The central aim of this article is to explore issues related to the transformation of an oil-reliant economy to a knowledge economy in Saudi Arabia, a country which witnessed a remarkable revolution following the discovery of oil more than three quarters of a century ago (March 1938). The study provides insights into what the country’s knowledge economy looks like today and the potential policy issues related to how the economy might evolve into the future. Saudi Arabia, a member of G20, is the world’s largest oil exporter and derives about 90% of the government revenue from oil. Based on the documentary analysis (World Bank, United Nations, World Economic Forum, Ministries in Saudi Arabia and newspapers), the findings of this study suggest that there are six key aspects which need to be considered in developing Saudi Arabia’s knowledge economy: human capital, innovation, information and communications technology (ICT), the economy, education and employment. In particular, several challenges are identified relating to human capital, research and unemployment amongst university-educated females. The Saudi government’s Vision (Arabic: 2030 and the related National Transformation Program 2020 both stress the importance of diversifying the economy through development of the knowledge economy. The findings of this study will assist policymakers as they work to create sustainable knowledge economy framework for Saudi Arabia. Further research is required to compare the pillars of the knowledge economy in the Middle East.
This is a preview of subscription content, access via your institution.
Buy single article
Instant access to the full article PDF.
Tax calculation will be finalised during checkout.
Adelman, J., Brown, G., & Quesada, J. (2006). Contextual diversity, not word frequency, determines word-naming and lexical decision times. Psychological Science, 17(9), 814–823.
Altbach, P. G. (2013). Advancing the national and global knowledge economy: the role of research universities in developing countries. Studies in Higher Education, 38(3), 316–330.
Al Arabiya (2016a). Al Arabiya interviews Deputy Crown Prince Mohammed bin Salman. [video transcript translated from Arabic to English]. 25 April. Available at: http://english.alarabiya.net/en/webtv/programs/special-interview/2016/04/25/Deputy-Crown-Prince-This-is-the-Saudi-vision-2030.html (accessed: 14 November 2016).
Al Arabiya (2016b). Here’s a quick glance at the Saudi National Transformation Program. 8 June. Available at: http://english.alarabiya.net/en/perspective/features/2016/06/08/Here-s-a-quick-glance-at-the-Saudi-National-Transformation-Program.html (accessed: 15 June 2016).
Asongu, S. A. (2015). The comparative economics of knowledge economy in Africa: policy benchmarks, syndromes, and implications. Journal of the Knowledge Economy, 1–42. doi: 10.1007/s13132-015-0273-4 (accessed: 22 February 2017).
Baayen, R. H. (2008). Analyzing linguistic data: a practical introduction to statistics using R. Cambridge: Cambridge University Press.
Becker, G. (1964). Human capital (2nd ed.). New York: Columbia University Press.
Big Think (2014). Fareed Zakaria on the knowledge economy. 14 May. Available at: https://www.youtube.com/watch?v=_-8uhMBl6vI (accessed: 27 July 2016).
Bloomberg (2016). What’s in Saudi Arabia’s blueprint for life after oil? 25 April. Available at: http://www.bloomberg.com/news/articles/2016-04-25/key-elements-of-saudi-arabia-s-blueprint-for-life-post-oil (accessed: 27 May 2016).
Capital Market Authority (2015). Rules for qualified foreign financial institutions investment in listed shares: based on the Capital Market Law issued by Royal Decree No. M/30 dated 2/6/1424H. English Translation of the Official Arabic Text.
Ceptureanu, S. I. (2014). Knowledge based economy in Romania: comparative approach. Journal of Applied Quantitative Methods, 9(4), 51–61.
Chidambaram, R. (2014). To become a knowledge economy. Current Science, 106(7), 936–941.
Corbetta, P. (2003). Social research: theory, method and techniques. London: Sage Publications.
Corso, M., Martini, A., Pellegrini, L., & Paoulucci, E. (2003). Technological and organizational tools for knowledge management: in search of configurations. Small Business Economics, 21(4), 397–408.
