Executive Report

Global Knowledge Index 2017: Executive Report

Global Knowledge Index has been produced through a partnership between Mohammed Bin Rashid Al Maktoum Knowledge Foundation (MBRF) and United Nations Development Programme/ Regional Bureau for Arab States (UNDP/RBAS)

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The analyses and results presented in this publication do not necessarily reflect the views of Mohammed bin Rashid Al Maktoum Knowledge Foundation or United Nations Development Programme, its Executive Board Members or United Nations Member States. The report is an independent publication, produced by a team of prominent consultants and experts.

This report has been originally written in Arabic. The English translation has been edited for flow and clarity, and as such may not reflect all part or sentences in the Arabic version.

Foreword Mohammed Bin Rashid Al Maktoum Knowledge Foundation

Global Knowledge Index… A Seismic Shift Towards Sustainable Development

With its ever-growing list of initiatives and outward- remain abreast of all transformations brought about by looking projects, the Mohammed Bin Rashid Al Maktoum the digital revolution, which have affected all aspects of Knowledge Foundation has broadened its scope to go far our lives. To that end, we have launched a host of creative beyond the borders of the UAE, and those of the greater projects and initiatives, and today, we are gathered here surrounding region, for that matter. The Foundation is to announce yet another ambitious project: the first-ever now a global institution communicating with and spreading Global Knowledge Index, which promises to be a global knowledge to all corners of the globe. With that, we are knowledge platform, that tracks the realities of this sector abiding closely by the forward-thinking vision of our wise in 140 countries around the world, highlighting challenges leaders, and particularly, His Highness Sheikh Mohammed and proposing solutions for the sustainable development bin Rashid Al Maktoum, Vice President and Prime Minister of societies. of the UAE, Ruler of Dubai, who said: “Our objective is to show the world that we are able to contribute to humanity With the Global Knowledge Index, we offer the world a through quality knowledge and scientific discoveries.” scientific tool to accurately evaluate knowledge, identify challenges, strengths and weaknesses within the sector, and Driven by H.H.’s aspirations, we, at the Mohammed bin share valuable insight and expertise. Rashid Al Maktoum Knowledge Foundation, have spared no effort to offer the world one knowledge-powered The Index provides timely and accurate data, organised initiative after the other. Today, we’ve joined hands with based on a thorough and scientific classification system, our strategic partner, the United Nations Development in order to establish a competitive environment between Program (UNDP), to launch an all-new scientific instrument governments and other competent authorities. It is a and a seismic shift towards sustainable development. sophisticated instrument that supports decision-makers and lays the foundations for a holistic sustainable The Foundation is not out of touch with the rapid development strategy for peoples around the world. advancements taking place around the world, we strive to

Ahmed bin Mohammed bin Rashid Al Maktoum, Chairman of MBRF

Foreword United Nations Development Programme

I am pleased to present the Global Knowledge Index, knowledge and development in the Arab region. The the latest product of the successful partnership between index provided policymakers with a practical tool to guide the United Nations Development Programme (UNDP) the assessment, planning and implementation of policies and the Mohammed bin Rashid Al Maktoum Knowledge that maximize the employment of knowledge to further Foundation (MBRF). development.

We introduce this tool hoping that it will inspire The positive reception of the Arab Knowledge Index policymakers and stakeholders across the world to prompted this present endeavour to develop the Global design initiatives that best employ knowledge to achieve Knowledge Index, which employs a comprehensive set sustainable development, as we pursue our global shared of standardized indicators to measure the performance of vision to achieve a prosperous and just future for people vital knowledge sectors. The index offers objective data to and the planet – one that leaves no one behind as envisaged help countries track progress trends over time to better in the 2030 Agenda for Sustainable Development and the employ knowledge in meeting changing development Sustainable Development Goals. needs, and facilitates comparisons with other countries, enabling better learning from and adaptation of successful Knowledge is the cornerstone of sustainable development. experiences. Profound transformations triggered by globalisation and the unprecedented proliferation of information technologies At UNDP, we value our partnership with the Mohammed have changed the rules of progress: now more than ever, bin Rashid Al Maktoum Knowledge Foundation, and a country’s ability to harness knowledge is pivotal to its remain committed to our shared vision of promoting ability to thrive. Indeed, the capacity to produce and apply knowledge as a key driver of sustainable human knowledge in service of the economy, social progress and development. I salute MBRF’s unwavering support to the environmental sustainability is a distinguishing factor in endeavour of establishing knowledge societies, not only in sustainable development. the UAE, but across the Arab region and beyond.

A key challenge to managing the knowledge transformation is the measurement of knowledge and its contribution to development. In 2015, UNDP and MBRF introduced the Arab Knowledge Index, in a pioneering effort to address the deficit in data and information about the nexus of

Mourad Wahba United Nations Assistant Secretary-General Assistant Administrator & Director of the Regional Bureau for Arab States, United Nations Development Programme

Table of Contents

Introduction 1 Defining knowledge 3 Linking knowledge with development 3 Measuring knowledge: Review of other tools and approaches 4 The Global Knowledge Index (GKI): Towards a multidimensional index 5 General Methodology 6 Statistical Methodology 9 Selection of variables 9 Data collection 10 Data treatment 10 Index weighting 11 Index calculation 11 Index structure 12 Pre-University Index 12 Structure of the Pre-University Education Index 13 Knowledge capital 13 Educational enabling environment 15 Relative weighting 16 Technical Vocational Education and Training (TVET) Index 16 Structure of the TVET Index 18 Formation and professional training 18 Features of the labour market 18 Relative weighting 19 Higher Education Index 19 Structure of the Higher Education Index 20 Higher education inputs 20 Higher education outputs and quality 20 Relative weighting 22 Research, Development and Innovation (RDI) Index 22 Structure of the RDI Index 22 Research and development 23 Innovation in production 24 Social innovation 25 Relative weighting 25 Information and Communications Technology (ICT) Index 26 Structure of the ICT Index 27 ICT inputs 27 ICT outputs 27 Relative weighting 29 Economy Index 29 Structure of the Economy Index 30 Knowledge competitiveness 30 Economic openness 32 Financing and value added 32 Relative weighting 33 General Enabling Environment Index 33 Structure of the General Enabling Environment Index 33 Political and institutional 33 Socio-economic 34 Environment and 35 Relative Weighting 35 Key findings 36 Concluding remarks 37 Endnotes 39

References 41

References in Arabic 41 References in English 42 References in French 48 List of figures

Figure 1: The Knowledge Index: Support for Development Policies 6 Figure 2: Construction of the Global Knowledge Index 7 Figure 3: Structure of the Global Knowledge Index 9 Figure 4: Structure of the Pre-University Education Index 14 Figure 5: Structure of the Technical Vocational Education and Training Index 17 Figure 6: Structure of the Higher Education Index 21 Figure 7: Structure of the Research, Development and Innovation Index 23 Figure 8: Structure of the Information and Communications Technology Index 28 Figure 9: Structure of the Economy Index 31 Figure 10: Structure of the General Enabling Environment Index 34 Figure 11: Correlation of the GKI to the and SDG Index 35 Figure 12: Comparison across Sectors 36

List of Tables

Table 1: Comparison of Sectoral Average Scores of Top Ranking and Lowest Ranking Countries 35

Contributors

Advisors Ahmed El-Sherbini, Ali Hadi, Anuja Utz, Hugo Hollanders, Jan Sturesson, Jean-Louis Laville, Laurent Probst, Leif Edvinsson, Luis Serven, Milorad Kovacevic, Shyamal Majumdar, Sid-Ahmed Soussi

Core Team Najoua Fezza Ghriss (Main Author/ Pre-University Education), Youssef Sadik (TVET), Ali Ibrahim (Higher Education), Ali Saeed Al-Kaabi (Higher Education), Motaz Khorshid (RDI), Yousry El Gamal (ICT), Khalid Al-Wazani (Economy), Mohamad Ismail (Expert Statistician)

Arab Knowledge Project Director (UNDP) Hany Torky

Mohammed bin Rashid Al Maktoum Knowledge Foundation Jamal Bin Huwaireb (CEO), Saif Al-Mansoori (Corporate Affairs Advisor to the CEO)

United Nations Development Programme (UNDP) Mourad Wahba (United Nations Assistant Secretary-General, Assistant Administrator and Director of the Regional Bureau for Arab States), Khaled Abdel Shafi (Regional Hub Director), Yakup Beris (Regional Programme Coordinator), Alberto Natta (Regional Programme Analyst)

Arab Knowledge Project (UNDP) Anthony Fakhoury, Hany Torky, Mariam Itani, Samah Hammoud, Sara Diab, Sara Salame, Sirine Saghira, Stéphanie Boustany

Digital Platform and Mobile Application Dany Wazen (ICT Coordinator, UNDP) Integrated Digital Systems (IDS)

Programme Support Abusabeeb Elsadig (Results and Resource Management Specialist and Regional Programme Management Support Unit Head), Maya Beydoun (Project Management Specialist), Tarek Abdelhadi (Project Management Consultant)

