kbe strategy final document
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KBE Strategy Final DocumentTRANSCRIPT
NATIONAL STRATEGY FOR TRANSFORMATION
INTO KNOWLEDGE SOCIETY
TRANSFORMATION OF THE KINGDOM INTO
KNOWLEDGE SOCIETY/
KNOWLEDGE-BASED ECONOMY
1434 H
2
Contents
Table of Contents
List of tables
List of figures
List of boxes
List of appendices
Preamble
Chapter (1): National Strategy for Transformation into Knowledge Society
1. Importance of the Kingdom's Transformation into Knowledge
Society
2. The Key Elements of the Strategy
3. The Vision
4. Objectives
5. Policies (Initiatives)
5.1 Microeconomic Policies
5.2 Macroeconomic Policies
5.3 Promoting the Administrative and Organizational Capacity of
the Government Agencies
6. Time Schedule (A Staged Approach for Transformation into
Knowledge Society)
7. Quick-Wins Initiatives (Enablers)
Chapter (2): Strategy Implementation and Follow Up
1. Current Situation of Implementation
2. Mechanisms of Implementation
2.1 Preparing the National KBE Strategic Action Plan
2.2 Preparing KBE Financing Strategy
2.3 Broad Consultation and Engagement of Related Civil Society
Organizations
3. Follow Up and Monitoring System
3.1 Performance Measurement Indicators
3.2 greater Emphasis on Quantitative and Qualitative Dimensions
4. Institutional Arrangements
4.1 High-level Government Entity for Supervision of
Transformation into Knowledge Society
4.2 Saudi Development Institute
3
List of Tables
Table (1): Composition of the National ESDI
Table (2): Education and Human Capital Policies
Table (3): Science, Technology and Innovation Policies
Table (4): Policies Aimed at Development of ICT
Table (5): Policies related Market and Institutions
Table (6): Strategic Action Plans – An Example
Table (7): A Selective List of the Most Notable Recent Achievements and
Underlying Policy Initiatives of KSA
Table (8): Kingdom's Position in a Sample of International Indices
Table (9): SWOT Analysis
Table (10): The Structure of the Prototype ESDI Model
Table (11): Comparison of ESDI Results, 2000 and 2009
4
List of Figures
Figure (1): Illustrative Model for Bridging Knowledge Gap through
Exponential Growth Pattern of Acquiring Knowledge
Figure (2) Key Elements of the strategy
Figure (3): Time Frame for Implementation of the National Strategy for
Transformation into Knowledge Society
Figure (4): Development and Growth of GDP
Figure (5): Development of Education, ICT and Science and Technology
Indicators
Figure (6): Development of Industry Sector and FDI Indicators
Figure (7): The GDP and Employment Shares by Sectors (1991- 2000, and
2010)
Figure (8) Economic and Social Development Index
Figure (9):
5
List of Boxes
Box (1): Knowledge-based Economy (Definition – Characteristics –
Activities)
Box (2): Policies Related with Knowledge Intensive Industries and
Services
Box (3): Policies related with Spatial Development
Box (4): Policies related with Spatial Development
Box (5): Policies Aimed at Maximizing the Utilization of Globalization
and Regionalization
Box (6): Policies Related with Upgrading Administrative and Regulatory
Capacities of Government Administrative Body
Box (7): Policies Related with the Strategy's Coordination and
Implementation Mechanisms
Box (8): Policies Aimed at Upgrading Capacities of Government Officials
Box (9):
Box (10):
Box (11):
6
List of Appendices
Appendix (1): Current Conditions and Major Challenges
1. Main Achievements and Underlying Policies
2. Future Issues and Challenges
3. Macro Economy Development
Appendix (2): Basic Follow-up Measure of the Strategy:
Economic and Social Development Index (ESDI) Model
1. Basis and structure of ESDI
2. Economic and Social Development Index
Appendix (3): Methodology of Strategy Preparation
Appendix (4):
a)
b)
Appendix (5):
Appendix (6):
7
Preamble:
Global Transformation into Knowledge Society:
Most countries of the world have recently experienced a clear economic and
social transformation into what is known as knowledge society which
"generates, disseminates and utilizes knowledge to improve the standard of
living and quality of life of the citizens in a sustainable manner". Such a
transformation came as a new phase of move to information society.
Transformation into a knowledge society implies social, economic, cultural,
political and institutional dimensions. Therefore, knowledge, in this context,
comprises all types of knowledge in all sectors and activities.
Transformation into knowledge-based economy is inevitable for transition to
knowledge society. In such an economy, growth depends on knowledge factor
more than ever in human history. Utilization of knowledge in all sectors of the
economy is considered as a key for development, creation of job opportunities
and economic diversification. In light of this transformation, drivers of
economic growth have differed from those prevailing 25 years ago. Hence, this
transformation has been accompanied with change in some economic policies to
reflect higher attention paid to innovation and its utilization in all sectors, giving
a new task to technology and related investment, development of entrepreneur
activities, development of education, enhancing life-long learning, building
manpower capabilities on advanced bases, shifting management from hierarchal
structures to rapid interacting horizontal networks, in addition to radical
structural reforms. This comprehensive shift in policies have necessarily led to a
qualitative shift in the competitive and productive capacities of the economy
thereby changing the economic growth curve. The growth rate is increasing
markedly moving from the growth curve prevailing in the developing countries
to the growth curve of the advanced countries which have already transformed
into knowledge society (figure 1). Many developing countries have experienced
such a change, including South Korea and Singapore.
8
Box (1): Knowledge-based Economy (Definition – Characteristics – Activities)
Definition: The World Bank defines knowledge economy as: "the economy which is able to
acquire, generate, spread and utilize knowledge in an effective manner to accelerate
the pace of economic and social development".
Characteristics: The main characteristics of the knowledge-based economy comprise the following:
1. Dependence on highly educated, productive manpower.
2. Close linkage with global sources of knowledge.
3. Communications and information technology composes the main tool of its
activities.
4. Existence of a social environment conducive to international talents.
5. High national per capita income.
Activities Knowledge-based Economy: The process of transformation into knowledge-based economy and the move to
knowledge society in a broader manner, comprises the following activities:
1. Knowledge Generation Activity:
This activity ignites the spirit of innovation in all sectors of the society on one
hand and enhances R & D in universities, research institutions and industries,
KACST, government agencies, and public and private production and services
institutions, such as large companies, health facilities, … etc. on the other hand.
2. Knowledge Transfer Activity:
This tasks place via two channels. In the first one, knowledge is transferred
indirectly by acquiring franchises, patents, information and expertise or skills,
education and training of human resources, and acquisition of technology. In
the other channel, knowledge is transferred directly by acquisition of advanced-
technology production lines, acquisition of machineries and equipment,
acquisition of appropriate foreign companies, and attracting technology
companies for direct investment, technology transfer and performance of
research activities.
3. Knowledge Accumulation and Management Activity:
This activity is represented in accumulation of knowledge wealth or
accumulation of intangible assets, and comprises one of the importance
activities of the knowledge-based economy. Management of knowledge takes
apparent dimensions in this type of economy due to its important role in
sustainability of innovation and creativity process.
4. Activity of Knowledge Dissemination in the Economy and Society:
This activity is undertaken by many knowledge-related institutions. In case of
the Kingdom, this activity may be performed by institutions of general
education, higher education, and training, as well as technical and vocational
training institutions. Moreover, communications and information technology
companies, and Ministry of Culture and Information and related agencies
9
provide necessary infrastructure for dissemination of knowledge, such as
computers and computer networks, including internet, as well as
press, radio and television channels.
5. Activity of Knowledge Utilization in Various Sectors:
It takes place via activities of R & D and innovation, encouraging production
and services companies to increase the level of knowledge and make use of
development and innovation outputs. Spread of this activity leads to production
of highly competitive, export-oriented national goods and services, thereby
contributing effectively to sustainable development process, high rates of
growth and building of a sustainable knowledge society.
Figure (1): Illustrative Model for Bridging Knowledge Gap through Exponential
Growth Pattern of Acquiring Knowledge
Knowledge Gap
Time
Kn
ow
led
ge
inte
nsi
ty
10
Source: Towards Knowledge Society, Arab Human Development Report, UNDP,
Arab Fund for Economic and Social Development.
11
Transformation into knowledge society involves increased importance of
knowledge and innovation role in economic and social performance;
accumulation of wealth; rapid generation; spread and utilization of knowledge;
increased role of education and training; increase of global competitive
environment; trade liberalization; increase of knowledge content in exports; and
globalization of production.
Transition to knowledge society is characterized by many important properties
particularly that knowledge comprises a basic form of material and human
capital; economic and social growth is based on knowledge accumulation; new
technologies lead to a series of innovation that lead; in turn; to rapid growth
rates; technology increases the return on investment thereby ensures the
sustainability of growth (contrary to the traditional theory which assumes
decrease of investment return over time); investment increases the growth of
technology and vice versa and as a result there is a sustainable growth (contrary
to the traditional theory). Moreover, intellectual property rights lead to
investment in R & D and innovation and, accordingly, to growth. This
contradicts with the traditional theory which believes in full competition.
Finally, there is a greater impact of the competitive advantage compared with
the comparative advantage.
National Strategy for Transformation into Knowledge Society in the
Kingdom:
Intensive development efforts continued, in the Kingdom of Saudi Arabia, over
the past four decades to maintain high levels of growth, raise the standard of
living and improve the quality of life of citizens. KSA has made impressive
progress in achieving this goal as indicated by economic and social indicators,
particularly in light of enhanced efforts and accelerated paces over the few past
years.
A truly impressive societal dynamism is in place now, and is marching steady
towards a more diversified and higher knowledge-contents economy beyond
"natural sources-based-economy". Yet, still there are many challenges that KSA
should overcome in order to secure its path towards the long-term vision.
12
Alongside its strategic assets, there exist structural and institutional problems
which should be confronted.
In light of the abovementioned, Royal Decree No. 546 was issued on
2/1/1433H, entrusting the Ministry of Economy and Planning to "Prepare a
comprehensive, pragmatic national strategy for transformation into knowledge
society, supported with action programs, time schedules and specific costs".
The decree was put into effect by preparation of this strategy which also
includes preparation of an implementation plan to enable the Kingdom tackle
the challenges and attain the future vision of turning itself into "a diversified,
prosperous, private sector-driven, knowledge society, while safeguarding
Islamic values and Kingdom's cultural heritage as stated in the Long-term
Development Strategy of the Kingdom. To attain this goal, the strategy of
transformation into knowledge society comprises the main factors leading to
this end while focusing primarily on the question of how to transform KSA into
knowledge-based economy as a prerequisite for attaining a sustainable
knowledge society. On the other hand, this strategy does not explain other
issues in detail, such as spatial development, environment and energy due to
existence of official strategies concerning these issues.
This report adopts a problem-solving approach by reassessing the current
conditions of the Kingdom and re-evaluating the challenges it faces in its
transformation into knowledge society, and analyzing points of strengths and
weaknesses and opportunities and threats (SWOT). Hence, the strategy aims to
provide a detailed, strategic roadmap designed to show how to bridge the gap
between the status quo and the intended knowledge society and the long-term
vision in the Saudi national context.
Although this strategy does not reiterate analyses prepared in the context of the
previous national strategies, it does refer to them several times, as it builds on
the existing strategies, policies and plans, such as: "National Science and
Technology Policy", "National Communications and Information Technology
Plan", National Industrial Strategy", Prospective Higher Education Plan
(AFAQ)", Giftedness, Creativity and Innovation Support Strategy 1444H", and
"National Transport Strategy".
13
The main elements of the strategy comprise vision, objectives and policies. Four
strategic measurable objectives were adopted to reach a solid, strong growth
engine, a high degree of social welfare and coherence, well-developed human
resources, and a regional and global leadership. On the other hand, policies are
characterized with inclusion of sectoral policies, macroeconomic policies, and
government administrative and organizational capacities development policies
which comprise two sets of policies: the first is related to coordination
mechanisms, and the second deals with upgrading the capacities of government
officials. The policies are classified into three categories: existing policies, new
policies, and structural reform of implementation.
The most salient features of this strategy are reflected in three main points:
- First: it focuses on addressing the key issues from a holistic perspective,
presenting problem solving courses of action which conform to the long-term
vision. While the existing strategies documents comprise a list of problem areas
which require policy intervention, the actual policy details are left to the
discretion of individual ministries or programs or projects related to particular
tasks. In contrast, this strategy report provides a more complete and integrated
document, showing how the detailed policies across different sectors or
components of the knowledge-based economy can be coordinated in an
integrated manner to attain the vision at the national level.
- Second: while the existing strategies tend to focus on the micro aspect of the
knowledge society (human capital, CIT, and S & T), this strategy pays attention
to all aspects (micro and macro) for reform of issues at the macro level, such as
public administration, corporate sector, labor market, finance, and repercussions
of globalization, all of which are major long-term challenges that are likely to
confront the Kingdom's path towards transformation into knowledge-based
economy and knowledge society.
- Third: this strategy pays substantial attention to the action plan related to
institutional set-up and human capacity building as part of the call for upgrading
the implementation mechanisms. In this regard, it proposes the following:
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(a) Establishment of a higher council for knowledge society, after the fashion of
Higher Education Council, chaired by the Custodian of the Two Holy Mosques,
and the Minister of Economy and Planning as a vice chairman.
(b) Establishment of the Saudi Development Institute (SDI) for economic and
social policy research, after the fashion of KDI. The board of directors of the
SDI should be chaired by the Minister of Economy and Planning.
(c) Use of a new, more objective tool based on "Economic and Social Development
Index" (ESDI) for measuring the progress towards attaining the strategy and all
related key elements, including the future vision, long-term objectives, and
policies.