Coyle, D. (1999). The weightless world: thriving in the digital age. London: Capstone.
Creswell, J. W. (2008). Research design: qualitative, quantitative, and mixed methods approaches. London: Sage Publications.
Crotty, M. (1998). The foundation of social science research: meaning and perspectives in the research process. London: Sage Publications.
Drucker, P. F. (1959). Landmarks of tomorrow. New York: Harper & Brothers.
Drucker, P. F. (1969). The age of discontinuity: guidelines to our changing society. New York: Harper and Row.
Drucker, P. F. (1994). The age of social transformation. The Atlantic Monthly, 274(5), 53–80.
Drucker, P. F. (2001). The next society. The Economist. 1 November. Available at: http://www.economist.com/node/770819 (accessed: 27 July 2016).
Dutta, S., Lanvin, B., and Wunsch-Vincent, S. (Eds) (2016). Global Innovation Index 2016. Cornell University, INSEAD, and the World Intellectual Property Organization. Available at: https://www.globalinnovationindex.org/gii-2016-report (accessed: 27 September 2016).
emirates 247.com (2014). UAE has most diversified GCC economy. 6 January. Available at: http://www.emirates247.com/business/economy-finance/uae-has-most-diversified-gcc-economy-2014-01-06-1.533612 (accessed: 13 November 2016).
Encyclopedia.com (2007a). Saudi Arabia. Available at: http://www.encyclopedia.com/places/asia/arabian-peninsula-political-geography/saudi-arabia (accessed: 27 September 2016).
Encyclopedia.com (2007b). Wordmark encyclopaedia of nations: Saudi Arabia. Available at: http://www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/saudi-arabia (accessed: 13 November 2016).
Forbes (2016). Best countries for business: Saudi Arabia. Available at: http://www.forbes.com/places/saudi-arabia/ (accessed: 5 January 2017).
Franco, C., Marzucchi, A., and Montresor, S. (2012). Absorptive capacity, innovation cooperation and human-capital: evidence from 3 European countries. IPTS Working Papers on Corporate R&D and Innovation no. 05/2012.
Gretton, P., Gali, J., & Parham, D. (2003). The effects of ICTs and complementary innovation on Australian productivity growth. Canberra: Productivity Commission.
Guellec, D. (1996). Knowledge, skills and growth: some economic issues. STI Review, 18, 17–38.
Haller, S. and Siedschlag, I. (2008). Determinants of ICT adoption: evidence from firm-level data. DYNREG Working Paper no. 29.
Hossain, A. (2015). Evolution of mutual knowledge-based economy in regional integration: an experience from the Cooperation Council of Arab States of the Gulf. Journal of the Knowledge Economy, 6(4), 790–817.
Huang, C., & Soete, L. (2007). The global challenges of the knowledge economy: China and the European Union. Maastricht: Working Paper Series, UNU-MERIT.
Hvidt, M. (2015). The state and the knowledge economy in the Gulf: structural and motivational challenges. Muslim World, 105(1), 24–45.
International Monetary Fund. (2015). Saudi Arabia: tackling emerging economic challenges to sustain growth. D.C.: Washington Available at: https://www.imf.org/external/pubs/cat/longres.aspx?sk=42462.0 (accessed: 27 May 2016).
International Telecommunication Union (ITU) (2016). Statistics: ITU World Telecommunication/ICT Indicators database 2016. Available at: http://www.itu.int/en/ITU-D/Statistics/Pages/stat/default.aspx#tab2 (accessed: 27 September 2016).
Jacob, M. C. (2014). The first knowledge economy: human capital and the European economy (pp. 1750–1850). Cambridge: Cambridge University Press.
Jovanovic, B., & Rousseau, P. L. (2005). General purpose technologies. In P. Aghion & S. N. Durlauf (Eds.), Handbook of economic growth (pp. 1181–1224). Amsterdam: Elsevier.
Khalifa, A. B. (2015). Investment in knowledge based economy and firm’s innovation performance in developing countries: evidence from Tunisian firms. Journal of Academic Research in Economics, 7(2), 256–282.