Editors Arabic: Mariam El-Ali English: Francis Field

Translation to English Abdulrahman Bustani

Global Knowledge Index 2017 1

Int roduction within countries. The World Bank was among the first to consider this knowledge gap, noting that “the widening This publication provides an introduction to the ‘Global access to knowledge brought about by the technology Knowledge Index’ (GKI) - a joint initiative between the United and information revolution is transforming relationships Nations Development Programme and the Mohammed bin between expert and amateur, government and citizen, aid Rashid Al Maktoum Knowledge Foundation (MBRF). donor and recipient”, and stressing that “knowledge cannot be static, nor can it move in one direction only. Instead The Index aims to measure the multidimensional concept of it must flow constantly back and forth across an ever- knowledge. The concept is a fluid one, often linked to related changing web, involving all who create and use it”.1 This gap, concepts such as ‘knowledge economy’ or ‘knowledge society’. however, should not be explained in overly-simplistic terms It is also sometimes restricted to a narrow understanding that of who owns the knowledge and who does not, because limits the focus to education or technology. the underlying social inequities that determine imbalances in terms of knowledge acquisition must also be considered.2 Given the variations in its use and meaning, the GKI aims to introduce a more systematic understanding of knowledge While information and communications technology has in two respects: enabled broader and faster dissemination of knowledge from a greater variety of sources, this has not closed the - It breaks down the concept into its constituent widening knowledge gap between countries and regions, components - i.e. education, economy, research and leading to profound and multifaceted development technology. Therefore, it recognizes the multidimensional imbalances. UNESCO’s 2005 report on knowledge societies nature of knowledge systems in all contexts and supports this argument, stating that all countries are not applications relating to economic and social structures. equal in confronting knowledge challenges, adding another This allows a more meaningful and insightful exploration fundamental ‘gap’ to existing inequalities.3 of knowledge policies in relation to different sectors. Consequently, the relationship between knowledge - It also enables a more scientific and evidence-based and development was reformulated, resulting in the linkage between development and a multidimensional consideration of knowledge as a major driver of concept of knowledge, in keeping with the notion of development. In this sense, development becomes a human development as applied by the UNDP as well comprehensive process that touches on multiple human as the concept of sustainable development agreed by dimensions such as education, economy, health, politics, world leaders in 2015 in the 2030 Agenda for Sustainable culture and society. All these aspects refer to the broader Development. concept of sustainable development, of which people are the essence, engine and purpose. Once the concept is clarified and the linkage with development is established, it is possible to introduce a more With such complexity, attempts to bridge these gaps cannot comprehensive approach to ‘knowledge-based development’. depend on improvizational processes or interpretations This can guide policymakers, researchers, civil society and based on unreliable data and analysis. Rather, it is necessary the private sector to work together on different aspects of to gather a precise and objective description of the reality policies to foster a development process that seeks to invest of those gaps in their different manifestations. This individuals – from an early age – with the necessary skills to requires a systematic assessment process based on scientific prepare them for the future. indicators that take into consideration the multidimensional nature of knowledge and its functional links to sustainable A focus on knowledge in understanding development invites human development. The Global Knowledge Index has us to rethink gaps, imbalances and inequalities among and been developed in response to this specific need.

Global Knowledge Index 2017 3

Defining knowledge Linking knowledge with development

The concept of knowledge adopted by the Knowledge There are various definitions of development. This report Project at its launch in 2008, which has matured during considers two main examples that are predominantly used the course of the six reports produced up to 2016, in the international development community. encompasses all information acquired by mankind, as well as our perceptions of ourselves and our surroundings. The first is the concept of ‘human development’, the However, it is not merely an accumulation of information; definition of which itself has expanded with time. rather, it is a chain of research, scrutiny, analysis, criticism Originally confined only to economics, it was then and selection that produces new useful ideas and tools.4 extended to encompass all economic, political and social It includes all human creations in the fields of natural aspects of society. It became too broad to be confined to science, technology, humanities, social sciences, literature, one field, because human development is centred around arts and the breadth of human expertise.5 The value mankind, which by its very nature is multifaceted. More of this knowledge lies not only in its production and recently, the concept of development has been widely used dissemination, but also in an equally important social to replace that of ‘progress’ or ‘advancement’, which had sense, through sharing and integrating knowledge in work, prevailed in the literature of economics and politics for family and society. Hence, the value of products in the the past century. Gradually, it has become associated with knowledge society lies not in the raw materials used, nor in other equally important concepts, namely ‘knowledge’ and the capital expended, but in the knowledge incorporated ‘sustainability’, which has increased both the importance in the end product6, and the extent to which the available and complexity of these three concepts. knowledge base is utilized to drive development and innovation.7 The other commonly used term is ‘sustainable development’, which has many variations in use. The most There are two categories of knowledge: explicit knowledge, prevalent among international economic organizations is which is embodied, encoded or written so that it can be that provided by the World Commission on Environment learned and utilized; and implicit knowledge, which is and Development (WCED) in its Brundtland Report: complex and embedded in the minds, behaviour, lives “Sustainable development is development that meets the and professional experiences of individuals and groups. needs of the present without compromising the ability of 8Another classification distinguishes between scientific future generations to meet their own needs”.10 knowledge, which is the driving force behind industrial development and is often encoded and acquired through Sustainable human development theory has emerged as institutional learning; and traditional knowledge, which a maturation of these two development approaches: the is acquired through practice and experience and reflects human development strategy developed in the UNDP the characteristics of the local cultural and physical Human Development Report, based on the dissertations environment.9 Whatever classification is used, there is of Mahbub ul Haq and Amartya Sen; and the sustainable common agreement that knowledge worthy of acquisition development approach adopted by the United Nations is that which is developed through intellectual efforts Conference on Environment and Development in Rio and innovative or creative activities that may employ de Janeiro in 1992.11 Accordingly, development must be that knowledge to bring about positive change, develop sustainable if it is to meet present needs without neglecting capabilities or expand opportunities. the future needs of a given society in these three basic dimensions (i.e. economic, social and environmental sustainability).12 4 Global Knowledge Index 2017

As for the relationship between knowledge and Measuring knowledge: Review of other tools and development, as will be further elaborated in the findings of approaches this report, there is a strong statistical correlation between the two. This correlation is derived from a comparison The need for a scientific approach to the measurement of of countries’ rankings in the Global Knowledge Index knowledge has long been acknowledged. Below is a non- and in development-related indices such as the Human exhaustive list of attempts to introduce such measures Development Index and the Sustainable Development in the context of understanding knowledge within Goals Index. This relation reinforces the conceptual the broader context of the economy or institutional foundations and assumptions of the Global Knowledge structures: Index, whereby knowledge and development are closely linked and mutually influenced. - The World Bank’s Knowledge Assessment Methodology (KAM): in an effort to help countries The World Bank pioneered the placing of the concept identify the challenges and opportunities they face of knowledge at the centre of development in the World in their progress towards the knowledge economy, Development Report, ‘Knowledge for Development’, in an interactive reference tool has been developed to which it recognized that the most significant imbalances monitor the overall level of countries’ readiness for exist in the ability to acquire knowledge – rather than a knowledge-based economy. This methodology is income – and that being able to drive development is based on two indices: the Knowledge Index (KI) and as important as earning physical capital. The difference the Knowledge Economy Index (KEI). The first is the between rich and poor countries is not only the lower simple average of three pillars: innovation; education; availability of financial resources to the latter, but also and ICT infrastructure. The second represents an their weak capacity to produce, share and use knowledge arithmetic mean of four pillars, with the addition of to meet the daily challenges they face. The report also the economic and institutional system. The World stressed, in a remarkable departure from the embrace of Bank stopped producing the index as of 2013.14 absolute economic freedom, the need for active support on the part of states and regional blocs for efforts to - The Lisbon Scorecard was used for the first time in acquire knowledge.13 2004 in a World Economic Forum report as a tool for comparing the progress made by EU member states Sustainable human development is a comprehensive, towards developing knowledge economies to that balanced and long-term process that is closely linked to achieved by the USA and East Asian countries.15 The the status of knowledge and can only be managed and tool investigated eight pillars: information society; achieved through careful planning, hard work, continuous innovation, research and development; liberalization; monitoring and objective evaluation. Hence, the process network industries; financial services; enterprise of measuring knowledge for development is essential, environment; social inclusion; and sustainable especially given the risks to human life and the environment, development.16 In 2010, this structure was revised the widening of development gaps and the multiple forms to be more responsive to the requirements of the of deprivation and discrimination experienced around Europe 2020 strategy. The ‘information society’ was the world. Moreover, the problems hindering sustainable integrated into the ‘innovation’ pillar, while ‘network development affect all areas of human life, highlighting the industries’ and ‘financial services’ were integrated need for sound solutions that take into consideration all into the ‘liberalization’ pillar. Thus, the modified social and economic developmental aspects, technological format covered five pillars: innovation; liberalization; advances, environmental protection and changes in the enterprise; employment and social inclusion; and daily lives of individuals and modern societies. sustainable development and the environment.17 Global Knowledge Index 2017 5