15
CHAPTER ONE
NATIONAL STRATEGY FOR TRANSFORMATION INTO
KNOWLEDGE SOCIETY
16
1. Importance of the Kingdom's Transformation into Knowledge Society
The advanced countries completed the process of transformation into
knowledge-based economy and knowledge society over the last quarter of the
20th century. In order to make use of the experience of the advanced countries,
many developing countries are endeavoring to change their economic policies to
attain such a transformation. As an economic developing country, the Kingdom
recognizes the necessity of transformation into knowledge society as imposed
by the requirement of growth and the global development where the concept of
international competition has changed making knowledge the basis of
competitive advantages among countries with diminishing of the effects of
comparative or differential advantages.
This transformation entails laying emphasis on development of human
resources to become more creative and productive. Some practices have
emerged, such as: increased importance of knowledge and its role in wealth
accumulation; rapid generation, dissemination and utilization of knowledge;
increased global competition and its dependence on knowledge; increased role
of education and training; trade liberalization; increase of knowledge content in
products and exports; and globalization of the production process through
multinational companies.
Accordingly, transformation of the Kingdom into knowledge society becomes
inevitable to ensure sustainability of development process and building of a
modern, competitive economy. Hence, adoption of a national strategy in this
regard, supported with a detailed implementation plan, is considered as an
urgent, logical measure. Success in attaining transformation will contribute to
addressing important issues at this stage of the Kingdom's history, particularly
the following (appendix 1):
Providing elements of economic and social stability in the medium and long
runs, and ensuring sustainability of development process and stability of growth
rates.
Addressing the issue of economic diversification, reducing the dependence on
oil and gas, and building a sustainable production base for post-Oil period.
17
Continuing to raise the standard of living and quality of life of the citizens and
ensuring their sustainability.
Attaining a substantial increase in labor productivity and increasing the rate of
return on human investment.
Providing decent, productive job opportunities to the youth, and absorbing the
population growth in a safe, productive manner.
Transforming the society into a one that believes in the role of science,
appreciates the value of knowledge generation, dissemination and utilization,
thereby affecting the practices and attitudes of the individual towards society,
work and economy.
Enhancing the stand and role of the Kingdom at the regional level (within the
GCC or LAS contexts) or at the Islamic world level (in the context of OIC), or
at the global level as a member of G-20.
2. The Key Elements of the Strategy
Figure (2) shows the key elements of the strategy represented in: vision,
objectives and policies of the Kingdom's transformation into knowledge-based
economy and knowledge society.
Based on the vision, four strategic objectives were derived covering basic fields
of transformation into knowledge society. Achievement of these general
objectives can be measured by use of specific indicators for each objective.
To attain these objectives, the strategy adopted three types of policies:
a. Sectoral economy policies which cover five fields, each of which comprises
specific policies.
b. Macro economy policies which include a set of policies related with
establishment of a new, enhanced market and business environment, and
another set for maximum utilization of globalization, regional blocks,
membership of the WTO, and bilateral and multilateral agreements.
c. Policies pertaining to improvement of administrative and organizational
capacities of the governmental body. They comprise two sets of policies: The
first relates to coordination mechanisms and the other deals with upgrading the
capacities of government officials.
18
Policies (103 policies) are classified in: improvement of existing policies, new
policies, and structural reform policies. Total number of policies in the second
and third categories amounted to about 80 policies.
The strategy also comprises a timeframe for implementation. It has been
developed according to a three-stage approach for transformation into
knowledge society. The strategy adopts three stages: the first is concerned with
implementation of the existing initiatives and policies in this field in addition to
implementation of quick-wins. The second is related to attaining major changes
and structured reforms to pave the way for realizing the intended
transformation. The third stage concentrates on consolidation of transformation
attained through completion of the structural reforms. Finally, to ensure optimal
use of time for achievement of the strategy objective, a number of quick-wins
are proposed.
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Figure (2) Key Elements of the strategy
VISION
STRATEGIES
MICRO 1 . Education and human capital 2 . ICT 3 . S&T, innovation 4 . Knowledge-intensive Industry 5 . Spatial Development
GOVERNMENT ADMINISTRATIVE AND ORGANIZATIONAL CAPACITY
1. Coordinating/implementing mechanism 2. Capacity of officials 3. Feasibility Study
MACRO 1 . Public Administration 2 . Corporate Sector 3 . Labor Market 4 . Finance 5 . Globalization and regional blocks
OBJECTIVES 1. Solid Growth Engine 2. High Social Cohesion and Welfare 3. Enhanced Human Capacity 4. New Global Leadership
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3. Vision
The National Strategy for Transformation into Knowledge-based Economy and
Knowledge society is based on the following vision: "By 2030, the Kingdom
will have been a knowledge society with a prosperous, diversified, private
sector and human capacity driven knowledge-based economy providing high
standard of living and a good quality of life and occupying a prominent position
as a leading country at the regional and global levels".
This ambitious vision has been developed based on analysis of the current
conditions (appendix1) and the National Long-Term Strategy (2005-2024) with
addition of two important elements: First, Stressing the utmost importance of
human capacities as an absolute driving force and a major objective of attaining
the vision. Second, paying focused attention to the Kingdom's leadership at the
regional and global levels in light of its capacity as a leading G-20 country.
Such a leading role will be more enhanced as the Kingdom moves further to
knowledge-based economy, with a supportive, sustainable social and cultural
base.
4. Objectives
To ensure availability of an economy which supports attainment of the vision,
and to enable the policy makers to make appropriate adjustments in the
economic and social development process towards transformation into
knowledge society, it is essential to have some concrete objectives which allow
measurable indicators and ongoing evaluation.
The vision statement envisages the Kingdom's achievements in four distinct,
though interrelated, fields:
1- A robust growth engine: a resilient market economy with solid, diversified
sources of growth, innovation and competitiveness; a dynamic, private
sector-led non-oil sector; high value added manufacturing industries, and
high-productivity services sectors. These sectors and activities should
complement oil and other natural resources sectors.
21
2- High Level of Welfare and Social Cohesion: A knowledge society which
ensures an equitable distribution of wealth and income, an advanced social
safety net to ensure a decent life for all, and an integrated care system based
on an effective economic partnership between the state, Saudi private sector
and foreign companies.
3- Human Capacity Development: A world-class HRD system, highly
diversified, dynamic innovative, capable of nurturing the talents and
producing highly competent and motivated manpower who believe in the
culture of work, education, training and life-long learning.
4- Regional and International Leadership: Success in integration with the global
system, not only in terms of trade but also at all levels, particularly in the
fields of FDI and human interaction. As a result, the Kingdom will emerge
as a political, scientific and cultural power, commensurate with its economic
power, its unique history and its membership in G-20.
It is clear, from the abovementioned objectives, that the strategy of
transformation into knowledge society aims at attaining a broad-based or a
horizontal development base combining a wide range of sectors. Hence, it is a
balanced development strategy that combines economic efficiency and social
cohesion. Human capacities development enjoyed a particular attention, among
the objectives of the strategy, due to utmost importance of the human element of
the Kingdom and its role in realizing the vision of the strategy of transformation
into knowledge society. The objectives also comprise a fourth objective of
realizing the Kingdom's regional and global leadership. In this domain, the
Kingdom can realize a tangible achievement in light of its unique, strong
geopolitical position, financial capabilities, cultural heritage, and religions
weight at the regional and global levels.
Though broadly defined, these objectives are carefully selected to allow
quantitative measurements and thus follow up of progress towards realization of
the vision. In order to measure the degree of attaining the objectives, the
strategy uses the Economic and Social Development in Korea after refining and
adapting it in line with the requirements of the Saudi context. Table (1) shows
how to measure the progress made towards realization of the four objectives.
22
Table (1): Composition of the National ESDI
Category Sub-class Component
Growth
Engine
Income Per capita GDP (PPP & $ constant 2009)
Macroeconomic
stability
Inflation, GDP deflator (annual %)
Central government debt (total; % of GDP)
financial
development
Liquid Liabilities/GDP + Stock Market Capitalization/GDP
Private Credit by Banks and other financial institutions/GDP + Stock
Market Total Value Traded/GDP
Informatization
Internet users (per 100 people)
Mobile cellular subscriptions (per 100 people)
Personal computers (per 100 people)
Government
accountability
Government Effectiveness
Rule of Law Index
CPI (Corruption Perception Index)
Social
Cohesion &
Welfare
Security
Unemployment (total; % of total labor force)
Public & mandatory private Expenditure: Old age (% of GDP)
Employment rates for old age group 55-64
Road fatalities (per million inhabitants)
Health expenditure (total; % GDP)
Infant Mortality
Suicides, deaths (per 100,000 population)
Crimes recorded in criminal statistics, Grand total(rate per 100,000
inhabitants)
Empowerment Labor participation rate, (total, % of total population ages 15+)
Social Welfare Public social expenditure as a percentage of GDP
Gini Index
Fertility/Aging Fertility rate, total
Population aged 65 and above (% of total)
Social capital
&
Social tolerance
Trust in people
Institutional confidence
Civic engagement
Protection of disabled workers
Degree of tolerance according to international indices
Stocks of foreign population and % of total population
Regional Proportion of the population using improved drinking water sources
23
Category Sub-class Component
Development LPI (Logistics Performance Index)
Infra Structure of WEF Competitiveness Index
Human
Capacity
Technological
innovation
Researchers in R&D(per million people, FTE)
Number of Patents Granted(All Patent Types)
- Number of scientific Publications.
- Number of companies emerging from R of D.
Human
capital
Employment to population ratio, 15+, male (%)
Employment to population ratio, 15+, female (%)
GDP per person (constant 1999 PPP $)
Percentage of population, 25-34, total, completed tertiary education
Expected years of schooling
Public spending on education, (total, % of GDP)
Productivity Labor productivity
Regional
and Global
Leadership
Economic
openness
Foreign Trade (% of GDP)
Foreign direct investment, net inflows (% of GDP)
Net ODA Ratio to GNI
5. Policies (Initiatives)
Challenges facing the Kingdom has been reviewed in the part pertaining to
analysis of the current conditions (Appendix1). A vision and a number of
objectives were adopted to address these challenges. Policies and strategic
actions of attaining the vision and objectives are classified into three types: (1)
micro policies to strengthen Saudi indigenous innovation capacities, (2) macro
policies to make the Saudi economy more market-based and private sector
driven, (3) policies to upgrade the capacity and efficiency of government
institutions especially with respect to policy coordination and implementation.
5.1 Microeconomic policies
Transformation of the Kingdom into a knowledge-based economy entails
continuous, intensive efforts in all fields and sectors to enhance the nation's
internal innovation capacity. The main fields of priority are: (1) Education and
Human Resources (HR), (2) Science, Technology and Innovation (S&T), (3)
24
Communications and Information Technology (CIT), (4) Knowledge-Intensive
Industries, (5) Spatial Development. As various policies are already in effect in
each area, it will be useful to put forth key policy suggestions and classify them
into three groups: (1) Existing policies which worth continuation, expansion and
improvement and redesigning, if needed; (2) new polices; (3) Policies related to
radical structural changes agenda.
Education and Human Resources Policies:
Despite the remarkable quantitative expansion in the number of enrolment,
education institutions, or graduates, the education sector exhibit serious
structural problems such as poor academic performance of the students,
shortage of competent teachers, and weak competition among schools and
universities. Even concerning the quantity of education and training services,
life-long learning (LLL) for adult workers as well as pre-school education are
still below the level of intended efficiency. Indeed, the Kingdom confronts an
array of serious challenges in all levels of education sectors, from pre-school to
general education and higher education as well as those related to technical and
vocational training (TVET) for the youth and the aged labor force.
These challenges necessitate expansion of the policy objectives of education
and human capital sector to cover the four criteria for successful policy efforts,
namely: quantity, quality, efficiency and equality. Although the policy efforts of
the Kingdom vary from one sector to another, the focus of these efforts should
shift from mere quantity expansion towards enhancing quality efficiency and
equity due to their utmost importance and relevancy to the issue of building a
knowledge society.
In terms of quality of education outputs and formation of human capital, the
points of weakness can be classified into two categories: Low labor
productivity, and high unemployment rate among the youth (male and female).
Consequently, there is an urgent need for a plan for human resources
development in all sectors, and not simply focusing on particular sectors, such
as education and vocational training of the youth. There is also a need for a
national comprehensive plan for human resources development. To ensure
success of those efforts, the Kingdom should reconsider its national human
25
resources development system and establish it on a proper basis to ensure
coordination among all agencies involved in human resources development and
improvement of their productivity, to oversee all such efforts. Table (2) shows a
brief summary of the core policies of education and human capital.
Table (2): Education and Human Capital Policies
Policy
Type Pre-Collage Higher Education TVET and HRD
Maintain/
harness/
improve
existing
policies
Enhance
monitoring and
supervising
functions of the
regional education
authorities.
Detection and
nurture of
talented.
Stronger, merit-
based college
admission.
Enhance research
capacity and
quality.
Strengthen
internationalization.
Enhance the role of
the independent
quality assurance
and academic
accreditation
agency.
Restructure internal
governance for
greater leadership of
rectors.
Improve college
entrance exams.
Support TVET to
meet labor market
needs.
Provide more and
better trained and
qualified trainers.
Improve the
efficiency of the
statistics/information
system.
More investments on
TVET.
Improve the outputs
of TVET.
Providing more
TVET to women to
raise their
participation in labor
market.
New
policies Nation-wide
competency test
(especially math
and science).
Prepare advanced
Teachers training
programs.
Funding of
competitive
research which
enhance knowledge
and achieve the
higher national
objectives.
Brain-Saudi 21
project.
Invite global
leading private
universities to
operate in the
Kingdom.
Approve the system
of teaching
assistants and
research assistants.
Establish the NHRD
system.
Establish education
consulting and
training centers.
26
Policy
Type Pre-Collage Higher Education TVET and HRD
Reform
Agenda
Policies
Professionalizatio
n of education,
ranking of
teachers and
providing
incentives to
school principals.
Competitive
hiring of teachers
and trainers and
assuring their
quality.