Khorsheed, M. S. (2015). Saudi Arabia: from oil kingdom to knowledge-based economy. Middle East Policy, 22(3), 147–157.
Lopez-Garcia, P., & Montero, J. M. (2012). Spillovers and absorptive capacity in the decision to innovate of Spanish firms: the role of human capital. Economics of Innovation and New Technology, 21(7), 589–612.
Michie, J., & Sheehan, M. (2003). Labour market deregulation, ‘flexibility’ and innovation. Cambridge Journal of Economics, 27, 123–143.
Ministry of Economy and Planning (MoEP) (2013). National strategy for transformation into knowledge society. Saudi Arabia.
Ministry of Economy and Planning (MoEP) and King Abdul Aziz City for Science and Technology (KACST) and Madar Research & Development (MRD) (2014). Transition to a knowledge society in Saudi Arabia. Saudi Arabia.
National Geographic Society (2014). 1938: Oil discovered in Saudi Arabia. Available at: http://nationalgeographic.org/thisday/mar3/oil-discovered-saudi-arabia/ (accessed: 13 November 2016).
Nelson, R., & Phelps, E. (1966). Investment in humans, technology diffusion, and economic growth. American Economic Review, Papers and Proceedings, 56(2), 69–75.
Nour, S. S. O. M. (2015). Overview of knowledge economy in the Arab region. Journal of the Knowledge Economy, 6(4), 870–904.
Nurunnabi, M. (2017). The myth of tax evasion in South Asia: the case of a lower-middle income economy. Advances in Public Interest Accounting, Vol. 20.
Organisation for Economic Co-operation and Development (OECD) (1996). The knowledge-based economy. General Distribution OECD/GD(96)102, OECD, Paris. Available at: https://www.oecd.org/sti/sci-tech/1913021.pdf (accessed: 15 August 2016).
Oxford Dictionary (2016). Definition of “knowledge economy”. Available at: https://en.oxforddictionaries.com/definition/knowledge_economy (accessed: 27 July 2016).
Parcero, O. J. and Ryan, J. C. (2016). Becoming a knowledge economy: the case of Qatar, UAE, and 17 benchmark countries. Journal of the Knowledge Economy, 1–28. Available at: doi:10.1007/s13132–016-0355-y (accessed: 22 February 2017).
Patton, M. Q. (2002). Qualitative research and evaluation methods. Thousand Oaks, CA: Sage.
Polder, M., van Leeuwen, G., Mohnen, P., and Raymond, W. (2010). Product, process and organizational innovations: drivers, complementarity and productivity effects, UNU-MERIT Working Paper no. 2010–035.
Romer, P. M. (1990). Endogenous technological change, part II. The Journal of Political Economy, 98(5), 71–102.
Saudi Commission for Tourism and National Heritage (2016). Facts about Saudi Arabia. Available at: http://www.sauditourism.sa/en/About/Pages/c-History.aspx (accessed: 13 November 2016).
Sinclair, S. and Rockwell, G. (2016). Cirrus: Voyant Tools. Available at: http://voyant-tools.org (accessed 3 November 2016).
Skorupinska, A. and Torrent-Sellens, J. (2014). ICT, innovation and productivity: evidence from Eastern European manufacturing firms. IN3, Working Paper Series is a monograph series. DWP 14–003.
Soldatkin, V. and Astrasheuskaya, N. (2011). Saudi Arabia to overtake Russia as top oil producer-IEA. 9 November. Reuters. Available at: http://www.reuters.com/article/russia-energy-iea-idUSL6E7M93XT20111109 (accessed: 13 November 2016).
Spiezia, V. (2011). Are ICT users more innovative? An analysis of ICT-enabled innovation in OECD firms. OECD Journal: Economic Studies, 1, 97–119.
Stiglitz, J. E. (1999). Public policy for a knowledge economy. London: Department for Trade and Industry and Centre for Economic Policy Research.