- The European Innovation Scoreboard, formerly the sectors of education; economy; ICT; and research, known as the Innovation Union Scoreboard, has development and innovation (RDI).21 In 2016, the also been used to monitor the implementation of the second version of the Arab Knowledge Index was Europe 2020 strategy by assessing the performance released, alongside a special index on reading in the of national innovation systems in EU Member States, Arab region as a knowledge-related component that other European countries and neighbouring regions. should be viewed in the context of personal and The final tool (2017) includes 27 indicators under four environmental factors.22 main groups: framework conditions, investments, innovation activities and impacts. It covers the The Global Knowledge Index (GKI): Towards a following 10 innovation dimensions: human resources; multidimensional index attractive research systems; innovation-friendly environment; finance and support; firm investments; If we agree with Stewart that we cannot manage what we innovators; linkages; intellectual assets; employment cannot measure,23 or with Bukh et al. that management impacts; and sales impacts. 18 and measurement are two sides of the same coin,24 we may also recognise the importance of developing systematic - Unlike the above indicators which measure the and scientific tools to measure and monitor progress performance of states, the Kensho Index, launched towards knowledge-based development. Such tools will in 2014, aims to measure the level of knowledge in allow decision makers and specialists in various fields to organizations and companies. The real value of this identify the strengths and weaknesses of the development tool lies in its ability to highlight institutions that are process, as well as factors of success and failure, and empowered to use the most important organizational determine the precise parameters of progress. Indeed, the resources – namely knowledge – with a high degree sustainable development goals emphasise the importance of efficiency. ‘Kensho New Economy Indices: 21st of the identification of quality indicators in the decision- Century Sectors’ are comprehensive and objective making process and the need for good and reliable data tools that dynamically measure many of the industries for monitoring, tracking and measuring progress.25 that drive the ‘new economy’ (e.g. smart transportation, clean power index, intelligent infrastructure index, From this perspective, the Global Knowledge Index final frontiers index, future security index), and aspires to evolve in the near future into a systematic tool enable investors to understand the factors that make that helps countries find realistic, objective and accurate enterprises successful in benefiting from technological answers to four fundamental questions concerning their evolutions. 19 knowledge status:

- At the Arab states level, attempts have been made to - Where are they now? (diagnosis of the status quo). measure aspects of knowledge using sub-indices that - Where do they want to be? (the desired situation). form part of a comprehensive composite index. For - What path should they follow? (development strategy). example, the Arab Competitiveness Index includes - What progress are they making? (monitoring, tracking a sub-index, the Implicit Competitiveness Index, and evaluation). that in turn comprises three main pillars: capacity for innovation/localization of technology; human Therefore, this knowledge initiative represents a direct capital; and technological infrastructure.20 In 2015, contribution to global sustainable development efforts; UNDP, in partnership with MBRF, launched the first it contributes to the creation of a tool to measure the Arab initiative to build six composite indicators to availability of objective data regarding the various measure the state of knowledge in the Arab region discrepancies between countries in terms of their ability from a development perspective, while focusing on to generate and use knowledge in a way that fosters 6 Global Knowledge Index 2017

Figure 1: The Knowledge Index: Support for Development Policies

development. This may be used to guide development The structure of the GKI covers the most important processes in each country by assisting diagnosis, dimensions of development. The sectoral indices that form planning, implementation and assessment (Figure 1), and the pillars of the GKI are: thereby helping these countries to meet their changing development needs. It will also allow them to compare -Pre-University Education; their performance with other countries from the same or -Technical Vocational Education and Training (TVET); similar regions, and enable them to identify and benefit -Higher Education; from the successful experiences of others. -Research, Development and Innovation (RDI); -Information and Communications Technology (ICT); General methodology -Economy.

In view of the correlation between knowledge and A seventh pillar was added to support the sectoral indices, sustainable development outlined above, the GKI intends as these sectors do not operate in isolation from their to measure the status of knowledge in various countries surroundings, but rather in a space governed by a range of the world, as this may represent a critical base for of contextual factors - political, socio-economic, health- development choices and pathways. related and environmental (Figure 2).

Due to the multidimensional nature of knowledge, a Below is an overview of how these sectors are closely composite index was constructed consisting of six sectoral linked to knowledge and thereby form its constituent sub-indices. Composite indices allow for a single value that components; this will be analysed further in the following gives a fuller picture of the phenomenon being measured, sections of the report: especially if this phenomenon is multidimensional as in this case. Composite measurements also better reflect - The pre-university education sector plays a central role possible connections between different dimensions in building the knowledge capital, that represents the and their internal interactions, and allow for standard first input in preparing young people to acquire and comparisons between countries. produce knowledge. Pre-university education equips youth with scientific knowledge as well as creative skills Global Knowledge Index 2017 7

and capacities to access lifelong learning opportunities. countries. RDI is closely linked to the other sectors This sector is therefore key, as it constitutes the first because it provides essential inputs to the entire system. basis for other sectors to build upon. - ICT plays an essential role in supporting the - The TVET sector represents the main connection advancement of knowledge across all sectors. between education and the labour market, and Advancements in knowledge-intensive production have provides educated young people with opportunities for become closely linked to the provision of advanced professional integration. It contributes to the provision technology, especially as the Internet has increased of high-skilled labour and to the development of the opportunities available to acquire knowledge. conducive working environments. Therefore, it is essential for countries to employ indicators that quantify their levels of ICT development - The higher education sector is of high importance, as it for the benefit of stakeholders in their societies. is an active component in educating youth, developing their qualifications, and expanding their knowledge and - The knowledge economy is the main driver of skills, which results in the improvement of a country’s sustainable development, wealth creation and job productivity and competitiveness in global markets. creation in various economic fields, across the It is also considered among the most important industrial, agricultural and service sectors .26 Unlike the factors that directly contribute to the advancement of traditional concept of economic resource analysis and scientific research and technological development. availability, a knowledge economy is primarily based on providing economic resources – particularly human - Research, development and innovation (RDI) resources – with knowledge tools, including digital and contributes to increasing knowledge at the national and technological knowledge assets as well as innovative regional levels. RDI is mainly based on the production and creative skills. of new or improved goods, services, production processes and organizational models, which serves These sectors are not isolated; rather, they are interactive as a driver for economic growth and sustainable and integrated systems. For example, the education system development in both developed and developing cannot operate in isolation from appropriate economic 8 Global Knowledge Index 2017

conditions, or without due consideration to developments also true of the relationship between social capital and in the field of ICT. The same is true for the RDI sector, . A rise in social capital that coincides with a which is organically and functionally linked to the higher decline in human capital can increase the risk of instability education sector and directly interacts with the economic and economic and social decline through conflict and system, etc. Therefore, we find that many variables or division. This highlights the importance of the optimal sub-pillars under the indices of the education sectors can distribution of the various elements affecting knowledge directly or indirectly affect the production process and performance, which justifies assigning equal weights to the use of production elements in a given economy. This the different sectors that constitute the Index. Knowledge is also true for ICT indicators that overlap horizontally performance is not the simple sum of the performance of and vertically with all other sectors. Higher education each sector but rather reflects how the sectors contribute output variables are essential for the performance of to each other to achieve the highest level of knowledge the RDI sector, which in turn directly contributes to effectiveness. The performance of each sector is thus determining the level of knowledge in the economy, the interdependent. level of development in the production process and the process of utilizing production elements. Accordingly, the Therefore, the structure of the GKI reflects the fact importance of the variables chosen should not be viewed that knowledge has many dimensions that can be seen only from the perspective of their relationship to their in all areas of human life, reflected in key components respective sector, but also from that of their interaction that relate to vital sectors closely linked to sustainable with the other variables of other sectoral indices. development. Hence, it is assumed that the more these sectors interact with each other and are integrated in a The significance of this structure is that in addition to given country, the more the level of knowledge in that allowing the construction of a comprehensive index country increases, rendering it more capable of achieving that reflects the status of a country and its ranking vis- sustainable human development. à-vis other countries (comparison of countries), it offers deeper insight into the specific conditions of each sector A key challenge facing the formulation of a GKI is creating and a comparison of their performances (comparison an index that combines different development areas yet is of sectors in the same country).27 This goes beyond flexible enough to be adapted for use in countries with providing an ‘average position’ in order to allow a deep varying levels of development. In addition, there is a understanding of each system and its role in supporting need to produce reliable data that can contribute to the or impeding progress.28 growth of the global knowledge base. Perhaps the biggest challenge is to achieve the difficult balance of being ‘brief The complementary nature of the variables does not yet comprehensive’; that is to say, to build indices that mean that some replace others, but it does call for offer a focused view of vital knowledge - development ‘minimum critical thresholds’ and an ‘irreversibility line’ conditions, but comprise sufficient essential elements to approach - a methodology that the GKI applies. This avoid a misleading simplification of an already complex involves setting the minimum levels required for a positive reality. This means that variables were carefully selected interaction and integration between sectors. An example so that sectoral indices have the necessary and sufficient of the possible overlaps and integrative effects of sectors number of variables to support policymakers. is the connection between ‘health capital’ and ‘social capital’, as key components of human welfare. Human As for the principles that led the development of the index, welfare cannot be achieved without a minimum level of this work is intended to complement global knowledge, both components (which means that the absence of this leveraging previous work and following methodological minimum level in one is an obstacle to welfare, even if approaches that have proven scientific value. Therefore, the other element reaches the maximum value).29 This is the research team reviewed previous work in the field Global Knowledge Index 2017 9

