Exploring Saudi Arabia's Knowledge-Based Economy: A Case Study

Running Head: KNOWLEDGE BASED ECONOMY, CASE STUDY OF SAUDI ARABIA 1
KNOWLEDGE BASED ECONOMY, CASE STUDY OF SAUDI ARABIA
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KNOWLEDGE BASED ECONOMY, CASE STUDY OF SAUDI ARABIA 2
Introduction
A knowledge-based economy is an economy that is characterized by its reliance on
knowledge as a major source of its competitiveness. Mainly this kind of an economy capitalizes
on the important role of science, technology, research, and innovation to create knowledge.
Additionally, this kind of an economy is also characterized by the high reliance on computer and
internet to access, share and then apply the knowledge. According to the OECD, knowledge-
based economy has been associated with high technology of manufacturing, advanced services
sector industries such as software design and advanced business services such as information and
communications (Balcerzak & Pietrzak, 2016). Unlike in the traditional models where economic
activities were entirely based on the three basic factors of production which are land, labor,
capital, and entrepreneurship, knowledge-based economy has widened the scope of labor factor
from the basic production of goods on the assembly line to an advanced flexibility design,
manufacturing and implementation of business ideas.
The two types of knowledge which are considered under this type of economy are
explicit knowledge which is based on fact figures and data, and then the tacit knowledge which
frames how thing work, the experience and how people should be dealt with (Bano & Taylor,
2015) In regard to this kind of an economy, education qualifications are seen as the key
indicators of person’s tacit knowledge and, to some extent, explicit knowledge. However, the
largest part of the knowledge-based economy is achieved through practical learning which falls
under traditional education.
Compared to the traditional economies, knowledge-based economies have some distinct
features which make them stand out. First of all, this type of economy largely relies on

KNOWLEDGE BASED ECONOMY, CASE STUDY OF SAUDI ARABIA 3
knowledge and information as its key driver of productivity (Drahos & Braithwaite, 2017 ). For
instance, this type of economy highly invests in research with an aim of collecting information
about various stakeholders in the economy. Mainly, this type of economy is always keen on any
kind of information and data concerning its stakeholders like customer behavior, fluctuations on
the economic activities and predictions of markets in order to make decisions.
The knowledge-based economy is also characterized by rapid growth in high technology
investment and industries. Considering the fact that this economy majorly relies on information
as its key driver of productivity, it tends to raise the demand for technology services and devices
which are the sole conveyors of timely information (Ejdys, Ustinovičius & Stankevičienė, 2015).
For instance, for a company to stay updated on the current issues; it will have to invest in modern
technology like specialty search engines and SEO tools. These kinds of technologies are
provided by technology companies and rising demands by the consumers tend to make the sector
more attractive for investments. In addition to that, demand for technological devices tends to
increase as a result the increasing demand for real-time market information and that as well
promotes the industries producing such devices (Garicano & Rossi-Hansberg, 2015).
Additionally, in a knowledge-based economy is also characterized by high growth in
knowledge-intensive service sectors such as the education sector, communication and
information sectors. This is again borrowed from what was pointed out as the first feature of this
economy, its reliance on knowledge and information as the key driver of productivity
(Khorsheed, 2015). Because the information and knowledge are conveyed through the modern
technology whose scope is not large enough, companies and other business organizations tend to
seek training on the basics of this technology so that they can leverage on its benefits. As the