Strożek, P. (2014). A spatial analysis of the knowledge-based economy in Poland. Comparative Economic Research, 17(4), 221–236.
Tchamyou, V. S. (2016). The role of knowledge economy in African business. Journal of the Knowledge Economy, 1–40. Available at: doi:10.1007/s13132–016–0417-1 (accessed: 22 February 2017).
The Financial Times (2014). Saudi market reforms invite access to oil growth. 28 July. Available at http://www.ft.com/intl/cms/s/0/c8c3f7bc-1636-11e4-93ec-00144feabdc0.html (accessed: 5 March 2016).
The Wall Street Journal (2015). Saudi stock market opens to foreign investors—recap. 15 June. Available at: http://blogs.wsj.com/moneybeat/2015/06/15/saudi-stock-market-opens-to-foreign-investors-live/ (accessed: 5 March 2016).
Unerman, J. (2000). Methodological issues—reflections on quantification in corporate social reporting content analysis. Accounting, Auditing and Accountability Journal, 13(5), 667–681.
United Nations Development Programme (UNDP) (2010). Arab Knowledge Report 2009. Dubai: Mohammed bin Rashid Al Maktoum Foundation (MBRF) and the United Nations Development Programme/Regional Bureau for Arab States (UNDP/RBAS).
US Energy Information Administration (2016). Total petroleum and other liquids production 2015. Available at: https://www.eia.gov/beta/international/rankings/#?cy=2015 (accessed: 15 August 2016).
US Patent and Trademark Office (2016). U.S. patent statistics chart calendar years 1963–2015. Available at: https://www.uspto.gov/web/offices/ac/ido/oeip/taf/us_stat.htm (accessed: 17 December 2016).
Vinding, A. L. (2006). Absorptive capacity and innovative performance: a human capital approach. Economics of Innovation and New Technology, 15(4–5), 507–517.
Vision 2030 (2016a). Vision 2030: Kingdom of Saudi Arabia. Available at: http://vision2030.gov.sa/en (accessed: 15 June 2016).
Vision 2030 (2016b). National Transformation Program 2020: Kingdom of Saudi Arabia. Available at: http://vision2030.gov.sa/sites/default/files/NTP_En.pdf (accessed: 7 August 2016).
Weber, R. (1990). Basic content analysis (2nd ed.). Newbury Park, CA: Sage.
Wiseman, A. W., Alromi, N. H., & Alshumrani, S. (2014). Challenges to creating an Arabian gulf knowledge economy. In A. W. Wiseman, N. H. Alromi, & S. Alshumrani (Eds.), Education for a knowledge society in Arabian Gulf countries (international perspectives on education and society, vol. 24, pp. 1–33). Bingley: Emerald Group Publishing Limited.
World Bank. (2011). The changing wealth of nations: measuring sustainable development in the new millennium. Washington, D.C: The World Bank.
World Bank (2016). World development indicators. Available at: http://data.worldbank.org/country/saudi-arabia (accessed: 13 November 2016).
World Economic Forum (2016). The Human Capital Report 2016. Available at: http://reports.weforum.org/human-capital-report-2016/economies/#economy=SAU (accessed: 15 August 2016).
Wynbrandt, J. (2010). A brief history of Saudi Arabia (2nd ed.). New York: Infobase Publishing.
The author gratefully acknowledges the editor, Professor Elias G. Carayannis, and two anonymous reviewers for their constructive comments on an early version of this paper. The author also acknowledges the invaluable support provided by Dr Ahmed S. Yamani (Rector, Prince Sultan University, Saudi Arabia) with regard to data on Saudi Arabia’s Vision 2030.
About this article
Cite this article
Nurunnabi, M. Transformation from an Oil-based Economy to a Knowledge-based Economy in Saudi Arabia: the Direction of Saudi Vision 2030 . J Knowl Econ 8, 536–564 (2017). https://doi.org/10.1007/s13132-017-0479-8
- Oil economy
- Knowledge economy
- Saudi Vision 2030
- National Transformation Program 2020
- Saudi Arabia