New school
accounting
system.
Provide merit and
performance based
grants.
Develop the
governance system
in universities.
Enhance the
decentralization
system and
competiveness in
Universities.
Provide a
qualification system
to enforce skills
signal in labor
market.
Pay more attention to
the special-need
groups.
Science, Technology and Innovation Policies:
Despite notable progress, the S & T and innovation base in the Kingdom is
still below the intended level. Hence, the existing efforts and investments
should be expanded for capacity building in this regard. The Kingdom has
already entered an important stage where substantial investments were
directed to establishment of nascent and venture capital companies, which
makes improvement of the National Innovation system (NIS) and the "Soft"
policy aimed at ensuring efficiency of R & D activities more important.
Accordingly, the Kingdom needs to re-align and reorganize its R & D
activities and programs and related activities of qualifying the human
resources to meet the present and future needs of industries, and to support
the efforts of commercializing the R & D outputs. Moreover, a new national
R&D program should be adopted to develop a selected set of strategic
industrial technologies in conjunction with restructuring of the present
KACST system. Key policies are summarized in table (3) below:
27
Table (3): Science, Technology and Innovation Policies
Policy Type Capacity Building Networking and
cooperation Commercialization
Maintain / harness / improve
Giving utmost priority to promoting creativity and nurturing the talented since childhood to create a generation of innovators and entrepreneurs.
Continuous investment.
Improve management of S&T and innovation activities and their performance.
Establish more technology incubators.
Maintain technology transfer efforts of universities.
Improve IPR regulation to facilitate spin-off of R&D outputs.
Prepare a long-term strategy for technology valleys and cooperative research centers (KACST).
Better coordination of diverse initiatives (especially industrial clusters and economic cities).
Explore new business opportunities for TAQNIA program and other related programs using comparative advantages of the Kingdom (KACST).
New Policies Establish innovation centers and clubs for general education students.
Establish a new research institute for industrial technology development.
Launch a national program for industrial technology development.
Provide more funding for industrial technology development activities.
Reform Agenda Policies
Reform S&T education system (quality assurance, industrial linkages).
Enhance R&D efficiency through some institutional reforms.
Establish "Saudi-customized framework for technology transfer.
Contribute to industrial diversification through support of advanced industrial R&D.
28
Communication and Information Technology (CIT) Policies:
To accelerate the pace of knowledge generation, diffusion and utilization in
the Kingdom, it is important to quickly upgrade information and
communication infrastructure, foster new knowledge markets in line with the
global market trends, and review and update various government regulations,
including IPR regulations.
Although the CIT infrastructure in the Kingdom is developed compared to
those of other sectors, yet some infrastructure, such as broadband
penetration, are still lagging behind that of advanced countries. Therefore, it
is important to consolidate investment capabilities of the private and public
institutions to ensure establishment of a nationwide, world-class broadband
network. Moreover, policies related to promoting CIT market – such as
expanding CIT infrastructure of companies and industries, meeting the
growing demand, and improving technical expertise - must be reviewed and
updated. Policies to be adopted include giving preferential treatment to
SMEs regarding government purchase of CIT products. Regarding CIT
development policies, preparation of a special program can be considered;
for instance, creation of information development fund. Table (4) shows the
key policies related to CIT development.
Table (4): Policies Aimed at Development of ICT
Policy Faster and Safer
Infrastructure SMEs' CIT Policies CIT and its Linkage with Human
Resources Development Maintain /
Harness /
Improve Accelerate spread
of fixed broadband
network.
Provide more
financial allocations
to enhance
information
security/
Develop or provide
low cost
applications.
General distribution
of CIT projects.
Support wages and
costs of education
and training.
Financial support for on-the-job
training and development of CIT
related skills.
Network for CIT statistics and
policies.
Enhance basic applied and
professional skills in CIT fields.
Enhance utilization of specialized
female cadres in IC domain. New
Policies Direct financial
support to tablet
PCs for using them
as digital text books
and terminals for
learning
applications.
Develop computer
applications on the
various operation
systems.
Make use (as a benchmark) of the
Korean model for supply chain
management and establishment of an
information enhancement fund.
Provide basic training in the field of
CIT for women and adults.
Provide subsidies for publishers and
local digital content.
29
Policies Related with Knowledge Intensive Industries and Services:
The knowledge services sector constitute one of the key features of knowledge-
based economies. It is noteworthy that the services sector currently accounts for
about 80% of the USA's GDP. Moreover, US services exports account for the
largest share of its total exports thanks to the transition to knowledge-based
economy and outputs of human brain.
The Kingdom of Saudi Arabia enjoys oil based relative advantages which
qualified it to build manufacturing industries, particularly petrochemical
industries that enabled it to become one of the most important countries in the
market of this industry at both regional and global levels. However, the
continued development of manufacturing industries as well as their increased
competitiveness will remain dependent on the extent of their reliance on
knowledge and the outputs of modern science. On the other hand, ensuring
diversification in both industrial and export bases depends on the ability of the
economy and the society to assimilate new sciences in order to enter knowledge
and innovation based industries, a matter which is exactly targeted by the long
term strategy (2025), the ninth development plan and the national industrial
strategy.
Against the above background, this strategy stresses the importance of looking
for innovated and new methods to realize economic diversification and establish
a wider system of manufacturing industries along with enhancing business
services related with manufacturing industries and other knowledge intensive
services.
Box (2): Policies related with knowledge intensive industries and services
Expanding increasing use of knowledge in the development of manufacturing
industries, expansion of their system and promotion of their competiveness.
Establishment of new knowledge and innovation based industries.
Creation of new and innovated methods for realizing economic diversification.
Enhancement of business services and expansion of knowledge based services.
30
Polices Related with Spatial Development
The industrialization process and urbanization have been accompanied by
migration of population to metropolitan centers. Available studies indicate that
most migrants to large cities are in the youth group (with good education)
seeking job opportunities and higher wages. However, the migration of this
youth group deprives villages and small urban communities of their activity and
viability. On the other hand, such migration results in several problems in large
metropolitan areas like housing shortage, over-crowding, poor quality services
of public utilities, pollution, slums, particularly around large cities as well as
adverse social consequences.
Box (3): Policies Related with Spatial Development
Updating the spatial strategy and linking it with the economic cities' strategy.
Enhancing balanced development among provinces and within each province.
Establishment of competitive and differential advantage industries and services in
rural areas.
Against the above background, it is imperative to update the spatial strategy in
order to address problems of urban areas as well as remote rural areas through
boosting efforts directed towards ensuring balanced development among
provinces and within each province. Thus, unique industries and services shall
be established in rural areas, a matter which encourages the youth to stay in and
develop these areas, and alleviates pressure on large cities. The development of
these areas may also lead to counter migration from large cities to the new areas
that provide promising job opportunities and higher income away from the
over-crowding and problems of cities.
5.2 Policies Related with Macro Economy
Transition into knowledge society and knowledge based economy requires more
than simply focusing on the development of a certain sector of knowledge based
sector or solving particular problems therein. It also entails comprehensive
development of the entire economic and social systems. Furthermore,
achievement of this goal requires introducing a major change in the way of how
31
economic resources and outputs, including knowledge assets, are allocated and
transacted amongst variegated economic agents in a society.
Achievement of such a transformation typically involves deep structural
reforms in major macro-economy areas such as labor, corporate and financial
sector, and public finance. The implementation plan of this strategy will
elucidate the nature of these reforms. Due to the poor macro economy bases in
terms of adequateness with the kingdom's aspirations, and the absence of
applicable framework conditions in reality, any policy efforts to promote a
certain sector especially, if driven by public investment, are deemed to failure or
delayed implementation.
In light of the Kingdom's ongoing efforts and initiatives, though in a gradual
than radical manner, the application of macro economic policies will deepen the
change momentum by strategically and carefully expanding reform mechanism,
particularly in the main areas of the aforesaid macro economic policies. Specific
problems and challenges the Kingdom confronts in these areas or sectors have
been pointed out earlier in (Appendix 1). In essence, these problems are
systemic and deep-rooted reflecting the very nature of the Kingdom's economy
as a high resources-based economy and rentier society in most of its activities.
Box (4): Policies Related with Spatial Development
Introduction of deep structural and institutional reforms according to conditions and
frameworks applicable in major areas of macro economy sectors like labor,
corporate, financial sectors and public finance.
Developing reform mechanisms in a strategic and careful manner.
Major change in the methodology of how economic resources and outputs are
allocated including allocation of knowledge assets and translated amongst the
general economic elements in the society.
The macro economic reform initiative faces a real difficulty, as it requires deep
structural and institutional changes leading to a real restructuring of the
interests and activities of virtually all citizens, and hence redistributing income.
The implementation plans of this strategy will explain the nature of these
changes. Thus, it is almost safe to indicate that the success of the Kingdom's
32
efforts in transformation to knowledge society will depend on how successfully
the country carries out the reform agenda at the macro economic level.
The strategy adopts two key themes for macro economy related policies which
are policies aimed at the development of a new environment for market and a
new environment for institutions, in addition to policies aimed at ensuring
maximum utilization of globalization and regionalization.
Policies Aimed at Development of new Environments for Market and
Institutions:
Table (5) shows macro economic level policies related with the market and
institutions. All these policies point towards transition to a new framework of
national employment and income generation. Under the present system, KSA
has a bloated government sector which acts in some of its aspects as a welfare
system than an employment system for its citizens to make use of their
capacities. This method has resulted in the dependence of a portion of citizens
on the state, thus closing off market mechanisms in the labor market.
The policies aimed at creating a radical transition to knowledge society include
exerting further efforts, in a gradual and carefully designed manner, for
reforming the existing employment system that does not ensure sustainable
development process in the hope of empowering the citizens to take their own
initiatives actively in a new market economy friendly and private sector driven
business environment.
33
Table (5): Policies Related with Market and Institutions
Areas Policy Suggestions
Public
Finance
Rationalization of subsidy system and expansion of social safety net.
Introduction of Pre-Feasibility Study (PFS) System to ensure inclusion of
proposed projects and programs within the approved national priorities prior
to conducting their feasibility study, as the case of Korean system (PPS).
Upgrading the Financial Management System.
Labor
Market
Making private sector jobs more attractive to the youth (higher
unemployment benefits or other incentives).
Develop foreign labor recruitment policy (e.g., work visa and sponsorship
system).
Corporate
Sector
New ownership and governance structure engaging Saudi government-
investors-industrial capital and foreign companies.
Enhance competition policy (e.g. greater independence of the central and
regulatory bodies).
Improving insolvency system.
Finance
Strengthen financing policy to make up risk capital shortage.
Buttress SME financial assistance (strengthening of SCSB, Kafalah, VCs
and increasing commercial banks’ lending by creating SME dept.).
Establish consulting-augmented SME loans and one-stop SME support
system.
In order for these efforts to be fruitful, it is vital that the private firms turn itself
into an active source of employment generation. The following policies are
proposed in this regard (system of private sector firms and institutions):
1. Making competition policy effective to ensure fairer and more innovative
market and environment.
2. Upgrading the insolvency system for ensuring efficiency and flexibility in
the corporate sector.
3. Renaming and restructuring the existing SME support and development
system.
The government finance will continue to play the vital role to support the
Kingdom's transition into knowledge society/economy. Not only would the
capacity expansion effort at the macro economic level require continuous flow
of financial resources, but also significant finance and support when confronted
34
with the income redistribution issue which may occur during the process of
macro economic restructuring. Therefore, it is very important to have a new
system that can act as a security measure for guaranteeing the efficiency and
effectiveness of financial investments. It is imperative to introduce
Prefeasibility Study System (PFS) to help prioritize and economize large-scale
projects by subjecting them to such study. Details of this matter will be
indicated in the section for implementation of the strategy.
Policies Related with Fully Capitalizing on Globalization and
Regionalization
In order to resolve issues such as weak industrial base, skills disparity among
workforce and technological gap compared to developed countries, the
aforesaid policies must be implemented at the domestic level. Furthermore,
innovative and active mechanisms and policies are needed for the Kingdom's
economy expansion at the global level, i.e. giving more attention to exports and
integration with the world economy in order to assimilate and utilize global
resources available to the Kingdom along with affirming its position at the
international level.
The ever mounting trends of globalization and regionalization present both
opportunities and challenges to the society and economy. Saudi Arabia enjoys
tremendous potentials and resources to build a model knowledge based
economy with distinct leadership potentials at both regional and global levels
considering, among others, its sizable domestic market and population, geo-
political position at the Gulf, Arab and Islamic level as well as its distinguished
religions and cultural values. However, Saudi Arabia still lags behind in many
areas including international trade exchange, FDI and mobility of human
resources.
The following box (5) shows policies aimed at enhancement of the Kingdom's
position and boosting its potentials to make use of globalization and regional
economic blocks.
35
Box (5): Policies Aimed at Maximizing Utilization of Globalization and
Regionalization
• Expanding establishment of export industries to the GCC, Arab and Islamic
countries, especially in light manufacturing and those related with Arabic content,
with the understanding that King Abdullah initiative for Arabic Content and the
related strategy will meet the required if it is implemented.
• Continue strengthening of FDI attraction policies with due emphasis in the coming
phase on attracting investments that support the Kingdom's technological and
industrial development and those targeting full and productive investment of its
potentials built upon abundant and cheap supply of oil and gas and its sizeable
domestic and neighboring markets.
• Stepping up of the efforts exerted to attract and recruit foreign distinguished and
productive talents, for instance, by providing a favorable environment and offering
them permanent residence and citizenship along with reducing low knowledge, skill
and education labor in addition to enhancing Saudization efforts in this direction.
The US and European migration systems could be utilized in this regard.
• Continued extending of ODA in GCC, Arab and Islamic region and the
international level while also expanding bilateral and multilateral agreements/pacts
such as OECD as part of efforts of integration in the globalization system in a way
to support reform and development initiatives at the domestic level.
