Las técnicas

In identifying Oman’s readiness for knowledge economy pursuance, this research followed a sequential build up that started with analysing and discussing the chosen indicators that make up Oman’s knowledge economy scorecard. This scorecard was rationalised in the second phase of this build up to establish a knowledge economy index that can be used to evaluate Oman’s overall knowledge economy readiness.

Figure 6.5 Twelve indictors of the four knowledge economy pillars 0 1 2 3 4 5 6 7 8 9 10

GCC average MENA average World average Oman Malaysia Finland

nom m a liz e d v a lu s

Intellectual property rights Regulatory regime Government effectiveness R&D expenditure Number of reserachers per 1,000,000 people Technical Journals Adult litercy Gross secondary enrolment Gross tertiary enrolment Total telephones per 1000 people Computers per 1000 people Internet users

Source: World Bank (2006).

Examination of Oman’s twelve knowledge economy indicators that make up the knowledge economy pillars revealed varying degrees of achievements. As Figure 6.5 indicates, Oman did well in only four of these indicators, namely regulatory regime, government effectiveness, adult literacy rate and the number of telephone lines per 1000 people, and fell below the 50th percentile in the remaining eight of the twelve indicators of the knowledge economy. These rankings are discussed in greater detail below.

Governance and economic incentives

Oman seems to be strong in regulatory regime and governance effectiveness, both of which belong to the effective governance and economic incentives pillar, with normalised values of 8.24 and 7.65 respectively. These values indicated that Oman stands at the 80th and upper 70th percentile in these two indicators representing a positive achievement. (World Bank, 2006). In fact, Oman was found to be the second best among this group in regulatory regime, after Finland and third best in the effectiveness of governance after Finland and Malaysia. The government’s commitment to the WTO obligations and the increasing role of the private sector in general has contributed to this positive performance in these two indicators in Oman.

Despite this positive achievement, the country’s overall performance in this pillar was not as competitive as that of the other members of the benchmarking group. Some observers have attributed Oman’s lacklustre performance in this pillar to the private sector’s perception of the government’s bureaucracy and the lack of effective e- governance that hinders competitiveness (Al-Shihi, 2006).

In addition, one indicator of this pillar, namely protection of intellectual property rights is the weakest indicator of this pillar among the benchmarking group. This indicator is currently scoring below the rest of the benchmarking group levels with values in the upper 30th percentile. Although the Oman’s intellectual property law has been in place since 1996 when Oman joined the World Intellectual Property Organization, its weakness has been attributed to the absence of an innovation culture that protects and promotes innovators (World Bank, 2004). According to one of the interviewees, the absence of an innovation culture represents a disadvantage because innovation flourishes in a protective environment that rewards those who invest in new knowledge. This uncompetitive environment has also been reported by the 2007 Doing Business Report which ranks Oman at 49 out of 189 countries. Figure 6.6 depicts the overall benchmarking of governance and economic incentives pillar.

Figure 6.6 Effectiveness of governance and economic incentives indicators

0 2 4 6 8 10 GCC average MENA average World average Oman Malaysia Finland

Intellectual property rights Regulatory regime Government effectiveness

Education and training

In education and training, the literacy of people above fifteen years and gross secondary enrolment which stand at 5.63 and 4.71 normalised values respectively, are another positive performance areas of the knowledge economy in Oman. These indicators stand above the 50th and the 40th percentiles which come second and third best among this benchmarking group. The literacy rate is second best just behind Finland while gross secondary enrolment is third after Finland and the GCC averages. This positive performance has been attributed to the government’s emphasis in promoting the ‘education for all’ campaign since 1970, offering elementary and secondary schooling to all people in the country regardless of their age, gender or location. These high rates of achievement of 81 and 76 per cent, respectively, have been hailed by one of the UNESCO’s experts Rassekh (2004) as an education development success story in the MENA region. Figure 6.7 illustrates comparative education and training indicators.

Figure 6.7 Education and training indicators

0 2 4 6 8 10 GCC average MENA average World average Oman Malaysia Finland

Adult litercy rate (15+ years) Gross secondary enrolment Gross tertiary enrolment

Source: World Bank (2006).

