowledge Economy
N. Janardhan

(This article was first published on http://english.alarabiya.net)

A fortnight ago, my column focussed on identifying economic diversification particularly during a period of high oil prices as one of several possible reasons for the Gulf region being able to keep the lid on the impact of the boiling Arab Spring. Just as economic diversification has been a necessity to fulfill the newfound desire for sustainable development in an oil-rich region, building a knowledge economy is also important to sustain a non-oil economy in the long term.

While some of the Gulf Cooperation Council (GCC) countries have the worlds best indicators for economic growth, they also have a terrible record in the educational sector.

In 2007, Trends in International Mathematics and Science Study, an examination conducted every four years, yielded discouraging results, as it did four years earlier Qatar was last among the GCC countries with 307 points out of 500; Saudi Arabia and Kuwait were placed just ahead of Qatar; and Dubais score of 444 was the best in the region, though it ranked 27th overall.

Such education has resulted in a situation akin to a ticking time bomb.

The old oil economy helped create the current wealth, but the development of the new economy requires the bulging youth population to be adequately skilled and employed not only for economic, but for social reasons too.

The GCC governments expenditures on education reform were expected to create a generation of skilled nationals who could ultimately replace the expatriate workforce. However, sustained spending on education has not alleviated one of the most important challenges facing the region.

For example, with Saudi Arabias population expected to touch nearly 50 million by 2025, unemployment and its impact is indeed a major concern.

A World Bank report on the Middle East and North African labor markets, estimated that 100 million jobs would have to be created by 2030. But the private sector believes that the challenge would not be to fill 100 million jobs, but to find 100 million employable candidates.

According to one study, the GCC countries need to create four million jobs in the next two decades. While private companies would have to create a majority of these jobs, they are currently producing about 82,000 jobs per year for Gulf nationals.

To bridge the gap, the private sector would have to quadruple its job creation rate and pay twice as much for each of these jobs.

This explains the emphasis on a knowledge economy.

The 1999 World Development Report stated that For countries in the vanguard of the world economy, the balance between knowledge and resources has shifted so far towards the former that knowledge has become perhaps the most important factor determining the standard of living more than land, tools, and labor. Todays technologically advanced economies are truly knowledge based.

This premise rests on breaking away from the neo-classical economics model, which recognized only two factors of production labor and capital for over two centuries. Instead, New Growth theorists stress on a third dynamic technology, where knowledge is seen as increasing the return on investment.

Taking a cue from this, the GCC countries are attempting to tread the knowledge economy route one in which the generation and exploitation of knowledge play the predominant part in the creation of wealth, where human capital is the chief source of economic value, and education and training the main tools.

By studying the successes and failures of education reforms elsewhere and by partnering with some of the worlds leading educational institutions to apply those lessons, the region is attempting to create a unique laboratory for educational innovation.

Education reforms have varied across the region. While the UAE and Qatar have focused their energies on developing private universities, Saudi Arabia is focusing on strengthening public universities.

Most interestingly, all the GCC countries are revamping their school systems.

In a significant achievement, the GCC countries are emphasizing knowledge software over military hardware the UAE and Saudi Arabia have reportedly set aside more than $30 billion on projects that could bridge the knowledge gap.

Apart from school-based reforms that are targeting teachers and students, there are efforts to tie-up with foreign institutions at the higher education level. Qatar, the UAE and Saudi Arabia have several examples of such partnerships.

And, in a classic case of linking economic diversification to knowledge economy, Qatar is planning a high-speed rail link between Education City and Bahrain, which would make a one-way journey possible in just 51 minutes, to woo Bahraini students.

Further, English as a subject and medium of instruction is also getting the deserved attention.

Saudi Arabia has just announced that English will be taught in government schools from Grade 4 effective 2011-2012, advancing it from Grade 6; and since 2010, even three and four-year-olds at government kindergartens across Abu Dhabi are introduced to bilingual teaching.

As much as this dilutes the call for reinforcing national identity, the emphasis on English makes sense because, for example, the UAE Ministry of Higher Education reportedly spends 30 percent of the university education budget on remedial English courses, which is a colossal waste of resources that could be put to better use.

For now, the governments will continue to rely on the expert expatriate workforce to maintain economic growth. But, they will also hope that revamping the education sector and linking it to market requirements will send the right signals for the new generation of citizens.

It is the second stage that is critical if the governments are serious about diversifying their economies away from oil, it is likely to happen only if it is done on the back of indigenous labor because expatriates cannot be expected to be just as committed to achieving national objectives as nationals would be in the long run.

(Dr N. Janardhan is a UAE-based political analyst and author of Boom Amid Gloom The Spirit of Possibility in the 21st Century Gulf (Ithaca Press, 2011). He can be reached at: [email protected])

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