5.2 Upgrading Administrative and Regulatory Capacities of the
Government Body
The outputs and outcomes of the above macro and sectoral policies will depend
upon the quality and capacity of the existing Saudi government administrative
body. As pointed out earlier in the "Present Conditions" part (Appendex-1),
notwithstanding the exerted efforts, the administrative and regulatory capacities
related with achievement of the macro economic policies are still below the
required level whether due to institutional problems related with coordination
level among the various government agencies or due to pure individual
problems related with task-performing capacities of government officials,
especially in the middle administrative level, or the civil service system which
requires significant development.
36
In the context of the Kingdom's efforts to transform into an advanced
knowledge society/economy, the private sector is targeted to assume a greater
and effective role. Notwithstanding, the government will continue to carry out
its roles related wit policymaking, implementation and coordination among
ministries, strengthening center-regional relations, organizing public/private
sector relations in the context of complicated and sophisticated socio-economic
issues. It is noteworthy to stress the importance of good and efficient
implementation of policies as the key determinant to the success of any vision
or policy. Accordingly, development of the administrative and institutional
capacities of the government administrative body is considered the main "policy
or initiative" in the context of policies addressed by this strategy.
Box (6): Policies Related with Upgrading Administrative and Regulatory Capacities
of Government Administrative Body
Upgrade quality of government administrative body's capacities.
Ensure close coordination between the various government agencies (Box
7).
Improve capacity of government administrative officials regarding
performance of their tasks, particularly middle level officials (Box 8).
Radical development of civil service system.
Private sector to undertake a greater and effective role.
Strengthen relations between main centers and provinces.
Organize relations between public and private sectors.
Proper and efficient implementation of policies.
Policies Related with Coordination and Implementation Mechanisms
Poor coordination and integration among ministries / government agencies
constitute the major cause of the low implementation level of the various
policies, particularly at the level of agencies concerned with the process of
transition to knowledge society.
In recognition of this problem, a pilot agency may be needed to be entrusted
with management of transition to knowledge society / economy along with
37
leading the related development process. This agency should be empowered
enough to have the authority to resolve any inter-ministerial conflicts over
sectoral plans related with this transition or their respective shares of
government budget, and thus becomes able to achieve a high level of
consistency between these policies, and the long term vision as well as the
strategic objectives of transition to knowledge society.
Box (7): Policies Related with the Strategy's Coordination and implementation
Mechanisms
Assignment of a pilot agency to be entrusted with management of
transition to knowledge society to achieve a high level of consistency
between agencies responsible of implementation of the strategy.
Establishment of a higher council for transition to knowledge society
chaired by the Custodian of the Two Holy Mosques, Chairman of the
Supreme Economic Council to become the proposed agency.
The Ministry of Economy and Planning shall assume the role of the
executive secretariat for the Council.
Establishment of the Saudi Development Institute for development
policies research, to be independent with the Minister of Economy and
Planning as its Board of Directors' Chairman.
As a measure to fix this problem, a Higher Council for Transition to Knowledge
Society could be established to be highly empowered and presided over by the
Custodian of the Two Holy Mosques to ensure efficient and coherent
coordination in the domain of transition to knowledge society / economy,
between the budget through rational and productive management. This council
may assume, among others, the responsibility of directing implementation of
national horizontal projects, and at sector level, direct the establishment of a
national human resources development system in addition to the establishment
of new strategic projects or industries.
This council could also be free from societal and institutional constraints and
follow up achievement of the state's vision and long term objectives in the
process of transition to knowledge society. In fact, the perversasiveness of its
38
strategies and policies would stem from the unbiased and rational analytical
capacities of its executive secretariat or the ability to identify short and long
term issues or policies in an impartial manner in addition to offering more
progressive and coherent policy alternatives to address the pressing socio-
economic problems.
It is also proposed to establish the "Saudi Development Institute" as an autonous
national center for policy research, with the Minister of Economy and Planning
as its Board of Directors' Chairman, to become an effective interface between
the state and the society and enjoy the satisfaction of citizens in the achievement
of the long term socio-economic development and transition to knowledge
society / economy. The institute shall act as a main agency responsible for
provision of expertise, reliable studies, ideas, proposals and policies which
enjoy consensus, a matter which could be more effective and influential than
advocacy groups or individual scholars in universities. It may also support
government efforts during preparation development plans, analyze strategic and
policy adjustment issues, follow up and evaluate the process of reforms and
their implementation in addition to organization of intellectually grounded
public awareness campaigns.
Following are the main institutional requirements for the success of the
institute:
1. Approval and sound support of the institute to become a center of
excellence for policy and strategies research needed by the top leadership.
2. Close working relationship and cooperation with government agencies in
general and the proposed higher council in particular provided that the
center shall be independent.
3. Sufficient funding and high quality research facilities.
4. Flexible and modern system to attract and maintain outstanding national
and international cadres.
Policies Related with Upgrading Capacity of Government Officials
Available studies on the current performance level of government officials
generally suggest the existence of a gap between the ministries' missions and
39
tasks, and the professional capabilities of their officials due to the fact that most
of them do not receive the sufficient and required level of training for shortage
of tools and practices that enable them carry out their tasks as well as deficient
educational background. The problem is also related with how appropriate the
incentive system is to motivate qualified officials to continue working hard for
the attainment of the nation's vision.
To deal with the aforesaid problems, it is imperative to fundamentally develop
the civil service system for public officials, upgrade the process of hiring and
job assignment, performance evaluation, promotion and compensation, all more
in line with merit and performance-based criteria. In parallel, it is imperative to
develop government officials' training and retraining programs.
Given the significance of the aforesaid reforms and the importance of their
accelerated implementation, it is imperative to adopt some experimental and
selective approaches. One important approach in this context relates with the
development of quasi-governmental authorities and organizations and having
them serve the public better and more efficiently while giving them some
autonomy in the way they recruit, compensate and promote their employees.
In light of careful follow up of the performance of quasi-governmental
authorities, the outcome of experiments with such organizations may provide
new and useful solutions for the way government institutions deal and interact
with the society.
Box (8): Policies aimed at upgrading capacities of government officials
Training government officials to upgrade their capacities in the achievement of the
objectives of the government agencies they work at.
Providing sufficient and modern tools and practices to government agencies to help
them carry out their tasks.
Adopting an incentive system for encouraging qualified officials with good
capacities.
Updating the civil service system to become based on merit and performance
criteria.
Development of quasi-governmental authorities and organizations to provide best
services to citizens, particularly regarding management of human resources.
40
Restructuring government general administration by adopting the "two-track
recruitment system" or the elite-track recruitment system".
The Kingdom may directly tackle the problem of restructuring the government
general administration as a whole by adopting what is called the "two-track
recruitment system" or the "elite-track recruitment system'. The first track is the
one existing at present according to the civil service system along with a
parallel track for recruitment of elite cadres in various government agencies.
Those recruited according to elite track system will be increased while
gradually decreasing the number of those recruited according to the normal
track system. To implement this approach, it would be possible to start with
recruitment of elite cadres of officials – who are recruited separately from the
existing track, through holding a national competitive, fair, impartial and merit
– based examination at the agencies related with the development process or
agencies entrusted with other main development tasks in the country.
6. Time Frame: Staged Approach to Transition to Knowledge Society /
Economy
Transformation into knowledge society/ economy requires major structural
changes. In order to overcome such challenges over the course of
transformation, it is imperative to proceed with reforms and changes in a step-
by-step fashion along with strengthening both the pace and sequence of the
process so that citizens can assimilate, accept and positively interact with the
proposed changes.
To achieve the above mentioned objective, it is imperative to control the status
quo and realize a series of small successes from the outset such as: starting with
reforming micro-block policies whose implementation requires only gradual
changes, and then application of macro-block policies which require carefully
and effectively dealing with the reform opponents and compensating those who
lose out as a result of the reform policy measures. Thus, the strategy proposes a
three staged approach for realizing the vision:
41
Figure (3): Time Frame for Implementation of the National Strategy for
Transformation into Knowledge Society
Reinforcing the
ongoing policy
initiatives
Accelerating the
change momentum
and undertaking
major structural
reforms.
Consolidation of
transformation
process
State (1)
1433-1435H
(2012-2014)
Stage (2)
1436-1447H
(2015-2025)
Stage (3)
1447-1452H
(2016-2030)
Implementation of the
Strategy
42
Stage (1): 1433-1435 (2012-2014): Reinforcing the Ongoing Policy Initiative
Aimed at Knowledge Capacity Building:
On top of existing plans, launch a number of quick – win projects geared to
benefit a large mass of citizens. Complete the knowledge society strategy by
formulating the implementation plans, i,e. the action plans of the national
knowledge society strategy as well as the strategy's financing plan to be detailed
in the part related with implementation of the strategy. This stage also covers
introducing and boosting activities of the key institutions, including the higher
council proposed to support the reform process and relevant requirements. This
stage also covers the preparatory process for the ensuing two stages.
Stage (2): 1436-1446/47 (2015-2025): Accelerating the Change Momentum
and Undertaking Major Structural Reforms:
Disseminate and enrich the momentum of change by undertaking major
structural reforms geared mainly to enhance the efficiency of the whole
economic system. This stage may span over the 10th
and 11th
development
plans.
Stage (3): 1447-1451/52 (2026-2030): Consolidation of the Transformation
Process:
Complete the second stage structural reforms and consolidate the transformation
process. This stage to coincides with the 12th development plan, and by this time
Saudi Arabia may be ready to switch to a more open strategic plan.
7. Quick Wins Initiatives (enablers)
The Saudi government has accomplished a great success in the establishment of
various quick win projects, but most of them targeted small selected group of
citizens such as MAWHIBA and study abroad programs. In order to achieve the
goal of building knowledge economy/society, it is necessary to expand quick
wins and their benefits to a broader more general Saudi citizens with a view to
enhance citizens support for the transformation process. Following are some
proposals regarding quick win initiatives:
43
Launch a new project for establishment of knowledge based
enterprises:
This project aims at establishing a few (3-5) large-scale knowledge based
companies. Such a government project will have a positive impact in
terms of completing the collaborative network circle between
universities, incubators, start-ups and SMEs. Taqnia and the Education
Development Holding Company and others operating in the
establishment knowledge, science and high tech based business, will be
representative models which should be expanded and empowered in a
best manners. Furthermore, there is another project which could be
envisaged in the context of national industrial clusters project to develop
the national capacities in the design and manufacturer of auto spare parts
and other equipment depending on local inputs, such as SABIC plastics.
The desalination and electronics sectors are also nominees to enter this
project.
Expand activities and services of public health care facilities and
social activities facilities:
Despite the current attention given to reform the health care system, it is
possible to shift this system to a more preventive care-oriented one.
Investment could also be enhanced and expanded in youth welfare
facilities, clubs, schools and universities in a way that surpasses sports
and educational activities for males/ females to cover social, development
and knowledge activities in addition to organizing social awareness
campaigns.
Expand MAWHIBA Programs:
It is imperative to expand the programs of King Abdul Aziz and his
Companions Foundation which currently serves around 1% of the Saudi
youth, most of whom live in major cities, so that they benefit larger
number of youth in all provinces of the Kingdom. In this context, there is
a need to establish a special academy for math and science as well as a
special scholarship program for male/female talented students.
Expand Life Long Learning (LLL) Programs: In order to
upgrade capacities of the existing labor force, the following
steps could be taken:
44
1. Expand the training and retraining programs of government officials
(say, by expansion of IPA programs) and design a program for top and
middle level. Managers by distinguished international training
institutes.
2. Increase subsidies provided to (LLL) activities including those
provided by the private sector (about 1000 private VET organizations
in place).
Radically improving the Teacher Re-Training Systems through
professionalization of education, establishing a system for teachers ranks,
developing adequate criteria and examination for selection and promotion
of new teachers. Expand the early childhood education system which
could contribute to opening new sectors enhancing women participation
in the labor market in addition to development of curricula, evaluation
process, teaching methods, building student personality and raising their
punctuality level.
Develop a full-fledged e-learning and e-school system: This entails
expansion of web-based lecture system and broadcasting services for high
quality educational contents (EDUNET and Cyber Home Learning
System used in many countries including Korea). Development of this
system, which will cover general and higher education stages, will lead to
expansion of education opportunities and reducing the educational gap
between urban and rural regions.
Reconsider human, industrial, agricultural and housing development
funds and projects, so that they become more supportive and consistent
regarding transition to knowledge society and requirements of
implementing pertinent policies, along with allocation of a proportion of
finance to support this move.
Accelerate dissemination and applications of the broadband network,
particularly in the creation of SMEs and provision of job opportunities for
citizens.
45
CHAPTER TWO
IMPLEMENTATION AND FOLLOW-UP
OF THE STRATEGY
46
1. Current Situation:
The major constraints facing the strategies and development plans have more to
do with the implementation than the contents. Many strategies and plans contain
excellent contents, but they face real problems when it comes to their actual
implementation stage by concerned agencies. The core of the implementation
problem lies in: (1) poor interagency coordination both at planning and
implementation phases, and (2) shortage of implementability and
implementation mechanisms. The following box shows details of the long term
development strategy (2025) in terms of mechanisms related with addressing
this problem, a matter which contributed to the achievement of certain
improvements particularly at the level of preparing the strategic plans and
strategies at the individual ministry or agency level. However, there remains the
fundamental problem of "coordination and implementability". Thus, the
situation is more or less: "The plan necessary to resolve the implementation
problem has not been executed".
(Box 9) LTS 2025’s Suggestions for Effective Implementation of the Strategy
1. Three specific mechanisms:
“Implementation Agreements” between the Supreme Economic Council (SEC) & all
government agencies to ensure operationalization & implementation of their ideas.