of building composite indices while maintaining the - Presenting the developed indices to a group of external participatory approach of the Knowledge Project, which referees for their discussion and review to ensure that relies on the collective effort of a central team, as well as they meet the required conditions. regular consultations with external partners from regional and international organizations in disciplines related to the As for data publication dates, it was decided to use data pillars of the index. In all stages of index construction, published no earlier than 2007 to allow access to as much careful consideration was given to ensure systematic rigour data as possible for the calculation of indices. This range by adhering to a set of methodological and technical may need to be reduced in subsequent releases. measures that include the following: Statistical methodology - Observing standard criteria in the literature on scientific index building, which can be classified into three The Global Knowledge Index (GKI) consists of six categories: representation criteria (validity, sensibility sectoral indices and one supporting index focusing on the and reproducibility); procedural criteria (measurability, general enabling environment. Each of these seven indices availability and ethicality); and decision-assisting criteria was constructed in accordance with standard international (transparency, interpretability, links to specific objectives methodologies for the design of composite indicators.31 and links to factors that can be modified by a decision).30 The GKI is structured with a hierarchy of five levels: - Selecting necessary data from credible international data index, constituting indices (also referred to as sectoral sets and/or reports, fully verifying all data and ensuring indices), pillars, sub-pillars and variables. Each of the that sources are accurate and hold sufficient scientific six sectoral indices has a weight of 15 percent, while the integrity. general enabling environment has a weight of 10 percent (Figure 3). - Subjecting all selected data to a rigorous set of statistical analyses to ensure their internal consistency and Selection of variables interrelations, verify the consistency and sensitivity of variables and the distribution of relative weights, and The selection of variables (individual variables) included address unavailable and deviant values. in the construction of each of the seven indices was based 10 Global Knowledge Index 2017

on a well-defined scientific methodology drawn from assumption that it was error-free. In the cases where those an extensive review of relevant local and international variables were linked to other size-dependent variables – literature, as well as the experiences and concepts of such as or GDP – results were recalculated international organizations and agencies. It also relied on an after adjusting for the effect of the size. Variables included intensive consultation process that engaged experts -from are in the form of hard data, composite indicators and different countries, including , , , the survey questions/responses. UAE, the and the - each of them specialized in fields related to the sectors of the GKI. The most recent data for each variable within the period Experts expressed their agreement, rejection or proposed 2007–2017 was used, with very few exceptions in which additions or amendments to a selected list of variables and data for 2006 were used, because the index is incapable aggregations. Based on their feedback, and that of the core of providing estimates or values for missing figures at team who prepared the report, a final list of variables was this stage. produced. As a prerequisite, data employed in the construction of Principal components analysis was used to confirm the the composite indices have met certain statistical criteria. consistency of the selected variables and the structure of For example, each country was required to have at least 50 their classification into the various sub-indices, further percent of the figures for variables in each sectoral index supporting the consistency of the broader conceptual for it to be included in the general index (GKI). The team context across the variables and their classification in the had to ensure these criteria were met before calculating sub groups - for which the explained variance ratio in most the composite index. The methods used to identify and cases exceeded 50 percent.32 treat outliers, severe skewness and severe kurtosis are outlined below. The results of the in-depth correlation analysis and Cronbach’s Alpha coefficient (exceeding 0.70 in most Data treatment cases) confirmed the validity of the selection and classification of the variables. Furthermore, the correlation Skewness and kurtosis matrix for normalized variables was analysed to ensure that they followed the same direction as the composite A variable was considered to have severe skewness if its index, confirming the need to include variables with high absolute skewness coefficient was above 2.25, while an correlation coefficients (above 0.9) with other variables. absolute kurtosis coefficient above 3.5 indicated that the variable had severe kurtosis.33 Conditions were relaxed due Data collection to the small sample size (131 countries), but those variables with severe skewness and/or severe kurtosis required The 133 variables employed in the 2017 GKI were obtained statistical treatment before they could be employed. from sources including the United Nations Educational, Variables with one to five outliers were winsorized, Scientific and Cultural Organization (UNESCO); the whereby those values considered outliers were assigned World Bank; the International Telecommunication the next highest value until the skewness and kurtosis were Union (ITU); the World Economic Forum (WEF); the brought into acceptable ranges. International Monetary Fund (IMF); the Organisation for Economic Co-operation and Development (OECD); However, five variables with more than five outliers the International Labour Organization (ILO) and other required additional calculation and were treated as follows: UN and international agencies. The team reviewed the logarithm transformation was used to treat three variables: data multiple times to ensure no errors had occurred values and shares of creative goods exports (percentage of during data entry; consequently, data was processed on the total trade); international Internet bandwidth per Internet Global Knowledge Index 2017 11

user (Kbit/s); and SJR ranking of the best scientific journal and maximum values; for instance, in the case of the 1-7 in the country. Adding factor f and log transformation range for the World Economic Forum Executive Opinion were used to treat foreign direct investment, net inflows Survey variables. (percentage of GDP)34; and the square root method was applied to ICT/PCT patents, million. Index weighting

Outliers It should be noted that weighting across the index components (indices, pillars and sub-pillars) was not The value of a variable was considered an outlier if its unified, and varied according to the nature of the instance fell outside the range of the specific data fence components and their relative importance. Weightings defined as follows: identified for the seven constituent indices range from equal weighting and budget allocation to factor analysis. Lower bound = first quartile – (1.5 x interquartile range) Equal weights were used in the absence of any clear evidence of a diversity of significance among variables, as Upper bound = third quartile + (1.5 x interquartile range) well as in the absence of sound and complete information concerning the existence of causal relationships, or where Outliers were treated by replacing each outlier with the a lack of consensus exists on a classical method for second highest value in the case of high values, or the estimating weights. second lowest value in the case of low values. The budget allocation method was also used for weighting. Normalization A group of specialists and experienced experts were invited to attend a workshop for each of the knowledge The rescaling or ‘maximum–minimum’ method was used sectors. Each expert was given a budget consisting for normalization. The values of variables were normalized of 100 points to award to the variables. If the variable into the 0-100 range, in which higher values indicated was believed to have greater relative importance, it was better results. The normalization criterion depends on allocated a greater number of points. Subsequently, the whether the variable is good (has a positive relation with weights were calculated according to the average of the the overall Index) or bad (has a negative relation with the total points allocated to each variable.35 overall Index). The weights were also assessed using factor analysis, which The good variables were normalised using the following is based on aggregating the linked sub-indicators to form formula: a single factor containing as much information as possible that is shared between these linked indicators. The weights produced by using both the budget allocation and factor analysis methods were consistent with each other and with the initial weights estimates, based on the intellectual and In the case of bad variables (i.e. those with an inversely conceptual framework. correlated relation) the formula was adjusted as follows: Index calculation

The 2017 GKI was calculated for 131 countries in this first edition, using the most recent and best available For survey data or composite indices, the original series’ data to calculate the variables for each country, with range of values was retained in the form of minimum 2007 as a cut-off year and 2006 being exceptionally 12 Global Knowledge Index 2017

used for specific countries that required additional data Education is also essential to the protection of human to qualify for inclusion in the Index. The values of the rights, as it provides the basic foundations for ensuring composite sub-index were calculated by applying a freedom, economic independence and participation in series of successive aggregations starting with the (more social and political activities. Education is a ‘public good’, detailed) variables and ending with the production of with benefits extending far beyond economic progress the index. and national development.36 Hence it is considered by many to be an investment of guaranteed return: Owing to the lack of availability of data covering all the components for each country, and in view of the need “There is no more powerful transformative to maintain an adequate level of accuracy, the composite force than education - to promote human rights index was calculated in a bottom-up pattern, where the and dignity, to eradicate poverty and deepen upper level index is calculated only where at least two sustainability, to build a better future for all, thirds of its components are available. This applies to founded on equal rights and social justice, respect all knowledge sub-indices and for all countries. In cases for cultural diversity, and international solidarity where data for a variable was not available for at least and shared responsibility, all of which are half of the countries, this variable was excluded from fundamental aspects of our common humanity”.37 the calculation of the overall composite indicators (i.e. excluded from the index structure). The past decade has witnessed increasing focus on the quality of education systems around the world, rather The arithmetic aggregation formula was used to than solely on their delivery and accessibility. Today, calculate all composite indicators of the Index. The it is essential to consider the appropriateness of the composite indicator (CI) is calculated by aggregating its education being provided and to verify learning outcomes

sub-components (SIj ) as follows: among children, adolescents and adults. Monitoring and evaluation are essential for decision makers to eradicate the weaknesses and accentuate the strengths of a given education system. The Incheon Declaration (2015) was clear in this respect, linking good education with enhanced evaluation and established mechanisms CI is the proposed composite indicator to be computed; for measuring progress. It called for effective global

wj is the relative weight of the sub-component SI; and n and regional monitoring of the implementation of is the number of sub-components aggregated to form the education agenda through comprehensive national the composite indicator. systems that support data collection, analysis and reporting at the country level, but which remain within Index structure the framework of existing regional entities, mechanisms and strategies.38 Pre-University Education Index Therefore, to be truly able to guide the reform and Education is a key sector in promoting knowledge- development of education systems, there is a need for based development. Its role today is not limited to indicators that can capture multiple aspects of education. providing students with basic skills such as On one side, they must represent the strengths and and mathematics, or readying them to pursue a certain shortcomings of education systems; on the other, they profession. Education seeks to prepare young people for must capture those changes in technology and human life, actively contributing to lifelong self-development knowledge that require adaptation of the education and the pursuit of positive social and cultural change. system. Global Knowledge Index 2017 13

The methodology employed to construct the Pre- and equitable quality education and promote lifelong University Education index has three main foundations: learning opportunities for all.