However, this strong and positive performance in literacy rate and gross secondary school enrolments is in contrast with the third education indicator namely the tertiary education enrolments, which stands at about 13 per cent of the total tertiary education eligible population. As a result, Oman ranks the lowest in the benchmarking group in tertiary education, behind 25 per cent in the MENA region, 26 per cent in Malaysia, 30 per cent in the world, and 85 per cent in Finland. Oman’s poor performance in this

important education indicator is partly the result of the absence of a higher education promotion strategy in the country, where the first university was inaugurated as recently as in 1986 with 5 specialised colleges and had an intake of about 2000 out of more than 32,000 secondary school graduates. In the absence of tertiary education facilities, the majority of these graduates were directed towards technical education and vocational training, where the country has provided enough semi-skilled labour for the local market which is still saturated with more than 87 per cent of expatriates. According to the World Bank (2004), low tertiary education enrolments appear to be a major factor hindering economic progress both at the country level and in the MENA region collectively.

Information and communication technologies (ICTs)

Looking at the main information and communication technologies indicators, Oman appears to fall behind the entire benchmarking group in all of the three indicators as represented in Figure 6.8. Only the number of telephones is ranked above the 50th percentile benchmark, while internet users and number of computers both per 1000 inhabitants are in the 40th and 30th percentiles respectively. This is compared to above the 80th percentile on the three indicators average in Finland, and between the 50th and the 70th percentiles for the rest of the benchmarking group.

Figure 6.8 ICT indicators

0 2 4 6 8 10 GCC average MENA average World average Oman Malaysia Finland

Total telephone per 1000 people Computers per 1000 people Internet users per 1000 people

Source: World Bank (2006).

According to Gartner (2002) and Al-shihi (2006), Oman’s poor performance in ICTs has been related to many factors, most notably to ineffective management, lack of proper competition between ICT providers, high fees, and the lack of public and

business awareness of the importance of ICT in today’s globalised world. This is also attributed to the fact that the telecommunications market in Oman is mainly dominated by the state-controlled incumbent operator, the Oman Telecommunications Company (Omantel), which is still the sole licensed operator of public fixed-line telecommunications services, including local, long-distance and international telephony, as well as data communications, value-added services and internet access services.

The government seems to be aware of these ICT development barriers. An Information Technology Authority was established in 2006 to serve as a competency centre on the best ICT practices with the aim of harnessing its potential throughout all of the stakeholders in Oman. In fact, enhancing public and business awareness, further liberalization of the ICT sector, and more importantly removing any barriers (technical or physical) to trade in these products are believed to be the way forward in order to enhance productivity and international competitiveness.

Research and development, and innovation (R&D and innovation)

In R&D and innovation, Oman is significantly weak in all of the main indicators of this pillar compared to its benchmarking group. In fact, its R&D expenditure as a percentage of GDP is the lowest in this group with 0.1 normalised value, which put Oman at 0.10th percentile, while its number of researchers and technical journals being published per 1,000,000 inhabitants are at 1.3 and 2.9 normalised values respectively. This puts Oman in only 1 and almost 3 percentiles, respectively. Such ranking is not the lowest among this benchmarking group but does put Oman among the lowest worldwide. Figure 6.9 illustrates the status of R&D and innovation indicators.

Figure 6.9 R&D and innovation indicators 0 2 4 6 8 10 GCC average MENA average World average Oman Malaysia Finland

R&D expenditure Number of researchers per 100,000 people Technical journals per 1,000,000 people

Source: World Bank (2006).

The knowledge economy literature indicates that R&D and innovation is the most important among the knowledge economy pillars, as many empirical studies suggest a positive relationship between R&D spending from both public and private sectors and economic development (OECD, 1996, 2002; World Bank, 2004). The weakness of this main pillar seems to be rationalised by the fact that given Oman’s limited natural resources, its previous economic concentration was directed towards building physical infrastructure. However, in recent years the government has recognised the importance of R&D and innovation, as it has established its first national scientific research council in 2005 for fully developing the potential of this vital pillar.