“Strategic Plans” of individual agencies as being derived from their “Operational
Plans”
“Long-term Strategy” at individual agency level, to ensure well aligning of the
“implementation agreements” and “strategic plans” with the long-term national
strategy
2. Follow-up, coordination and evaluation
The Supreme Economic Council undertakes an important ride in the proposed
knowledge society.
Annual Report: an annual follow-up, report reflecting progress made on the
implementation of the strategy prepared by MEP builds on: (1) overall progress with
vision objectives measured by Quality of Life Index, Diversification Index, and
Balanced Regional Development Index, and (2) Strategy Implementation Index (SII)
and Policy Implementation Index(PII)
3. Institutional arrangements:
Partnership between SEC and MEP to make use of SEC’s powers (the nodal point in
designing & approving important national policies) and MEP’s potentials (technical
47
expertise and the data to prepare various indexes (QLI, SII etc.) and technical reports).
There is no question that the LTS (2025) suggestions remain valid and thus
need to be further followed up. However, ensuring a more effective
implementation of the national strategy for transition to knowledge society
requires some rethinking, improvement and innovation as detailed in the
following sections.
2. Implementation mechanisms
2.1 Preparing the National KBS Strategic Implementation Plan
Work is currently underway on the preparation an implementation plan for this
strategy in order to ensure effective implementation. Despite the fact that the
existing national strategy outlines the list of problems which require addressing
through policies, the actual policy details are usually left to the discretion of
individual ministries or agencies. Such a decentralized practice has resulted in
the respective ministries coming up with particular strategies or projects for
particular task, sometimes without full and obliging coordination between these
ministries. The overlap between the strategies and the projects out of the plans
has escalated the problem of poor joint integrated work, and consequently
repetition of efforts and poor efficiency of outputs.
Hence, while recognizing the importance of establishing vision and objectives,
this strategy places greater emphasis on identifying key policy implementation
actions from a holistic perspective, presenting some problem solving courses of
action critical to actually realizing the vision and objectives. This document
contains "a Strategy Master Plan" which focuses on ensuring integration
between this strategy and the sectorial strategic plans, a model which is used
internationally, and Korea has been using it since early 1990's during the post-
five year Plan era.
Once the strategy is officially approval in the Kingdom, it is imperative to
develop a comprehensive and obliging framework (along with guidelines,
criteria and indicators) to prepare the strategies and plans of the various sectors
for their implementation. This would facilitate actual implementation of the
strategy through its action plan. The action plan also targets preparing priorities
48
of the policies indicated in this strategy so that the end output would be "a
Strategic Action Plan". This strategic action plan will not only be confined to
identification of policy priorities, but will also cover such details as its basis,
effects, methodology and targeted numerical indicators as shown table (6).
Table (6): Strategic Action Plans – An Example
Strategy
Area Goals
Action
Program
Targets
Reference Index
1435
(2014)
1443
(2020)
1452
(2030
Human
capacity
Increase
Labor
Productivity
Program for
giving
attention to
work ethics
punctuality,
commitment.
Actual
manpower
productivity
World
Bank ILO
Increase
knowledge
labor
supply
- E-Learning
program.
- Economic
cities.
Labor
participation
in the labor
market
20% 25% 30% E-learning
program
(04-06)
Improve
labor
quality
- TVT
investment
- LLL
program
Enrollment
in TVT
program
(thousand)
150 200 300 USA, ITA
Germany
training
voucher
(03) UK,
skills
account
(06).
2.2 Preparing Finance Plan for KBS Strategy's Implementation
The success of this strategy's implementation depends on the existence of a
strong linkage between the short and medium finance plans and the strategy's
document and its action plan. Currently, no finance plan exists for transition to
knowledge society/ economy in the Kingdom in implementation of long term
strategy's vision (2023). Although some plans have been prepared to ensure or
guarantee the minimum level of finance as part of the five-year development
plans, the present system adopts the "annual agreement frame". Therefore, there
is no close linkage between strategic plans' objectives and the financial plans at
the medium and long term, thus leading to the problem of implementability of
such objectives.
49
The proposed financial plan has several advantages including the following:
1. It serves as a framework for verification of the financial feasibility of the
strategy, thereby boosting the trust of the government and the citizens in
this strategy.
2. It clarifies the relative priorities of major policy agenda proposed in the
strategy as well as their feasibility.
3. It is useful in promoting participation of ministries and agencies during
preparation of the strategy, thereby raising their accountability for the
outcomes.
The process of preparing a long term finance plan for the strategy's
implementation is a formidable task. However, if this matter is inevitable for the
success of the strategy, then it should be carried out in a good and integrated
manner, a matter which could be done as the case with the process of preparing
the operational plan for financing the tenth development plan, 1436-1442
(2015-2020). Based on the time frame this strategy proposes, it is imperative to
prepare a plan for financing transition to knowledge society/economy in the
Kingdom up to 1451/52 (2030) in conjunction with the upcoming tenth
development plan.
Preparation of the finance plan for implementation of the KBS strategy requires
cooperation of all, particularly between MOF and MOEP.
2.3 Broad Consultation and Engagement of Civil Stakeholders
It is very difficult to conduct broad consultation and ensure involvement of
citizens and civil stakeholders in the process of preparing five-year development
plans or knowledge society strategy. In fact, one of the key practical values of a
nation's medium or long term plan or strategy lies in the fact that such a scheme
not only provides a social forum for policy or alternative strategies dialogue, but
also helps build national consensus and public support for the nations long term
structural reforms.
50
If the strategic goal is to attain a successful transition to knowledge
society/economy, the importance of consultative and participatory nature of the
process increases significantly. This is partly so because the participatory
process greatly facilitates mobilizing socio-economic resources to boost
entrepreneurship, productivity and maximizing development achievements.
Furthermore, building more knowledge based society/economy requires change
of human mindsets and behaviors to cope with such development.
Against such a background, the present strategy emphasizes the political
leadership's commitment to the building of a national consensus and its
willingness and capability to support implementation of the strategy as well as
the policies implementation mechanism as a tool in pursuit of the society
common good.
3. Follow-up system
3.1 Performance Measurement Index
ESDI Constitutes the primary performance indicator reflecting the extent of
attaining the vision and objectives of this strategy (Appendix -2). ESDI provides
a mechanism for a systematic performance checkup regarding four objectives:
growth, social cohesion and welfare, human capacity and global leadership as
well as sub-objectives.
The index also allows measurement of the Kingdom's absolute performance as
well as its relative position compared with OECD countries and G-20 member
states. Being amenable to simulation and econometric analysis, ESDI is also
useful in scientifically setting future targets for various general objectives.
The proposed ESDI model needs to be further adapted to the conditions of
Saudi Arabia, not to mention further calibration and testing before its official
adoption. Some adjustments in the selection of benchmarking cases may also
have to be made, say for instance, to include Malaysia as well as of
measurement variables for different objectives, say to include global leadership.
51
Together with ESDI, this strategy also adopts the diversification index and
balanced regional development index. Issues such as diversification and
regional balanced development are of a most importance in the Kingdom, but
involve very Saudi-specific elements, and hence international comparison may
be neither easy or meaningful. Instead, of integrating such issues into ESDI,
they will be dealt with as separate indicators to overcome weakness points.
3.2 Emphasis on qualitative and quantitative Dimensions
KSA’s monitoring system has in general focused on the performance assessment
of projects and programs. Such a system is relatively easy to operate, and in fact,
it has been serving the purpose particularly because in terms of the development
stage, KSA has largely been in that of the input-based or investment-driven
growth. Improvements or re-orientation will be required, however, as more
efforts are directed towards its transformation into a knowledge-based economy
and society-- with more and more investments made in education, S&T, and
social welfare. For these “knowledge” sectors, it is harder to measure the
performances or progresses with quantitative indicators. Hence, while using
quantity-oriented indicators, such as ESDI, non-quantitative or quality-oriented
assessments will have to used, such as prefeasibility studies, opinion polls and
qualitative indicators.
4. Institutional Arrangement
4.1 Establishment of a High-Level Government Entity to Oversee Transition
to Knowledge Society
As explained earlier, establishing a body to oversee implementation of KBS
strategy is called for. Given the current organizational structure of the Saudi
government, it is recommend to establish a higher council for the Kingdom's
transition to knowledge society to be chained by the Custodian of the Two Holy
Mosques with Minister of Economy and Planning as vice-chairman. The Ministry
of Economy and Planning shall serve as the General Secretarial while the Saudi
Development Institute shall assume a crucial role together with MOEP in
evaluation of implementation programs and follow-up of performance.
52
In so much as a strong and explicit linkage between “plan” and “budget”
constitutes a key to the successful implementation of the strategy, a close
cooperation or partnership between MEP and MOF is essential. Thus, the core of
the required institutional arrangement lies in the formation of a triangular driving
body consisting of a special high-level KBS entity, MEP and MOF.
4.2. Saudi Development Institute
A special taskforce KBS group will be needed to conduct basic background
policy research and feasibility studies as well as to develop detailed action
programs and monitoring mechanisms and tools. These functions are currently
scattered around various organizations within KSA. Pooling of the existing expert
resources in the form of a special taskforce is imperative for the present, but these
functions will be best served with the creation of the Saudi Development Institute
like the Korea Development Institute (KDI). The activities of the SDI will cover
upgrading the process of planning and sustainable development in KSA.
53
(Box 10): Korea Development Institute (KDI)
KDI is a leading economic think tank of Korea that has played a pivotal role in Korea's
successful economic and social progress. KDI was established in 1971 as Korea’s first public
think tank with the mission to support Korea’s sustained development with the requisite
policy analysis, recommendations and guidance. Being an integral part of Korea’s
development model now, KDI has continued to make vital contributions to the formulation
and implementation of key public policies over a comprehensive range of areas such as
macroeconomic policy, banking and finance, fiscal policy, social security and welfare, labor,
manpower, trade, law & economy, and the North Korean economy.
As of 2011, KDI stands as the largest and most prestigious policy research institute in Korea,
with 292 staffs and researchers, including about 100 doctoral fellows, engaging in high
quality research and other associated activities of its four affiliated bodies:
1. Public and Private Infrastructure Investment Management Center (PIMAC) is responsible
for enhancing fiscal productivity through efficient and transparent public and private
infrastructure investment management. PIMAC conducts various project evaluations on
large-scale publicly-financed projects such as Preliminary Feasibility Studies and Re-
assessment Studies of Feasibility, and Value for Money Tests for PPP projects.
2. Center for International Development (CID) was founded in 2008 to systemize Korea’s
development experiences and share them with development partner countries, thereby
helping enhance their policy capacities. In 2010, CID, through the Knowledge Sharing
Program (KSP) in particular, has completed about 200 policy study and consultation
projects for 21 countries. CID aims to serve as a cornerstone for the balanced
development of the global community through knowledge sharing.
3. Economic Information and Education Center (EIEC) was established to upgrade the
general public’s understanding of the economy as well as their usage of economic
knowledge and capability. To this aim, EIEC conducts various training programs and
forums for a wide range of client groups. EIEC also develop basic instruction materials in
economics, while publishing a set of public-oriented periodicals including NaraKyungje
(National Economy of Korea), Economic Bulletin, and Click Economic Education.
4. KDI School of Public Policy and Management (KDI School) was established in 1997 to
educate and nurture the future leaders in government, business and civic organizations.
Recognized throughout Korea and the world as a premier institution for research and
learning, the School designs and implements research strategies to evaluate governmental
programs, and provide rigorous educational programs in public policy and management.
54
APPENDICES
55
Appendix (1): Current Conditions and Major Challenges
1. Main Achievements and Underlying Policies
The Saudi economy has accomplished growing, stable and balanced growth rates
over the past decades. It has also been resilient enough to surpass the global
financial and economic cruises (2008) and the resulting adverse impacts on most
of the world economies. Notwithstanding the world-wide economic uncertainty.
Particularly the current crisis of both USA and Euro region, the country’s
economic outlook in the short and medium run looks positive. The Kingdom
possesses enormous oil reserves, ensures proper management and investment of
oil revenues along with serious management of the economy and the financial
sectors, a matter which provided economic stability in the short run, and enabled
the country to consider creating a possible meaningful transformation in the long
run.
Figure (4): Development and Growth of GDP
At present, Saudi Arabia witnesses a new societal dynamism across the board
and a strong trend toward a more diversified and higher knowledge contents
economy. These developments have resulted in positive progresses at both macro
and micro levels.
At the sectoral level, the Kingdom witnessed tremendous developments in
education and ICT indicators. Enrollment rates at all educational levels have
increased rapidly over the past decades, and the number of academic institutions
for both primary and higher education levels is growing at an impressive pace.
Furthermore, mobile-cellular subscriptions as well as mobile-broadband
subscription also increased significantly. The establishment of KAUST reflected
GDP Development
56
the country's persistent endeavor to support innovation, science and technology.
Commercialization of R&D results grew while public-private and international
collaborative research efforts have been boosted. This is evident in the
establishment of specialized research chairs at King Saud University undertaken
by winners of Noble Prize. Moreover, twin agreements have been concluded with
leading world universities along with dedication of special attention to science
and new technology research such as nano technology … etc.
Industrial advancement is also underway. Alongside natural resources sector,
value added for petrochemical industry and other manufacturing industries are on
a steady increase.
The Kingdom also achieved a great progress at the industrial level. Alongside the
attention given to the natural resources sector, value-added of petrochemical
industries and other manufacturing industries also grew significantly, a matter
which is demonstrated by their growing share in GDP and non-oil exports.
Figure (5): Development of Education, ICT and Science and Technology Indicators
A) Number of Enrollments at Higher Education
thousand (person)
2002 2005 2010
900
650
400
57
B) I C T
(C) Expenditure on R & D and Share of GDP (GERD) – SR million – PPP
SR million
Government
Expenditure
Non-government
Expenditure Total Expenditure
12,250 5,256 17,506
Total budget
(540,000) 2,268% 0.974% 3.242%
GDP
(1,360,000) 0.752% 0.323% 1.074%
The Kingdom also witnessed positive progress at the macro economy level as
follows:
First: Rapid growth of the economy's foreign trade over the past decades.