- The intellectual foundation of the Index is the Knowledge capital cumulative experience gained from working on the development of previous knowledge reports that To say that people are the real wealth of nations and that have firmly established the intricate relationship human development ‘expands the choices of individuals’ between knowledge and sustainable development. implies that the ability of any country to achieve progress This focuses on individuals as efficient and effective is dependent on its trained and qualified human capital. human capital which, with the required knowledge, The effectiveness of any education system is measured by skills and values, can drive development. It also the learning opportunities it offers and by its quantitative focuses on the provision of enabling environments and qualitative outcomes; therefore, the following three and incubators that motivate the acquisition of sub-pillars have been identified: knowledge and help to achieve development. - Enrolment: this sub-pillar measures the extent to which - The methodological foundation of the Index seeks children and young people have access to schooling. The to avoid measuring the performance of education availability of inclusive education for all – regardless systems solely through attainment-related variables. of class, ethnicity or gender – will form the basis both Instead it aims to measure performance using for eradicating illiteracy and achieving the scientific a matrix of personal factors, family factors and and cultural advancement of society. This sub-pillar political, social and economic conditions. This comprises three variables, two of which measure gross approach is supported by existing experiences in this enrolment ratios for both sexes in primary and upper field (the International Association for the Evaluation secondary levels, while the third measures out-of- of Educational Achievement [IEA], UNESCO and school children and adolescents of primary and lower OECD) affirming that any evaluation of outputs that secondary school age. does not consider contributing factors and conditions will necessarily be incomplete. - Completion: statistics related to the completion (of the required years) of schooling at each level of - The pragmatic foundation of the Index posits that education represent important data that can inform indicators and indices are not an end in themselves. educational indicators. It is not enough for educational Their significance must not be measured by the systems to provide universal access to schools; they quantitative data they present, but rather by the must have the capacity to attract and retain students information derived from this data which can guide until they complete the required levels of education. educational decision-making and help formulate High enrolment rates at the beginning of each stage effective and appropriate development policies. This of education are most indicative where supported by is only possible if the structure of the Index covers high completion rates and low dropout rates. For this several basic components of the educational system. purpose, three variables were selected, describing gross graduation ratios from primary and upper secondary Structure of the Pre-University Education Index education, and survival rates to the last grade of lower secondary general education. The structure of the Pre-University Education index consists of two pillars - knowledge capital - Outcomes: this sub-pillar measures the various skills and educational enabling environment (Figure 4) - acquired by students through the education process. reflecting the global commitment to ensure inclusive Recent literature and global trends in education 14 Global Knowledge Index 2017

recognize the expansion of the concept of education • Values and attitudes: these basic outcomes are not outcomes. Rather than focusing on educational attainment, present in current indicators, despite their growing represented by the information and mechanisms acquired prominence in educational discourse. Current by the learner in relation to a certain curriculum, increasing conditions in numerous countries, and the increasing emphasis is being placed on abilities, skills and behaviour. levels of violence, extremism and conflict being This sub-pillar builds upon three outcomes: witnessed in certain regions, indicate a cultural and value crisis that may only be successfully eradicated • Lifelong learning skills: required at all levels and by instilling values of moderation and a culture of in all disciplines because they represent the basic peace among young people. Therefore, there is a tools for continuous lifelong self-learning. These growing need today to provide indices that measure include searching for and processing information, these aspects to facilitate their investigation and problem solving, communication (oral and written), improvement. language skills (Arabic and foreign languages) and • Basic skills: comprising literacy, mathematics and technological skills. science skills. Global Knowledge Index 2017 15

Unfortunately, insufficient data availability for several in education expenditure: government expenditure on of these indicators limited the current model to reliance 1) primary and 2) secondary education as a percentage on data presented by international studies of student of GDP; and 3) current expenditure as a percentage of attainment. Hence, two basic variables were selected: the total expenditure in public institutions. According the overall ranking of countries in the PISA (literacy, to the Incheon Declaration (2015), international and mathematics and science skills) and TIMSS (mathematics regional benchmarks set the allocation of “at least and science) studies. Despite the recognition that these 4-6% of and/or at least 15- skills - although important - are no longer sufficient in the 20% of total public expenditure to education”.40 current age, they remain essential for acquiring academic and higher skills. In this respect, the UN Secretary- - Early childhood education (ECE): this sub-pillar was General’s Global Education First initiative states: identified given the importance of early childhood in building individuals’ personalities, social awareness “Getting children into school is a first step. and preparation for learning in later life, as well as the Some drop out before receiving the four potential for early childhood education to influence years of schooling recommended for one later performance. The Convention on the Rights to become fully literate and numerate. Many of the Child emphasizes the importance of early more stay in school but learn very little year childhood development, declaring the rights of children after year. We have a learning deficit that to develop ‘to the maximum extent possible’ (Article poses huge challenges for development. 6).41 Likewise, the Sustainable Development Goals […] When we fail to convey those skills, clearly state the need to “ensure that all girls and boys we fail a generation of children whose have access to quality early childhood development, prospects in life will depend on them”.39 care and pre- so that they are ready for primary education” by 2030 (Targets, Goal 4: Educational enabling environment Education; Agenda for Sustainable Development).42 Two variables were chosen in this context: gross Empowerment in education entails investing in individuals enrolment ratio in early childhood education for both with the ability to absorb knowledge and contribute to its sexes; and percentage of new entrants to grade 1 of production. This requires an enabling environment that primary education with early childhood education motivates learning and active participation in the process experience for both sexes. of knowledge generation. Considering the available data, emphasis was placed on three sub-pillars that reflect - School environment: with an atmosphere that is the readiness of countries to provide inclusive quality conducive to education, and both facilities and education for all. infrastructure that are designed to serve learning, schools comprise the second main environment in - Expenditure on education: education is a process the formation of youth and their social upbringing, of production that requires suitable conditions and after the home and family environment. Schools investment in financial and human resources to ensure are responsible for providing young people with the knowledge production that delivers high returns. This ability to acquire and employ knowledge, as well as to cannot be achieved without sufficient funding and achieve mental, emotional and social development. For prudent expenditure policies that benefit both students schools to succeed they must provide a true ‘enabling’ and the education process itself. Given the positive environment, which requires at least three elements: correlation identified in numerous reports and studies good teaching in the classroom; an efficient educational between education quality and expenditure per pupil, framework; and an effective school organization and this sub-pillar utilizes three variables to reflect trends leadership. However, data limitations prevent coverage 16 Global Knowledge Index 2017

of all these aspects and restrict the sub-pillar to four several examples in this context, wherein countries’ variables that relate to teacher training - as an important increasing expenditures have failed to translate into factor for ensuring quality educational processes - and improvements in their underdeveloped educational pupil-teacher ratios, which provide insight on the systems. suitability of education and learning conditions. Technical Vocational Education and Training The ideal model of the index would be more (TVET) Index comprehensive in terms of variables included, to provide a more holistic picture of the education system. However, The technical vocational education and training (TVET) lack of relevant data precludes this approach in the present sector plays a pivotal role in the education system index. Some of the pillars that might have been included and provides a means to measure the linkage between are family upbringing, educational practices, school education and the labour market. It also allows for management, and effective management and governance assessments of training institutions’ capacities to develop of the educational system. and qualify young educated people and ensure access to professional opportunities. Relative weighting Various international studies of technical and vocational Regarding the relative weight of each pillar, the first education and training (conducted by UNESCO- (knowledge capital) was allocated (3/5) and the second UNEVOC, the European Training Foundation, and the pillar (educational enabling environment) with (2/5). This World Bank, etc.) identify strong links between TVET reflects the importance of human capital as a key target of and national economic dynamics, and view TVET as the development, and the role of the enabling environment as gateway to developing the workforce, ensuring appropriate the means through which it may be achieved. The quality conditions for the labour force and production, and and performance of these environments are judged providing new opportunities for lifelong learning and according to their outputs; they are assessed on the basis training.43 of their ability to provide the critical knowledge necessary to drive sustainable human development. TVET is a field in which various sectors overlap. Public policies on education, labour, economy, knowledge and Equal weights were assigned to the three sub-pillars of innovation all contribute to TVET; it has therefore been knowledge capital (1/3 each) due to the equal importance addressed in numerous international studies examining the of enrolment, completion and outcomes; enrolment is role of youth as drivers of social development. Previous most efficient when students complete all the required Arab Knowledge Reports (2009, 2010/2011 and 2014) years of education (i.e. graduate), and both enrolment and the Arab Knowledge Index in its two versions (2015 and completion are most meaningful upon acquiring skills and 2016) recognize TVET as a key contributor to - and and capabilities at graduation, thus marking the successful an integral component of - knowledge. conclusion of this level of education. Similarly, the two sub-pillars of educational enabling environment- i.e. early The Shanghai Consensus, which strongly supports TVET childhood education and school environment - were given initiatives, sets several strategic priorities for the sector. an equal relative weight of (3/8) each, while expenditure These mainly focus on developing administrative and on education was assigned a weight of (2/8). This reflects educational human resources by improving pedagogical the fact that despite its importance, rising expenditure and didactic approaches to TVET; adopting innovative will have a limited impact on education in the absence economic concepts such as green economy; promoting of appropriate planning to transform investments into sustainable development and modern technology in positive outputs from the education process; there are educational programmes; and offering better opportunities Global Knowledge Index 2017 17

