Those who had previously destined the ‘knowledge economy’ (KE) to buzzword status have probably changed their minds by now. The concept has had immense implications for the behavior of governments, businesses and individuals. It is difficult to make out a single unified and clear definition of the KE. In the simplest terms, a KE is an economy where the generation and utilization of knowledge is the main source of growth.
According to the World Bank, the four central pillars that determine a country’s readiness for a KE are education, innovation, information and communication technology (ICT) and the economic and institutional environment. Based on those, the Bank designed a measurement tool (the KAM) which at present shows Sweden heading the race with a ‘KE readiness’ score of 9.58. Lebanon, scoring 5.00, ranks 69th amongst 140 countries, nine positions lower than it did a decade ago. Regionally, it ranks 8th. A couple of years ago, Fadi Aboud, President of the Lebanese Industrialists Association, wrote an article titled “Lebanon’s Place under the Sun” where he told about his nightmares of Lebanon fatally falling behind. He now says, “The nightmares will naturally persist since the pace of reform and change is still slow. Lebanon is slipping behind other countries in the region and around the world in developing a knowledge-based economy.”
Amongst the pillars, Lebanon scores the lowest regarding innovation. In the past four decades only 33 US patents were distributed in Lebanon. As little as 0.5% of GDP was spent on research and development (R&D) in 2003, according to a recent World Bank report. The latest available statistic on the number of internationally published research papers dates back to 1990-1995. It was 500 papers, down from 743 during the 1970-1975 period.
On the brighter side, the country does have a national Science Technology and Innovation Policy (STIP). Peter Tindemans, a UNESCO consultant who worked with the National Center for Scientific Research (CNRS) on devising the policy stated that, “there was great enthusiasm among stakeholders. STIP was prepared by three very active working groups of persons from universities, CNRS institutes and industry.” Dr. Hassan Charif, CNRS advisor, explained that the budget increase promised to CNRS has failed to materialize. Moreover, he said, “what we received in research projects this year amounts to only half of what we usually get.” The new government has endorsed the STIP. Given the necessary commitment, STIP can become a cornerstone of Lebanon’s KE because it aims to mobilize and foster collaboration between the government, the scientific community and the private sector.
Private initiatives that promote technology and innovation, albeit very shy, are not completely missing in Lebanon. Berytech is a business incubator which houses technology related startups and SMEs. “It bridges the gap between research and commercialization,” said Tania Mazraani, business development and communications director at Berytech. She also explained some of the challenges, such as the country’s unstable and risk-adverse environment, costly and underdeveloped ICT infrastructure, high barriers to entry, and limited funding opportunities for entrepreneurs. Since its instigation, Berytech has distributed over $150,000 worth of grants for technology start-ups and has recently launched a new fund that “will be investing from $100,000 to $1,200,000 in any single investment, a range not generally served by formal venture capital funds,” she said. As a side note, it has to be mentioned how disappointing the suspension of the Beirut Emerging Technology Zone (BETZ) in Damour was. This national initiative could have been a noteworthy accomplishment for Lebanon.
Lebanon scores higher on the ICT pillar than it does on the other three. Nevertheless, Gabriel Deek, president of the Professional Computer Association in Lebanon, explained that the country missed out on the late 90s internet hype and has not yet caught up. IT companies are faced with massive “disablers” such as expensive telecommunication, deficiency in R&D activity and interest therein and the limited size of the local market. “The government lacks awareness… there is no centralized decision-making process for the sector,” he said. As a member of the national ministerial ICT committee created in 2000, he said the committee met only once.
The use of ICT in government falls under the e-government strategy, an imperative element of the National E-Strategy launched by the Office of the Minister of State for Administrative Reform (OMSAR) in 2003. Tania Zaroubi and Najib Korban, Senior ICT Project Managers at OMSAR, explained that despite the existence of an e-government strategy, its action plan misses proper high authority commitment especially with regards to funding. Nevertheless, OMSAR has been active in initiating a number of e-government projects. “The human resource capacity in the public sector creates a serious obstacle,” said Zaroubi. Kabalan explained that the unwillingness and resistance of some long due mindsets and agendas is impeding the government’s e-readiness.
The legal framework is also holding back the development of the ICT sector. This brings us to the country’s low score on the economic and institutional environment pillar. A KE is characterized by a regime which rewards investment in knowledge, encourages competition and portrays overall competent legal standards, along with well functioning labor and financial markets. According to the Heritage Foundation, Lebanon’s business and investment freedom, property rights and the regulatory regime that “deters foreign capital” all need to be improved. For example, although a law protecting intellectual property rights was voted by Parliament in 1999, enforcement is still condemned to be weak. Fadi Abboud explained that “the private sector has been the most innovative player and the major driving force behind development… but we need to create the right environment to help boost its efficiency. The only way to mobilize a private sector is to leave it alone and to stop creating obstacles.” Lebanon ranks 9th regionally and 73rd worldwide with respect to the Index of Economic Freedom.
Surprisingly, Lebanon ranks 6th amongst MENA countries with respect to the Education pillar, whereas it is known to have the highest literacy rates in the region. 48% of university-aged students were enrolled in tertiary education in 2003, the highest rate in the Arab World. Moreover, almost 26% of university students were enrolled in scientific, technical and engineering disciplines known to support KE readiness. AUB has collaborated with two international universities as well as Siemens to design an electrical and computer engineering PhD program and an IT masters program. This scheme, which is funded by the European Commission, is a vivid example of the networks and objectives of KE Higher Education institutions.
How to grow the knowledge economy
Education for the KE involves more than providing access and increasing enrollment — these conditions are necessary, yet not sufficient. For instance, globalization has implied a role for universities in importing and exporting knowledge. Several higher education centers in Lebanon have strong international affiliations. The need to seek quality assurance by importing international standards is recognized. Although Lebanon has been a higher education destination for Arab students, international universities are gradually seizing more opportunities to open campuses in the Arab World. Therefore efforts to continue attracting non-Lebanese students to the country are crucial. Unfortunately, sending qualified Lebanese to settle abroad is not knowledge exportation. A World Bank report shows that in 2000, 38% of highly educated Lebanese nationals lived in OECD countries. That number is probably even higher today.
Finally, an economy’s ability at leadership and vision-making, and its ability to diffuse knowledge through a healthy set of social networks and civil society are also necessary for the move towards a KE. A country’s social capital is hard, if not impossible, to measure. Yet, simply put, the nature of a county’s social capital can either smoothen the road to a KE or create frustrating checkpoints beyond which the road is blocked. In this context, corruption and lack of accountability are examples of facets that can create major setbacks. Analyzing how the nature of Lebanon’s social capital affects the pursuit of a KE is food for thought and an interesting issue for further examination.
It seems that most potholes on Lebanon’s road to a KE have already been acknowledged and quite a few of the required strategies have been devised. However, major checkpoints are delaying their implementation and the state of Lebanon’s KE is deteriorating. Given the country’s unrest, this issue faces the threat of being pushed further and further down the agenda. Meanwhile, the country continues to send off its most valuable asset — its human capital. The KE is a promising pursuit for Lebanon and for the mindsets that have adhered to their eagerness to learn and progress. It may as well be the country’s present chance to get back on a durable development path.
MAY WAZZAN is a Lebanon-based consultant who works on economic development projects