Second: Significant growth of non-oil sectors with increased diversification of
economic activities and the private sector's role in the national economy.
In fact, the private sectors' share in GDP constitutes one of the major
achievements of the successive development plans.
Third: Persistent efforts made to create an adequate environment for domestic
and foreign investment by completing physical infrastructure, enhancing
#REF! #REF! #REF!
number (million)
60
40
20
0
58
integration of economic policies, revising the structure of public
administration, enacting rules and regulations and strengthening
procedure. As a result, there has been a marked increase in FDI as total
inflows exceeded US$ 170 billion over 2000-2010.
Fourth: Significant improvements were also made in upgrading quality of public
health services along with raising health standards.
Fifth: Expanded implementation of Saudization program (NITAQAT) to
provide more job opportunities for citizens, hence reducing
unemployment rates in addition to increased unemployment of women
to climate their unemployment.
Sixth: Ministry of Labor to conduct studies aimed at rationalizing the recruitment
of foreign labor while ensuring their quality, a matter which will help
provide more job opportunities for citizens.
Figure (6): Development of Industry Sector and FDI Indicators
A) Industrial Sector GDP
59
All the above achievements have been realized with the Help of Allah, and the
ambitious efforts and policies of the government of the Custodian of the Two
Holy Mosques which made the Kingdom occupy a leading position among the
leading world economies. The following table (7) shows the most prominent
achievements and policies adopted by the Kingdom.
Table (7): A Selective List of the Most Notable Recent Achievements and
Underlying Policy Initiatives of KSA Achievements Policy Initiatives Overall Robust growth and resiliency
Emergence of new businesses and entities
Prudent fiscal management Multi-pronged flagship
development programs Launching of the EC project
Markets and Institutions
Modest expansion of the private sector's role
Marked improvement in business environments (DBI)
Implementing Saudization policy Various reform programs 10*10 program (SAGIA)
Education and HR
Rapid expansion of the entire education Sectors, esp. higher education
Tatweer1
AFAQ Launching of KAUST Overseas study programs MAWHIBA programs
2
S&T & Innovation
Considerable increase in government R&D
Rapid increase in scientific publications and patents
3
Several substantive STI initiatives under NSTIP - capacity building - networking and cooperation - commercialization
Industry Expansion of non-oil sectors Boom in business services Marked increase in FDI
New champion institutes like SAGIA, MODON, NICDP
Industrial diversification efforts (strategic clustering)
Preposition of national industrial strategy
CIT Rapid expansion of mobile phones Increased accessibility to digital
Arabic contents
NCITP Initiatives for Arabic content
1 King Abdullah’s programme for education development (Tatweer) has been launched, with the aim of
addressing issues at all levels of education needing further attention, such as: quality of education; teacher
training; curriculum development to focus on science, technology and mathematics; expansion of skill-
development activities, particularly analytical thinking and hands-on skills; initiative; innovation;
entrepreneurship; languages; and future and emerging sciences. 2 Sponsorship of talent and creativity and support r innovation developed tangibly. King Abdul-Aziz and his
Companions Foundation for Giftedness and Creativity “Mawhiba” adopted, a strategy to foster giftedness, creativity and support innovation. The vision of Mawhiba envisages that the Kingdom will “be a creative society with a critical mass of gifted and talented young leaders highly educated and well-trained to support the building of the knowledge based economy and the sustained growth and prosperity of the Kingdom”
3 Between 1996 and 2006, the number of scientific papers published by researchers in the Kingdom, or with
their participation, was 26,854. Thus, the Kingdom ranked second among Arab nations and 48 worldwide
60
2. Future Issues and Challenges
Saudi Arabia's short and medium term economic prospects appear positive and
optimistic as forecasted by the IMF and the Ministry of Economy and Planning.
Although long term economic outlook can also be positively stated, it is not
warranted. Saudi Arabia stands at a critical inflection point of development “S
curve”, from which distinctly possible is either a slow-down and self-
complacency or a path of strategic reform and change to make the utmost use of
its full potentials for development.
In light of recognizing this reality and those challenges, persistent efforts are
underway to tackle various problems and face all challenges, particularly those
emerged since the beginning of the Seventh Development Plan in 2000. For
instance, the Supreme Economic Council was established to undertake, among
others, evaluation of policies and measures necessary for improving the economic
climate and enhancing private sector investments. The program initiatives of
various individual ministries are also being studied and well thought out, most of
which will be activated particularly those addressing structural issues such as
boosting efficiency level as well as those related with structure of government
institutions … etc. Despite the efforts exerted at the various levels, particularly in
deepening the basis of knowledge based economy (Box-1) which resulted in
relative improvement in the citizens' conditions and the economic general
environment along with their positive impact on the Kingdom's position in many
global indicators such as international competitiveness, there remain many
challenges the Kingdom needs to overcome to attain its long term vision,
particularly with regards deepening the knowledge dimension in all socio-
economic aspects. Despite the improvement of the Kingdom's performance over
the past decades, global benchmarking shows that the country is relatively
lagging than many countries, particularly the new industrialized countries in
certain indicators as shown below:
1. World Bank knowledge economy index, which assesses market
institutions, education, innovation and CIT – indicates that KSA’s
overall ranking improved from 76th
in 2000 to 50th
in 2012, but it is
hopeful that the country proceeds to a higher ranking.
61
2. Saudi Arabia realized marked improvement in education and ICT, but in
comparison to other countries, particularly to other G20 countries, is still
behind specially in innovation and education. Moreover, even though
UNIDO’s CIP shows that Kingdom's international ranking improved
from 75th
(0.21 in 2000) to 66th
(0.22 in 2005), the actual index (0.22) is
still lower than the highest level (0.86) realized by the countries that are
on top of this index.
3. UNDP’s HDI has gone up from 0.71 in 1995 to 0.77 in 2011, but the
Kingdom's global ranking has declined from 50th
in 1995 to 65th in 2011,
implying that there are countries improving faster than KSA.
Box (II): The Focal Policy Initiatives of the 8th
and 9th
Development Plans
The 8th
Development Plan (2005-2009): focused on fundamental developments that laid the
basis for heading towards a knowledge-based economy. These included starting
implementation of the first five-year plan of the National Science, Technology and
Innovation Policy; adopting the National ICT Plan, the National Industrial Strategy, and the
Strategy and Plan for Giftedness, Creativity and Supporting Innovation; establishing the
Knowledge Economic City in Medina, and the Technology Zone of the Saudi Organization
for Industrial Estate and Technology Zones in Dammam; establishment of King Abdullah
Economic City, proceeding with preparation of a new strategy for higher education (AFAQ);
and advancing Saudization.
The 9th
Development Plan(2010-2014): adopts the drive towards a KBE through focusing
on education, which disseminates knowledge, paving the way for knowledge transfer and
accumulation and thereafter knowledge generation, and utilization of knowledge in various
economic and social sectors, particularly in production and service activities. Through these
endeavors, the Plan seeks to enhance the comparative advantages of the Saudi economy, add
to it new competitive advantages, diversify it, and increase its productivity and
competitiveness, as well as create appropriate employment opportunities for citizens.
62
Table (8): Kingdom's Position in a Sample of International Indices
Index (Institution) KSA Ranking
Development Features
KEI (Knowledge
Economic Index,
World Bank and DBI)
76th(4.6; ‘00) 50
th (5.9;
’12)
Improvements in
Education, ICT
Overall index and 4 sub-indices
- Economic and Institution Regime,
Education, Innovation, ICT
Ease of DBI(Ease of
Doing Business Index,
World Bank)
56th(‘05) 12
th (’11)
Low business cost and
regulation
Business cost, regulation indices
- warehouse, electricity, contract,
tax, register property, start to
business
BTI(Bertelsmann
Transformation Index,
Bertelsmann Stiftung)
SI: 79th (4.2; ’03) 102
th
(4.4; ’12)
MI: 97th (2.3; ’03) 96
th (4.0;
’12)
Worsening Democracy
index
Status Index and Management Index
- Status: Democracy(5), Market
Economy(6)
- Management:: Management
Performance(4) branch indices
GCI(Global
Competitiveness Index,
WEF)
35th (4.6; ’07) 17
th(5.2;
’11)
Improvements in all
indices
Overall index and 3 sub-indices
- Basic requirements(4), Efficiency
enhancers(6), Innovation and sophistication
factors(2)
CIP(Competitive
Industrial Performance
Index, UNIDO)
75th (0.21; ’00) 66
th (0.22;
’05)
Top score 0.890,
Bottom score 0.035
4 sub-indices
- Industrial, and Manufactured export capacity,
Industrialization intensity, Export quality
HDI(Human Development
Index, UNDP)
73th (0.77; ’01) 56
th (0.77;
’11)
KSA: medium
high
Education
improvement
4 levels (Very high, high, medium, low)
- Life expectancy, education(2),
GNI, etc.
IEF(Index of Economic
Freedom, Heritage
Foundation & Wall Street
Journal)
39th (66.5; ’00) 73
th (62.5;
’12)
Government spending,
Monetary freedom worsened
as a result of dealing with
global crisis consequences
10 indices
- 7 Freedom and 3 misc. indices
63
Sectoral Economy Development
Saudi Arabia witnessed impressive progress in the various sectors of the national
economy. Yet, there still remains an ample room for improvements.
Notwithstanding the fact that various efforts have been exerted for diversification
of the national economy base, the foundations of KBE still stay feeble due to the
weakness of main determinants such as: Education and HRD, S&T and
innovation, knowledge based industry and spatial development. Along with the
ongoing funding to support the existing policy initiatives for capacity building,
the Kingdom also needs to carry out - albeit gradually – bolder and more
systemic reforms to introduce a real change leading to achievement of the aspired
industrial transformation.
Education, Human Capital and CIT
The quantitative expansion in the education sector has not been accompanied by
a fundamental improvement of its qualitative outputs. International test scores
measuring the academic performance of Saudi students have been less than
satisfactory. According to Trends in International Mathematics and Science
Studies (TIMSS) for 2007, for instance, Saudi Arabia ranked 46th in
Mathematics and 44th in Science among the 48 participating countries. Students
do not exert sufficient effort that enables them improve their skills in math and
science.
The professional status of teachers should receive further attention . teachers
experience limited in-service training and poor motivation to upgrade
performance level. School facilities and services are also below the required
level. On the other hand, research and development capacities are still relatively
low and there are few postgraduate programs. Furthermore, the number of
intermediary institutions linking higher education with industries is still limited
and below the aspired level. The largest number of students still prefer theoretical
specializations of which the labor market has saturated. The unpopularity of
science and engineering as a choice majors for college students constitute a major
constraints in this connection, thereby escalating the problem of unemployment,
along with poor supply of the labor market with its needed specialists. Moreover,
64
the deficiency of vocational training system hinders provision of adequate
number of qualified trained workers.
According to ITU statistics, Saudi Arabia still lags behind in the use of broadband
network despite its growing importance recently. Perhaps the shortage of skilled
CIT professionals as well as the shortage of basic skills among such groups as
women, the elderly and the , concerns about information and data security, and
the lack of basic CIT skills among such groups as women, the elderly and the
illiterate constitute a constraints hindering the future growth of the ICT sector.
Despite the growing contribution of SMEs in the development of information
industry in terms of contents and value-added services, they still lack the
necessary understanding required for mechanisms of carrying out this role, or
simply cannot afford it.
Science &Technology and Innovation
Despite significant improvements witnessed by Saudi Arabia in S & T and
innovation activities over the past decades, the general evaluation of the Saudi
innovation system is still below the aspired level in the International Innovation
Index (2012) issued by WIPO and INSEAD, Saudi Arabia ranked 48th among
141 countries covered by the index, from 54th in 2010 issue of this index.
Against the above background, it could be said that Saudi Arabia is on the right
path, but some issues require continuous support through policies and
government finance. However, other issues involve structural complications
such as:
• Low research capacity of universities and public laboratories
compared to developed countries.
• Significant divide between production and utilization of knowledge.
• Lack of clear industrial strategy for technology development.
• Dispersed and sometime overlapping government initiatives.
Industry
65
Despite privatization efforts and policies as well as enhancement of the private
sector's role and economic diversification, most of the Saudi industries are still
predominantly public and petroleum related in a direct or indirect manner. While
GDP share of crude oil and natural gas increased by about 9% since 2000, the
manufacturing sector witnessed only a slight growth rates, and share of services
sector (trade, hospitality, government services, financial services) decreased
during 1991 and 2010 (Figure 7). The various sectors experience low
productivity levels which may reflect that the public sector operates alongside the
private sector in the economy. It is of great importance to ensure maximum
utilization of non-oil industries as well as the private sector activities in ways to
more closely link the national economy with market economy fundamentals and
principles.
Figure (7): The GDP and Employment Shares by Sectors (1991, 2000, and 2010)
Primary: Agriculture, Forestry & fishing.
BSP” Real estate, Finance + Community, Social & Personal services.
Utility: Electricity, gas & water and Transport, storage & communication.
Spatial Development
Population exodus into the major metropolitan areas accelerated particularly with
the growing momentum industrialization. Most of those moving to cities in
search of higher wage jobs and better opportunities are likely to be young and
well educated. However, this exodus deprives rural villages and small urban
communities their potentials. On the other hand, exodus of the this group to cities
Primary
Oil-Gas
Mfr Utility Construction
Trade, Hotel
BSP
Government Service
0
10
20
30
40
50
0 10 20 30 40Employment share (%)
GDP share (Current Price, %)
66
creates major urban problems, such as housing shortage, over-crowding, poor
quality services of public utilities, pollution, slums, illegal settlements, … etc.
Thus, these issues could be addressed in a way that ensures feeding of villages
with qualified cadres and maintaining the spatial and urban balance in large
cities.