for females and people with special needs.44 These goals The benefits of TVET are not limited to improving the are reiterated in UNESCO’s ‘Strategy for TVET (2016- lives of individuals; they also affect national and regional 2021)’45 and by Education 2030.46 The Strategy identifies economies and societies in varying degrees. TVET the challenge posed by the high youth unemployment rate assists in improving job opportunities, salaries and career - 73 million - which is expected to grow by 40 million each prospects for individuals, which inevitably results in year, necessitating the creation of more than 475 million increased productivity and innovation as well as improved new jobs over the next decade (2016-2026).47 organizational culture and national competitiveness.48 18 Global Knowledge Index 2017

Given the importance of this sector to improving social vocational education. This sub-pillar aims to reflect: and economic welfare, it is essential that the factors that the capacity of the sector to attract and retain youth; contribute to its performance are monitored and evaluated. the relative importance of the sector in governments’ This should take the form of targeted studies and research financial resource allocations for development; and to support decision making and policy development by education quality in terms of human resources and governments and stakeholders. It is also important that number of students per class. relevant experience and information produced by local and international stakeholders be shared to assist others Features of the labour market seeking to improve performance in the sector. This pillar aims to chart the general features of the labour Structure of the TVET Index market in terms of training, working conditions and labour rights and freedoms in accordance with international Following careful consideration and consultations with standards, laws and regulations. It also seeks to determine project experts and international specialists from a variety the competency of the workforce and the percentage of of disciplines, the TVET index was based on two main those with technical and professional skills. This pillar pillars: formation and professional training and features of comprises two sub-pillars: the labour market (Figure 5). - Qualifications of the human capital comprises three Formation and professional training variables: poor work ethic in national labour force; availability of skilled employees; and technicians per This pillar aims to determine the efficiency of the labour thousand labour force. The first variable is a measure market in providing training services, and identify the of the moral and ethical standards of performance responses of companies to the demand for continuous among the national labour force, as well as their ethics training. It also investigates the adoption of such training as a in dealing with officials, authorities and commercial priority in national economies. It consists of two sub-pillars: counterparts. It also reflects the rigour of auditing and reporting processes and the extent of management - Continuous training comprises three variables: extent accountability to shareholders and directors. The of staff training, availability of specialized training technicians per thousand labour force variable identifies services and percentage of firms offering formal the percentage of the labour force that has the technical training. This sub-pillar reflects the availability of knowledge and experience in the fields of engineering, training services and programmes in the relevant physics, life sciences, social sciences, humanities and/or country, and the dynamics of the sector in terms professional skilfulness to perform their roles. of training opportunities that are appropriate to the labour market and meet the needs of individuals, - Structure of the labour market has two variables: restrictive companies and organizations. labour regulations and labour freedom. This sub-pillar reflects the legal framework governing investment in - Educational structure comprises four variables: the economy, which heavily influences employment expenditure on secondary and post-secondary non- dynamics in the labour market. It considers various tertiary vocational education as a percentage of total aspects of the legal and regulatory framework of the government expenditure; percentage of students labour market, such as laws governing minimum wages, in secondary education enrolled in vocational layoffs and dismissals, as well as restrictive regulations in programmes; percentage of students in post- relation to hiring, working hours and participation rates secondary non-tertiary education enrolled in vocational in the labour force (to indicate availability of employment programmes; and pupil-teacher ratio in secondary opportunities in the labour market). Global Knowledge Index 2017 19

Relative weighting Agenda for Sustainable Development. SDG4 calls for the provision of inclusive and equitable quality education, The first pillar (formation and professional training) is including tertiary education, as a goal of gender equality assigned a weight of (3/5) against (2/5) for the second and a prerequisite for achieving development and full pillar (features of the labour market). This is because the social participation.54 variables of the first pillar - especially those under the educational structure sub-pillar - are directly related to the In the same context, in a speech delivered in 2000, former TVET sector and inevitably affect training processes and UN Secretary General Kofi Annan talked of the important outcomes. Within this first pillar, the educational structure role played by universities in our age, stating that “the sub-pillar is assigned a relative weight of (3/5) because greatest natural resource any nation possesses […] is the it constitutes variables that relate to capacity, qualified potential of its young to learn, to deepen their knowledge, workforce and ratio of TVET students to all students. The and to put their skills to proper use”, concluding that “the continuous training sub-pillar is assigned a weight of (2/5) key to prosperity in the twenty-first century is knowledge owing to the effect of commercial activities and services and education”.55 on the availability of specialized training and continuous development in general. Within the features of the labour Hence, higher education contributes to improving a market pillar, the qualifications of the human capital sub- country’s competitiveness in global markets, raising pillar is assigned a weight of (7/10) due to the importance individual income levels and driving the productive growth of the availability of specialized skills and competences to of society. This is, however, conditional on the provision of companies in the labour market. Finally, the structure of a conducive and productive labour market accommodating the labour market sub-pillar is assigned a relative weight human capital with higher skills, and balanced coordination of (3/10), reflecting the effects of its variables on the legal between industrial and social institutions. framework of the TVET sector. The higher education sector has demonstrated its ability Higher Education Index to keep pace with developments and adapt at all levels; but it now faces various challenges associated with the The World Bank defines higher education as all “post- acceleration of globalization.56 It is particularly important secondary education, including both public and private that stakeholders do not ignore these developments, as universities, colleges, technical training institutes, and this may result in reducing the quality and effectiveness of vocational schools”.49 For the purposes of this Index, the sector and a decline in a country’s ability to conduct higher education will be limited to ISCED 6, ISCED 7 research and generate knowledge in various fields, thereby and ISCED 8 programmes offered by public and private threatening a country’s prosperity. tertiary education institutions, as per the classification of UNESCO.50 Given the importance of measures to ensure the quality of higher education, the OECD’s ‘Assessment of higher Many countries ascribe significant importance to higher education learning outcomes’ highlights the lack of tools education, as it provides the labour market with qualified to compare the quality of education and learning in higher and trained human capital, and drives knowledge and education at the international level. It points out that the innovation.51 As such, higher education is a major few available studies focus on national-level comparisons.57 foundation of economic competitiveness52 and plays a vital role in achieving .53 It is worth mentioning that there is a difference between developing a higher education index that examines the The importance of this sector is demonstrated by its status of this sector across various countries, and a designation as one of the key focus areas of the UN 2030 ranking which reviews the existing international rankings 20 Global Knowledge Index 2017

