Challenges in Transitioning to a Knowledge-Based Economy in Saudi Arabia

1
LEADERSHIP IN BUSINESS
ECONOMICS ASSIGNMENT

2
Contents
Introduction................................................................................................................................3
Analysis......................................................................................................................................3
Conclusion..................................................................................................................................4
Reference....................................................................................................................................5

3
Introduction
Saudi Arabia is the largest exporter of oil in the world and a member of G20. Most of the
revenue of the government comes from the oil-exporting sector of the country. The oil
exploration in the early half of the 20th century allowed the country to improve the economic
standards. However, the government wants to diversify the source of economic prosperity
thereby transitioning slightly towards a knowledge-based economy. The article in question
discusses the challenges in the path of doing that. The objective of this paper is to present a
critical analysis of the approach of that article.
Analysis
The approach chosen by the article for the analysis is descriptive, information taken mainly
from the secondary sources. The paper first establishes the fact that education is important for
the economy to be sustainable in the near future. It also shows that transitioning into a
knowledge-based economy has benefited many economies of the world before. The study
finds out that a knowledge-based economy requires a high level of human capital (Alomari,
2019). However, there are instances where an economy with low human capital has
contributed to the knowledge-based economy. One of the major examples is the Philippines
which is among the best knowledge service providers in the world. The human capital index
of Philippines is 0.55 which is lower than that of Saudi Arabia, 0.58. Therefore the challenge
that has pointed out in this paper can be criticised.
The paper also highlights that it is important to transition into a knowledge-based economy in
the 21st century as it would provide some benefits to the economy to survive in the
competitive world (Sohaib, 2016). It also noted that the knowledge-based economy along
with the powerful oil industry of the country will provide sustainability in the long term.