3. Macro Economy Development
Macro economy indicators improved significantly over the past decades, a matter
which enables the Kingdom to start preparation of the national strategy for
transformation into knowledge society/economy. As regards the regulatory and
institutional aspect, Saudi Arabia accomplished significant progress in regulatory
reforms and privatization. However, further structural reforms are needed in the
long run in a way to ensure restructuring the Saudi economy for enhancement of
the market efficiency.
Labor Market and Government Employment
The public sector still attracts a significant portion of national workers while the
private sector concentrates on attraction of expatriate labor due to the difference
in the level of compensation and working conditions. This status is reflected in
quality of outputs and production of the private sector, particularly the industrial
sector. Analysis of labor indicators in the national industry shows its reliance-
mostly-on low education and low skills expatriate labor, and have low wages and
compensation. Therefore, many youth, particularly those with normal capacities,
refrain from joining the private sector institutions and prefer work at the
government sector which provides better compensation and working conditions.
Saudi Arabia, like other countries with high birth rates, witnesses increased
number of youth resulting in thousands of youth entering the labor market
annually. Thus, unemployment problems among the youth increased recently due
to the fact that the demand of the labor market and industrial sector does not
match the high population growth and the increasing number of youth.
In light of the Kingdoms trend to boost the private sector's role in the
development process, it is unlikely that the public sector can continue to be the
67
major employer of the youth. Surely, the work system in government institutions
provides a favorate environment for the youth to prefer continue working at the
government sector where exists the problem of lower attention to quality and
poor incentive to increase productivity, a situation which does exists in the
private sector institutions.
Many government officials, particularly at the mid and mid-high levels, lack
professional skills. They often work for a few hours per working day, but receive
compensations that are much attractive than what they would receive in the
private sector for the same effort. Thus, most Saudis employed by the
government are content with their current jobs and may have limited interest in
increasing their productivity, changing their work mode or upgrade their skills.
The under-utilization of female talents poses another major challenge for the
Saudi labor market. While policy efforts for addressing this issue are underway,
such policies will have to be turned into a tangible reality. Undoubtedly, the
limited number of necessary social institutions hinders women from joining the
labor market.
Against the above background, shifting from low-productivity public to high-
productivity private sector jobs should represent a crucial requirement and
priority on the part of decision makers in the Kingdom. However, this task
requires, at least, changing the current structure of the labor market as well as the
behavior and attitudes. It also requires education of the youth about respecting
work culture. Furthermore, shortage of competitive, risk capital technology-
driven firms in the various industries constitutes the major problem facing the
decision maker, a matter which requires serious and decisive tackling.
Reality of Finance Sector and Venture Capital
Saudi Arabia enjoys abundant finance potentials and stability of the financial
sector in addition to lower finance costs in general. Despite this abundancy of
finance potentials, Saudi Arabia still lacks risk capital. Risk capital which makes
adventurous long-term investments possible, is imperative to develop regulations
necessary for protecting investors' rights including bankruptcy and firms
liquidation regulations.
68
Corporate Sector:
With a few large stale-owned companies dominating the whole labor and
production market, KSA lacks large and leading companies which operate in a
private, competitive market. Under such a situation, most large companies are
operating in a protected and/or privileged environment, often preemptively
deterring the entry of prospective, promising competitors. Being in the capital-
intensive businesses (oil, gas, mineral resources, petro related activities, utility,
food processing, … etc), most large companies depend on a limited number of
quality jobs and lack adequate network of linkages with competitive SMEs.
There is no question that the Kingdom needs a strong, globally-competitive
corporate sector, led by a good number of leading, sizable companies.
Achievement of this goal is faced by great difficulties such as: scarcity of risk-
taking capital; lack of effective regulatory system; weak competition policy;
lack of transparent, reliable legal infrastructure and enforcement mechanisms. It
should be noted also that this challenge is exacerbated further by various
informal barriers. For instance, the insolvency act is in effect, but it falls short
of an effective mechanism for the process of structural transformation or market
rationalization.
Efficiency of Government Institutions:
Improving the efficiency of government administration policies require a
high degree of professionalism and commitment from the part of government
officials, particularly the executives. This will entail improvement of
employment practices and mechanisms, and assessment of performance,
promotion and incentives, … etc. These goals cannot be realized without
making structural, institutional and organizational reforms. Salaries and
promotion of the government officials should be based on performance and
merit. Moreover, there is a need for a radical improvement of the training
and retraining programs.
The current condition does not encourage government officials to devote
sufficient time and effort to public service. This resulted in very low
productivity levels of a large percentage of the public sector's labor force,
69
which also tend to work in isolation, a matter which leads to week level of
coordination, communication and team work.
Although the successive five-year development plans and the long-them
strategies are commendable, particularly at the ministerial or sectorial levels,
their implement-ability and actual effects remain questionable. It is
noteworthy that the national five-year plans frequently fall short of full
implementation and follow up due to nature of linkage between "Plan" and
"Budget"; weak policy prioritization; weak discretional powers regarding
realization of the intended team work; and weak pilot institutions. The
structural and institutional reason of the problem lies in the lack of close
linkage and coordination among concerned ministries and government
agencies.
This problem reflects the issue of the current governance structure of the
policy making process in the Kingdom, which can be characterized as a
Bottom-up Approach which is more dependent on the needs of various
agencies rather than on an institutionalized approach which meets the
national needs. Under this approach, individual agencies develop their won
agenda and budget request plans according to their own discretional powers,
irrespect of the higher goals and policies of the developers of national
strategies. Hence, there is a need for balancing between the "Bottom-Up"
approach and the "Top-Down" approach, in order to ensure more
coordination of policies of various ministries and sectors within a unified
national vision.
Alongside these structural problems, the Kingdom appears to suffer from a
shortage of competent, highly qualified officials to staff the government
administrative apparatus, especially in the middle operational level. As a
result, there appears to be a gap – in general – between capabilities needed to
realize those missions. This problem is also structural, reflecting a week
employment system. Under the present system, there would be no systematic
incentives for government officials to devote all their time and energy to
meet the public service requirements.
3. SWOT Analysis:
70
In light of the shifting in world's economic center of gravity from the advanced
industrialized countries to a group of emerging and developing ones, especially
over the past two decades, KSA is poised to become an economic growth pole
at regional and global levels by transforming itself into a knowledge-based
economy and society. In order to explore a map for the strategic options of the
Kingdom, table (9) shows a frame for a new analysis to identify points of
strengths and weaknesses and the opportunities and threats (SWOT) based on
the detailed SWOT analysis of the Saudi Long-Term Strategy (2025). This
analysis highlights the core factors and re-identify them in light of important
changes which happened over the last decade.
Table (9): SWOT Analysis
Strengths
Government / Institutions:
Stable and secure government.
Reform-oriented political leadership.
Economy: Industries / Firms:
Large, promising natural resources.
Substantial private sector potentials.
Well-developed state-owned companies and advanced CIT
infrastructure.
Human Resources:
Indigenous top talents.
Established, steady improving education system.
Social safety and coherence network supported with unique
Islamic values.
Weaknesses
Government / Institutions:
Rentier economy.
Below average performance of government bureaucracy.
Economy: Industries / Firms:
Big, inefficient public sector.
High dependence on oil and a weak industrial base.
71
Human Resources:
Lack of mid-to-high competent staff.
Weak incentives / work discipline.
Opportunities
Geopolitical and cultural advantages.
High oil revenues.
A new momentum of societal change.
Increasing cases of successful reform.
A young and healthy population.
Large size of population and a sizable domestic market.
Essentially stable regional security.
Free international mobility of talents and companies.
Membership of the WTO and the GCC.
Threats
Oil price volatility.
Insufficient supply of good private sector jobs.
A rapidly growing young population.
High domestic consumption of oil and oil derivatives.
Shortage of water, electricity, health and housing services.
Disparity among individuals and regions.
Severe competition in regional and global markets.
Political / social turmoil in Arab world.
72
Appendix (2): Basic Follow-up Measure of the strategy:
Economic and Social Development Index (ESDI) Model
1. Basis and structure of ESDI
Economic and social Development Index is a new index that can better reflect
and measure the new economic policies goals which aim at attaining the
transformation into knowledge-based economy and knowledge society,
including balanced development, with due emphases given to social cohesion
and environmental protection (Green Growth). Hence, this index provides new,
more comprehensive and balanced developmental measurements to support and
guide better and more balanced policies.
Table (10) shows the structure of ESDI model. The index consists of three main
categories: Growth Engine, Social Cohesion, and Environment. Each of these is,
in turn, divided into two classes and 2-5 sub-classes, each of which comprises a
number of standard measures most representative of each sub-class.
Table (10): The Structure of the Prototype ESDI Model
Category Class Sub-class Component
Growth
Engine
stable
growth
income per capita GDP (PPP, $, constant 2009)
macroeconomic
stability
Inflation, measured by GDP deflator (annual %)
Central government debt, total(% of GDP)
financial
development
Liquid Liabilities/GDP + Stock Market Capitalization/GDP
Private Credit by Banks and other financial institutions/GDP +
Stock Market Total Value Traded/GDP
Economic
openness
Foreign Trade (% of GDP)
Foreign direct investment, net inflows (% of GDP)
industrial
competitive
ness
informatization
Internet users (per 100 people)
Mobile cellular subscriptions (per 100 people)
Personal computers (per 100 people)
technological
innovation
Researchers in R&D(per million people, FTE)
Number of Patents Granted(All Patent Types)
Number of scientific publications.
Number of companies emerging from R & D.
human capital
Employment to population ratio, 15+, male (%)
Employment to population ratio, 15+, female (%)
GDP per person employed (constant 1990 PPP $)
73
Category Class Sub-class Component
Percentage of population, 25-34, total, completed tertiary
education
Public spending on education, total(% of GDP)
social
cohesion
Individual
freedom and
life security
freedom Index of Economic Freedom
Freedom of the Press
security
Unemployment, total(% of total labor force)
Public and private Expenditure: (percentage of GDP)
Employment rates for age group 55-64
Road fatalities per million inhabitants
Health expenditure, total (% of GDP)
Suicides, deaths per 100,000 population
Crimes recorded in criminal statistics, (rates per 100,000
inhabitants)
empowerment Labor participation rate (% of total population aged 15+)
Freedom Index
welfare,
distribution
Public social expenditure as a percentage of GDP
Gini Index
fertility/aging Fertility rate, total
Population aged 65 and above (% of total)
Social
tolerance
&
government
Accountabili
ty
social capital
trust in people
Institutional confidence
Civic engagement
Social tolerance
Protection of disabled workers
degree of tolerance
Stock and percent of foreign population
government
accountability
Government Effectiveness
Rule of Law Index
CPI (Corruption Perception Index)
Net ODA Ratio to GDD
Environme
nt
environment
al condition
resource
efficiency
Total Primary Energy Consumption/GDP
Total gross water abstractions/GDP
environmental
hazard
CO2 emissions/GDP
PM10, country level
Total amount generated of municipal waste/GDP
regenerative
capability
renewable
energy Total Renewable Electricity Net Generation
water, sewage Proportion of the population using improved drinking water
sources
74
2. Economic and Social Development Index
The ESDI, though developed initially to apply to the Korean case, is very
flexible, enabling easy adaption and application to other countries in line with the
needs and policies of each country. Accordingly, the overall structure (category,
class, sub-class) of the general index can be reconstructed to meet the policy
needs of the Kingdom. Benchmark countries can be customized as well in light of
the country's specific interests based on the available data. For the case of the
Kingdom, a simple working model has been prepared for some elements of ESDI
and the KSA's performance records over 2000-2009 have been analyzed from a
comparative perspective against 28 other countries. For simplicity, and in light of
the focal concerns of the Knowledge Society Strategy, the "environment
category", i.e. the environment sub-classes, was excluded and the model was
reconstructed as shown in table (11). The index now concentrates on two
categories only: "Economy" and "Society", each of them comprises two classes
and a number of sub-classes, which are quite different from those of the
prototype ESDI model shown in table (10).
75
Table (11): Comparison of ESDI Results, 2000 and 2009
Category Class Sub Class KSA Korea Big4
Resource
rich
2000 2009 2000 2009 2000 2009 2000 2009
Economy 2.21 2.74 2.81 3.23 3.81 3.81 3.43 3.52
Growth Engine 2.19 3.26 2.75 3.06 3.20 3.23 2.98 3.23
Macro Stability 3.57 3.34 3.59 3.86 4.20 4.29 3.71 3.88
Openness 1.48 3.55 1.99 1.96 2.46 1.72 2.96 2.70
Industrial
Competitiveness 1.52 2.90 2.67 3.36 2.94 3.67 2.28 3.12
Government Accountability 2.23 2.22 2.87 3.40 4.42 4.40 3.88 3.81
Government
Effectiveness 1.98 2.05 3.28 3.72 4.62 4.40 4.05 3.99
Rule of law 2.58 2.61 3.51 3.77 4.59 4.57 3.96 4.07
Corruption 2.12 2.00 1.82 2.71 4.06 4.24 3.65 3.35
Society 3.02 3.26 3.55 4.01 4.20 4.18 3.64 3.84
Equal Opportunity 2.59 2.90 3.15 3.85 4.13 4.10 3.35 3.61
Education 2.55 2.71 2.78 3.52 3.49 3.48 2.81 3.31
Territorial
Development 2.62 3.09 3.51 4.18 4.76 4.71 3.88 3.91
Safety Nets 3.46 3.62 3.96 4.16 4.27 4.26 3.93 4.07
Economy 4.76 4.64 4.79 4.91 4.62 4.32 4.67 4.62
Health 2.15 2.59 3.12 3.41 3.93 4.21 3.19 3.52
Note: Big4; United States, Japan, Germany, Sweden; Resource rich: Norway, Malaysia, Chile
Table (11) presents the results of calculations of the ESDI model after been
applied to the Kingdom. The Kingdom is compared with three resource-rich
countries (Norway, Malaysia, Chile) in addition to Korea and the G-4 (USA,
Japan, Germany, Sweden). The analysis leads to a number of important results,
such as:
Regarding Economy Index: The Kingdom still lags behind resource-rich
countries, but shows a robust, rapid progress (the index increased from 2.21 in
2000 to 2.74 in 2009). With respect to openness index, the Kingdom recorded
3.55 in 2009 and is ahead of resource-rich and G-4 countries.