of universities and higher education institutions. A study Sufficient government funding reflects on the quality published by UNESCO in 2013 warned that international of higher education institutions in terms of both rankings of universities use the research outputs of well- infrastructure and human resources. It also contributes reputed institutions as a standard for measuring other to improving the quality of education and the extent universities, which represents a key limitation to the to which it embraces technological developments, usefulness and relevance of such systems. Furthermore, thereby increasing knowledge generation and driving these rankings do not evaluate the success of a higher the country’s economic growth. education system considering the broader enabling environment in the reference country.58 Indices, instead, - Enrolment: this encompasses three variables that aim to analyse performance, and identify areas for reflect the percentages of students in higher education improvement and corrective intervention. An index can enrolled at ISCED levels 6, 7 and 8, and hence the also be a useful reference tool that allows decision makers capacity, accessibility and attractiveness of the higher and stakeholders to evaluate the progress of a certain education sector in each country. education system over time. - Human resources: this comprises two variables: pupil– Structure of the Higher Education Index teacher ratio in higher education and percentage of researchers in higher education institutions. A high In developing the Higher Education index, the core team pupil–teacher ratio indicates that less time is allocated reviewed international indices relevant to higher education for student–teacher interaction, which could result in and knowledge, such as the World Bank Knowledge less exchanges of ideas and knowledge. This often Economy Index (KEI),59 the Global Competitiveness affects students’ academic performance and scholarly Index (GCI)60 and the Global Innovation Index (GII).61 development in the long term. The second variable The team also reviewed relevant studies that contributed shows the percentage of researchers in the institution to the selection of the components of the index, including whose time is fully devoted to research, development a UNESCO study published in 2011 on the development and knowledge production, which affects research and of an index for higher education and the University of knowledge generation more generally. Melbourne’s rankings of national higher education systems in fifty countries (Universitas 21).62 Based on the above, the Higher education outputs and quality Higher Education index comprises two main pillars: inputs and outputs and quality (Figure 6). This pillar comprises four sub-pillars. The first two relate to the direct outputs of higher education, Higher education inputs namely percentages of graduates and employment after graduation. As such, they reflect the ability of the higher This pillar comprises three sub-pillars that reflect, to the education sector to provide society with graduates who best extent possible, the inputs of higher education in are able to satisfy the requirements of development. The terms of expenditure, capacity and availability of human other two sub-pillars relate to the quality of the higher resources. education system in terms of the quality of universities and the competency of students. - Expenditure: this consists of two variables: government expenditure on tertiary education as a percentage of - Graduation: this is measured through three GDP; and government expenditure per tertiary student. variables: percentage of graduates from ISCED 6 These two variables show the overall percentage of programmes; percentage of graduates from ISCED GDP allocated by the government for higher education 7 programmes; and percentage of graduates from and average government expenditure per student. ISCED 8 programmes. This allows for comparisons Global Knowledge Index 2017 21

between these variables and others under the with research and scientific advances: university– enrolment sub-pillar. industry collaboration in R&D and number of globally- ranked universities per country. Collaboration between - Employment after graduation: this consists of two higher education and industry is essential for driving variables: labour force with advanced education and innovation and growth, and reflects positively on both unemployment rate with advanced education. These sides. It facilitates continuous knowledge-sharing and two variables are important for illustrating the level guides knowledge generation towards meeting the of integration of higher education graduates in the needs of industry and achieving advances in research labour market. and innovation.

- Quality of universities: this comprises two variables - Competency of students: this is measured through two that clearly illustrate the extent to which universities variables: percentage of tertiary students enrolled in respond to development requirements and keep pace globally-ranked universities, which indicates the ability 22 Global Knowledge Index 2017

of students to compete and gain admission to globally- , Ireland, the , , , ranked universities; and inbound mobility rate, which , the United Kingdom and the United States also reflects the quality of the national higher education - have demonstrated excellent performance in economic sector in terms of its ability to attract students from and social development indicators. 46As scientific abroad. research contributes mainly to increasing knowledge at the national and regional levels, and since innovation Relative weighting is based on the production of new or improved goods, services, production processes and organizational and Weights were assigned within the Higher Education marketing models, scientific research and innovation index based on two criteria. First, more weight was serve as drivers for economic growth and sustainable assigned to the outputs pillar in accordance with the development in both developed and developing countries. recommendations of higher education indices, such as Although an RDI system needs to be developed in order the University of Melbourne’s rankings.63 Second, equal to support the UN sustainable development goals in weights were assigned to variables where there is a lack general, SDG 9 specifically emphasizes the need to “build of justification for assigning different weights within each resilient infrastructure, promote inclusive and sustainable sub-pillar. As the inputs pillar comprised seven variables industrialization and foster innovation”.65 and the outputs pillar comprised nine variables, with a total of 16 variables, the team decided to assign each variable a The RDI Index is based on the proposition that to formulate weight of (6/100). This resulted in the inputs and outputs effective scientific research and innovation policies and pillars having relative weights of (42/100) and (54/100) keep pace with developments in the knowledge age, respectively, with a total of (96/100), which led to the decision makers need reliable indicators to measure their remaining (4/100) weight being assigned to the outputs comparative progress in building the knowledge economy, pillar, thereby increasing its relative weight to (58/100). and evaluate their options for the future. UNESCO’s analytical indicators for research and development, as Following a closer examination of the variables under the well as those for science prepared by the OECD and the outputs and quality pillar, the team decided to increase World Bank are among the most important global and the relative weights of the four variables that measure regional sources for evaluating the progress of countries the competency of students and quality of universities. towards knowledge economies and societies.66 Taking all These variables are: percent of tertiary students enrolled the above into consideration, the RDI methodology is in globally-ranked universities; inbound mobility rate; based on diverse indicators and measurements that reflect university-industry collaboration in R&D; and number the modernity of society and its knowledge capabilities of globally-ranked universities per country. Weights are through an integrated R&D system, high added value presented in Figure 6. knowledge-intensive industries, creative products, skilled human capital and appropriate infrastructure. Research, Development and Innovation (RDI) Index Structure of the RDI Index The transition of countries to knowledge societies and economies is necessary to achieve the goals of sustainable The RDI Index consists of three pillars: research and economic and social development and the well-being of development; innovation in production; and social citizens. Research, development and innovation (RDI) innovation. Each pillar is divided into two sub-pillars: are important determinants of a country’s success in inputs and outputs, each being an indicator on its own, building its knowledge economy and society. Global with a specific nature reflected through its respective indices show that countries of high rank in terms of variables, as shown in Figure 7. research and innovation - such as , , Global Knowledge Index 2017 23

Figure 7: Structure of the Research, Development and Innovation Index Research, Development and Innovation

Research and Innovation in Social development production innovation (3/5) (1/5) (1/5)

Research and Inputs of Outputs of Research and innovation in innovation in Inputs of social Outputs of social development development innovation innovation inputs outputs production production (4/10) (6/10) (4/10) (4/10) (1/2) (1/2)

GERD performed Intellectual Number of Average property Ease of trademark GERD as a by business protecting documents per receipts, % of applications percentage of researcher enterprises as a minority ( ) percentage of GDP total trade issued to % GDP (2/20) investors residents at a (%) (6/20) (4/20) given national or (5/20) (6/20) regional office Citations per / Number of Joint venture (per billion PPP$ document GDP) - designs strategic GERD financed contained in alliance deals GERD per (2/20) by business (9/20) researcher, HC ( ) industrial (5/20) enterprises % design (in '000 PPP$, applications Number of constant prices - Citable (5/20) Share of national feature documents H filed at a given 2005) index national or imported ICT films produced (per million (5/20) Researchers (HC) regional office goods as (5/20) - Business (per billion percentage of population enterprise (%) (PPP$ GDP total goods (15-69 years old (2/10) ( ) Researchers per SJR ranking of (6/20) imported % (3/20) thousand labour the best (4/20)

force (HC) scientific journal Production Total computer in the country Printing and (5/20) process software (1/20) Foreign direct ( publishing ( ) sophistication spending % of Percentage of investment FDI GDP) manufactured graduates from and technology (1/10) output (% of Quality of (4/20) tertiary education scientific transfer manufactured graduating from (3/20) total output) Information and research Extent of Communications institutions marketing New business (2/20) Technology, Science, (3/20) (1/10) density Engineering and Share of , (3/20) Construction and PCT patents exported ICT Manufacturing, both / goods as sexes (%) applications million population percentage of (3/20) total exports (7/20) - (%) High technology (4/20) net imports (% of total trade) (2/20)

Research and development social and political fields. Hence, it is a necessary step in the production and dissemination of knowledge International literature defines research and development for sustainable development. In addition, research and (R&D) as creative activity that is systematically organized development results in ideas, visions, products and to increase and apply knowledge in various economic, new methods and outputs - particularly where research 24 Global Knowledge Index 2017

efforts succeed in bringing about development that can Innovation in production be regarded as creative or innovative.67 The OECD’s Oslo Manual identifies two forms of - R&D inputs: research and development inputs innovation in production: technological and non- comprise three categories of variables: the size of a technological. In cooperation with UNESCO, the OECD state’s expenditure on R&D activity; the human capital has designed a survey that captures the variables used to undertaking research activity; and the technology used assess innovation in production in different countries.68 in research production. Of course, R&D in a country The European Union is also currently undertaking similar is affected by both its expenditure as a percentage of efforts. GDP and its expenditure per researcher (the first and second variables). This expenditure is allocated for the Innovative activities can be assessed through three payment of compensation or salaries for researchers, interconnected perspectives. Innovation is partly generated the development of research infrastructure and through the full cycle of scientific research, which begins the purchase of equipment, devices and materials. with exploring natural phenomena and conducting basic Expenditure is calculated as a percentage of GDP research, then moves to applied research and experimental or per researcher to allow comparisons between models, and ends with the production of new or innovative countries. Since R&D requires human capital with goods and services. Additionally, there is innovation that is a high level of learning, individual and collective generated by businesses and units of production, based on skills and scientific ability, one variable is specific to the development of new or improved goods and services, the number of researchers per million inhabitants. the development of a marketing system, or modern and R&D inputs are also measured by the percentage of sophisticated organizational models of management. graduates of scientific and engineering disciplines among total graduates from higher education. The - Inputs of innovation in production: this sub-pillar last variable under R&D inputs is technology transfer, consists of four variables: GERD (gross expenditure which is a prerequisite in providing appropriate on research and development) performed by business infrastructure including laboratories and research enterprises as a percentage of GDP; GERD financed centres. by business enterprises; percentage of researchers in business enterprise; and total volume of foreign direct - R&D outputs: variables that determine the quality investment and technology transfer. These inputs of the outputs of scientific research are identified as reflect the economy’s efforts to expand into high value being related to scientific publishing, the competency added knowledge-intensive industries, and measure the of research institutions and the number of patents availability of research opportunities in production per million inhabitants. Scientific publishing variables enterprises. included are: average documents per researcher; citations per document; citable documents H - Outputs of innovation in production: this consists of index (which is calculated by dividing the number four variables where returns on intellectual property of scientific citations in the years following the rights, i.e. intellectual property receipts (percentage publication of scientific research by the number of of total trade), is a variable that represents the returns research articles published by the state in the same for companies that have registered technological or year); and the SJR ranking of the best scientific non-technological patent applications or other forms journal in the country. To complete the assessment of of intellectual property. Innovation and development R&D outputs, two variables are added: PCT patent in production processes (technological innovation) applications per million inhabitants and quality of is measured using two variables. The first relates to scientific research institutions. the design of new industrial products, number of Global Knowledge Index 2017 25