Concerning Society Index: The Kingdom experienced a tangible progress,
albeit at a slow, limited pace. The index increased from 3.02 in 2000 to 3.26 in
76
2009. Most sluggish progress was in education, health and regional
development sectors. Safety net sector remained stagnant with slight slow
down, from 4.76 in 2000 to 4.64 in 2009, though in an approximately equal
level with Korea, and the G-4.
Figure (8) Economic and Social Development Index
0.0
2.0
4.0
6.0
2000
2009
Macro Stability Openness
Industrial Competitiveness
Government Effectiveness
Rule of Law Corruption
Education
Territorial Development
Economy
Health
0.0
2.0
4.0
6.0
KSA
Korea
Big4
Macro Stability Openness
Industrial Competitiveness
Government Effectiveness
Rule of Law Corruption Education
Territorial Development
Economy
Health
KSA’s ESDI (2000 vs. 2009) KSA’s ESDI against other countries (2009)
77
Appendix (3): Methodology of Strategy Preparation
Royal Decree No. 546 dated 2/1/1433 H stipulates formation of a committee,
chaired by H.E. the Minister of Economy and Planning, to "produce a pragmatic,
comprehensive National Strategy for Transition to a Knowledge Society,
supported with action programs, time schedules and specific costs".
Tasks of the committee include the following:
1. Reviewing the strategy proposed by Al-Aghar Group and the suggestions
and recommendations made by the various committees been for studying
this strategy.
2. Analyzing the present conditions and pinpointing the strengths,
weaknesses, opportunities and threats (SWOT).
3. Reviewing the existing projects, programs and efforts.
4. Reviewing the level of current coordination and cooperation in
implementation of these programs and projects, and providing appropriate
proposals for ensuring a high level of coordination and integration
between the plans, strategies, programs and projects.
5. Studying experiences of a sample group of countries to derive relevant
lessons.
6. Identifying a clear mission and vision for the strategy as well as
quantitative and qualitative measurable goals.
7. Identifying the mechanisms, tools, projects and programs which can
contribute to achieving the goals of the strategy.
8. Identifying the costs of these programs and projects and the agencies in
charge of implementation as well as mechanisms of follow up and
monitoring.
9. Proposing the reference agency which will shoulder the responsibility of
supervision and follow up of the Strategy implementation.
- Duration:
- The committee shall submit its report to the Supreme Economic Council
within six months from the date of work start.
- Potential Capabilities of the Committee:
78
The Ministry of Economy and Planning in coordination with the
Ministry of Finance, shall make available the financial amounts
needed for performance of the specified tasks.
The Committee may seek help of experts and specialists from various
ministries, government agencies, and the private sector.
To implement this royal decree, the Ministry of Economy and Planning
concluded an agreement with the Korean Development Institute (KDI) to
cooperate in performing this project which aims at supporting the process of the
Kingdoms transformation into a knowledge-based economy and a knowledge
society. The Korean experience has been adopted due to the resounding success
realized by Korean economy. Korea is also the first country in the world which
established a ministry for knowledge-based economy. Moreover, KDI is
renowned world-wide as a successful institution in the field of planning
knowledge society building.
Accordingly, this project comprises preparation of a national strategy for
transformation into a knowledge society as well as preparation of a plan for
implementation of the strategy. In addition to the Supervisory Committee
formed as per the royal decree, an executive secretariat has been formed from
the Saudi party, as well as a work team, 13 technical committees and 6 work
groups. Moreover, a web-site has been designed for the project to be used as a
work platform for those participating in the preparation of the strategy and its
implementation plan. The web-site contains all documents of the project. The
strategy document and the supporting studies will be submitted in Shawal/Zul-
Qaadah 1434 H while the detailed implementation plan will be submitted in
Rajab 1434 H.
Based on the abovementioned, a group of Korean experts, chaired by the former
Minister of Labor, Dr. lee Hyung Cho, visited Riyadh during 14-18, January
2012. During this visit, the Saudi Minister of Economy and Planning asked the
Korean team to cooperate in the preparation of the strategy and its
implementation plan.
On January, 16th
the KDI received a letter of intent from the Ministry of
Economy and Planning, which included a formal authentication of the request
79
presented earlier by the Minister of Economy and Planning. Accordingly, the
KDI formed a work team comprising more than 40 highly qualified experts
from the Korean part. The team included Dr. Cheonsik Woo, the vice principal
of KDI and Dr. Tcha Moon Jong as project managers. A counterpart team was
also formed from the Saudi part.
Subsequently, four KDI missions visited the Kingdom and held meetings with
more than 50 agencies in the Kingdom. The first visit took place during 23-29,
January and the second during 22 March – 6 April. During these two missions
the Korean experts conducted interviews with officials in both public and
private sectors. Based on the data and literature collected during these visits, the
KDI team prepared draft supporting studies composed of three parts, which
were delivered on 22, April and were discussed with the Saudi work team until
the first day of May.
The third visit took place during 15-16, May 2012. The aim of the mission was
to collect the remarks and feedback about the supporting studies from all
agencies involved in this project. The KDI work team also attended a meeting
of the Supervisory Committee on May 16 and conducted more field works and
interviews with the government agencies, academic institutes, financial
institutions and the companies related with the project.
Using the additional information collected during the third visit, the KDI
embarked on preparation of the Strategy Document and presented it on the fifth
of June. The fourth visit took place during 7-21, June 2012, for further
discussions and deliberations regarding the formulation of the Strategy. The
Supervisory Committee held a meeting on the ninth of June and asked the KDI
team further revision and fine tuning of the strategy document. Many remarks
and comments were made in writing by the members of the Committee and
various national institutions. The KDI team perused such remarks and revised
the document to take them into consideration.
The Supervisory Committee held another meeting on 19 June, during which the
KDI team presented and reviewed the draft strategy. The team submitted the
final strategy document on mid-July and the detailed supporting reports by the
end of July. The Supervisory Committee held a meeting on July, 28 and
80
discussed the last adjustments to be made in the document prior to its
submission to the Supreme Economic Council.
Work is currently underway on preparation of the detailed implementation plan,
in response to the Royal Decree, to be submitted in Rajab 1434. During the
preparation process, four national workshops will be organized. Experts of KDI
will be invited to conduct a number of visits to Saudi Arabia in addition to the
Saudi delegation's visit to Korea. Furthermore, several supporting studies will
be conducted along with meeting for coordination between this plan and the
major sectoral strategies and plans. This task will be completely carried out in
the context of regular meetings by the Supervisory Committee, Project
Secretariat, work team, the 13 technical committees and the six work groups.
A. Supporting Studies and Reference Documents
First: Transformation of Saudi Arabia into Knowledge Society (KDI, 2012)
1. Part (1): Current condition in Saudi Arabia; SWOT analysis; a strategic
roadmap for the key policies to realize the Kingdom's aspiration; quick-
win initiatives; reconsideration of government organization and
management and improving its implementation capacities; evaluation of
knowledge level in Saudi Arabia in light of six international indicators;
definition of knowledge-based economy; case studies; and the main
features of the Korean experience.
2. Part (2): Market and institutions; public finance; labor market and
finance.
3. Part (3): Education and human capital; S & T and innovation; CIT,
industry; and health care.
Second: Other reports.
4. Establishment of the Saudi Development Institute; Korean Knowledge
Sharing Program (2012).
81
5. Towards a Knowledge-based Economy in Saudi Arabia; Korean
Knowledge Sharing Program (2012).
B. Reference Documents:
Documents delivered to KDI in the process of elaborating the KSA
strategy and KBE for the Kingdom (English versions)
Documents delivered on 26/February/ 2012
1. Strategy and Action Plan for Fostering Giftedness and Creativity and Supporting
Innovation (KAFGC, Mawhiba).
2. Programs and projects of certain ministries in the field of KBE (MoEP):
List of Existing Programs and Projects.
List of New Programs and Projects.
List of Proposed Programs and Projects by Relevant Agencies.
3. Saudi Arabia's National Innovation Ecosystem: Proposed Framework and Initiatives.
(KACST& Al-Aghar Group).
4. Knowledge-Based Industries (KBI) In GCC States: An Exploratory Report (GOIC).
5. National Policy for Science and Technology (KACST&MoEP).
6. Al-Aghar Group: Kingdom's Strategy of Transition To Knowledge Society, and Six
Quick- Win Initiatives.
7. KBI Strategy for Saudi Arabia: Draft Implementation Plan, Submitted to : KBI
Council , SAGIA.
8. The National Industrial Strategy, 1428 - 1441 AH (2008 – 2020 G)“ : Towards a
Competitive Industry and a knowledge-based Economy”.
9. PRIVATIZATION STRATEGY IN THE KINGDOM OF SAUDI ARABIA.
10. The National Communications and Information Technology Plan : The Vision
Towards the Information Society,(MoCIT) .
11. Kingdom of Saudi Arabia, Ninth Development Plan, KNOWLEDGE-BASED
ECONOMY,(MoEP).
12. ESTABLISHING A KNOWLEDGE ECONOMY IN SAUDI ARABIA. World Bank
Institute, Knowledge for Development Program, September 2008 , Hard copy.
13. Strategic Technology Program: 14 strategies, (KACST).
82
Documents Delivered on 26/March/ 2012
14. The Seventh Development Plan 1420/21-1424/25 (2000-2004), (MoEP)
15. The Eighth Development Plan 1425-1430H (2005-2009) (MoEP)
16. The Ninth Development Plan 1431-1435 (2010-2014) (MoEP)
17. Achievements of the Development Plans (Facts and Figures) 1390-1432 (1970-2011)
(MoEP)
18. Millennium Development Goals 1432H (2011) (MoEP)
19. The Saudi Development March (Excerpts) 1430H (2009) (MoEP)
20. Human Development Report 1423/1424H(MoEP)
21. The Saudi Economy in Figures 1432/1433H (2011) (MoEP)
22. Background Studies for the Ninth Development Plan (2010-2014) (MoEP):
1. Rationalizing the Saudi Petrochemical Industry - Cross Ownerships
2. Competitiveness: Issues Related to Saudi Non-oil Exports
3. Prospects for Diversification Based on Oil and Gas
4. Policies to Encourage the Internationalization of Saudi Corporates
5. Policies to Attract FDI
6. Saudization and labour market nationalization policies in other GCC countries: a
benchmarking exercise
7. Efficiency of Government Expenditure and Investment and the Use of the
Budget Surplus
8. Prospects for Diversification into Industries Unrelated to Oil and Gas
9. The Saudi Financial Sector: Achievements and Challenges
10. Economic Diversification of Saudi Arabia: International Comparison
11. Domestic Energy Demand, Supply and Efficiency, including Desalination in
the Kingdom of Saudi Arabia
12. The Environment and Economic Diversification, The Potential of CO2 for New
Economic Activities
Documents Delivered on 9/April/ 2012
23. UNIDO-MoCI Studies :
1. Diagnosis
2. Overview Dec12-06
3. UNIDO Report :Front-page A4_3
83
Preliminary_Pages-Rev.121206
PART A-12 December 2006
PART B-12 December 2006
Part-C_ 12 December 2006
Annexes_and_References-12 Dec 2006
4. SME Report
5. KSA- Industrial Innovation System
24. GERD KSA 2012 Expenditure on R&D (MoHE)
25. KACST_annual_Report_2009_final (KACST)
26. KESA WB Report 09 2008 (Knowledge Economy), soft copy
27. National S&T Policy and KBE (KACST 2012)
28. Privatization Strategy for Saudi Arabia (soft copy)
29. Long Term Development Strategy (LTS) 2025, Condensed Draft ( Jan 2007),
(MoEP)
30. Saudi Arabian Monetary Agency 47th
Annual Report 2011 (SAMA)
31. General Education Development Strategy 2012 (brief version+ PPT)
32. Water Tariffs
Documents Delivered on 16-5-2012
I- Documents on Companies in KSA:
1. Information on All companies listed in TADAWOL
2. SMEs Sector diagnostic, targets and initiatives _FINAL Boston Group
3. Data on production factories in KSA
4. six CDSI publications on production –companies
bldngcensus1424 Companies' number on 2003
ecs-bul-30 Companies' yearly economic Report.
industry0001-03 Productive Factories Until 2010 Classified by
Industrial Activity
industry0001-08 Manpower in the Productive Factories
industry0001-09 Total Financing to the Productive Factories
YearBook44 CDSI year book
84
II- Three documents on education development in KSA
1. REPORT ABOUT SOME EDUCATIONAL APPROACHES BA 7633 pdf
2. Sector Assessment V4 0 by BA pdf
3. The Education Sector Benchmarking Report.05.17.09 (1)
III- Strategic Plan (1431-1440) and National Project for Integrated and
Comprehensive Health Care
IV- Laws:
1. Competition Law
2. The Executive Rules of the Foreign Investment Act
3. The Law of Arbitration
V- Higher Education;
1. Higher Education in Numbers and Figures KSA 2010
2. Higher Education Indicators KSA 2011
3. Higher Institute For Plastics Fabrication
VI- Communication & Information Technology
1. CIT in KSA A socio-Economic Impact Preview, ENGLISH, STC
2. King Abdullah Initiative for Arabic Content
VII- Eastern Chamber of Commerce _v5 Developing a local content strategy
VIII- Labor Productivity Study, Saudi Arabia, and comparison, Draft most recent
A2
IX- NSTIP IP Policy 26 Dec 2011_English_v1
X- The development of performance in Eastern KSA
XI- National Transportation Strategy