designs contained in industrial design applications the number of new businesses registered annually per filed at a given national or regional office, and the thousand inhabitants in the 15-64 year age group. second measures the complexity and technological development of production processes, production - Outputs of social innovation: this sub-pillar comprises process sophistication. The last variable, extent of four variables. The first is number of trademark marketing, measures the success of marketing policies applications issued at a given national or regional of industrial companies in differentiating their products office, since a trademark represents the differentiation from those of their peers, which will enable them to of a new product from other products (goods or enlarge their market share or enter new markets. services) of the same category in markets as well as its innovative advantages. Statistical analysis shows a high Social innovation correlation between the number of trademarks and other innovation indicators. Other variables include the Social innovation includes a specific class of creative number of national feature films produced per million products that are based on ‘creative’ human capital, inhabitants; printing and publishing manufactured architecture, design, interactive computer software, cinema output as a percentage of manufactured total output; and television production, music, publishing, cultural and and share of exported ICT goods as a percentage other performing arts as well as intangible assets such as of total goods exported. These variables represent trademarks. Creative industries produce symbolic goods innovative outputs based on the concept of creative and services such as ideas, experiences and images.69 products from investment in intangible assets. Societal innovation does not necessarily occur in research institutions or industries that produce goods and services; Relative weighting it represents a quality of innovation that requires a modern community setting, a knowledge workforce with multiple Given the centrality of scientific research and development skills and a supportive enabling environment. For this sub- efforts in increasing knowledge stock and developing pillar to function, it is necessary to have a comprehensive innovation, the research and development pillar is assigned set of variables that reflect the capacity and readiness of a a weight of (3/5), while the remaining weight is distributed society to develop its R&D system and achieve innovation equally between innovation in production and societal across multiple societal activities. innovation, with (1/5) each. This is mainly due to the important role of R&D as a systemic activity that aims - Inputs of social innovation: this sub-pillar comprises to produce and apply knowledge on the one hand, and its variables that relate to the business sector and the contribution to supporting innovation and creativity on economy. These are: ease of protecting minority the other. Due to the importance of building an advanced investors by applying policies and rules that are scientific research basis or infrastructure as a necessary more flexible and transparent and ensure the rights condition for the success of the R&D sector, its inputs and of shareholders and investors; joint ventures/ outputs are assigned equal weights of (1/2) each. Since the strategic alliance deals among national companies outputs of innovation are not necessarily related to specific and between them and foreign companies, because inputs, they are assigned a relative weight of (3/5), which innovative activities require cooperation between is higher than that of inputs (2/5). As for variables under research institutions, universities and other civil these sub-pillars, they are assigned weights as follows: society institutions; share of imported ICT goods as a percentage of total goods imported; total computer - R&D inputs: GERD as a percentage of GDP and software spending as a percentage of GDP, because GERD per researcher are assigned (5/20) each, computer software represents the intangible assets while researchers per thousand labour force and that are creative goods; and new business density - percentage of graduates from tertiary education 26 Global Knowledge Index 2017

graduating from Information and Communications exported ICT goods as a percentage of total goods Technology, Science, Engineering and Construction, exported, are assigned (4/20) each. Finally, number of and Manufacturing) are assigned (4/20) each, with national feature films produced per million population the remaining (2/20) assigned to high-technology net is assigned (3/20). imports (% of total trade). Information and Communications Technology (ICT) - R&D outputs: given the relative importance of Index patent applications, which represent an essential step for developing new or greatly improved products, Information and communications technology (ICT) has processes and methods, the variable PCT patents significantly evolved in recent years, producing advances applications is assigned a weight of (7/20). The citable that have been systematically applied across all economic documents H index is assigned (5/20) as it involves and social fields and brought about a paradigm shift in several scientific publishing components, such as production and services. ICT has also become an integral publishing in scientific journals, citations of scientific aspect of research, innovation and modernization; the research and level of research achievements. The efficacy of communication connects manufacturers, remaining variables are assigned weights depending service providers and consumers, and allows for advanced on their relative importance and contribution to information sharing. This has produced greater variety developing research outputs in the relevant country. and quality among products, enhanced competitiveness and contributed to innovation, while the Internet offers - Inputs of innovation in production: the relative unprecedented opportunities for compiling, acquiring, weights of GERD and percentage of researchers in sharing and disseminating knowledge. business enterprise vary slightly (ranging from 3/20 to 6/20). Digitization has contributed significantly to economic development in many countries, especially where it - Outputs of innovation in production: intellectual has been accompanied by organizational change and property receipts is assigned the biggest relative weight enhanced labour skills.70 It increases productivity, creates (6/10), with number of designs contained in industrial jobs, reduces the cost of transactions and information design applications assigned (2/10). The other two sharing, improves labour efficiency and offers flexible variables, production process sophistication and extent working conditions. Furthermore, it creates opportunities of marketing, are assigned equal weights of (1/10) for businesses and organizations to share models and each. experiences and offers access to new modes of financing such as crowdfunding, 71 while the use of ICT services - Inputs of social innovation: joint venture/ strategic by small and micro-enterprises improves growth and alliance deals is assigned the biggest relative weight livelihoods. The revolution in mobile technology, especially (5/20) due to the importance of local and international in developing countries, has provided entrepreneurs institutional collaboration for innovation. The variables, with significantly improved connectivity across local and ease of protecting minority investors; total computer international value chains. This has prompted leaders software spending; and share of ICT imported goods, and decision makers to support the expansion of digital are assigned (4/20) each. infrastructure - particularly broadband Internet services - and ensure its availability to users at all levels with a view - Outputs of social innovation: number of trademark to developing countries’ national competitive advantages. applications issued to residents has the biggest relative weight of (9/20). The next two variables, printing At the social level, ICT offers access to basic services, and publishing manufactured output and share of including financial services, education, healthcare, Global Knowledge Index 2017 27

government transactions and information-sharing new jobs for people without the need to migrate to through open data initiatives and social media. Efficient densely-populated cities. The inputs pillar consists of two communication and increased connectivity have also sub-pillars: infrastructure and sector competitiveness. resulted in significant changes within societies, offering the potential for improved relations between individuals and - Infrastructure: this sub-pillar comprises three organizations.72 variables: percentage of the population covered by a mobile-cellular network, regardless of the quantity ICT plays an essential role in supporting the advancement of subscriptions or users; international Internet of knowledge across all sectors – including pre-university bandwidth per Internet user; and availability of secure education, technical vocational education and training, Internet servers. These variables indicate the extent higher education, research, development and innovation – to which the state is providing its people with the and in facilitating the evolution of knowledge economies. required means to benefit from basic services and The ICT index is strongly shaped by the outputs of enhance communication between national regions educational processes at all stages, the country’s RDI and countries. The International Telecom munication capabilities, economic and legislative environments, the Union (ITU) stresses that: efficiency of capital and business management, and labour and investment laws. Therefore, it is essential for “A well-developed information and countries to employ indicators that quantify their levels of communication network infrastructure and ICT development for the benefit of stakeholders in their applications, adapted to regional, national societies. and local conditions, easily-accessible and affordable, and making greater use of Structure of the ICT Index broadband and other innovative technologies where possible, can accelerate the social and ICT inputs economic progress of countries, and the well-being of all individuals, communities Given the importance of the ICT sector and the increasingly and peoples”.74 significant role it plays in facilitating and enriching the lives of users, driving economic growth and keeping pace with - Sector competitiveness: this sub-pillar reflects the globalization, the primary factor in the evaluation of this extent to which residents can afford high quality ICT sector is the readiness of a country to take full advantage services. It therefore reflects ease of Internet access in of the benefits ICT provides. To achieve balanced growth terms of cost and availability. The constituent variables in all areas and among all social classes, economies must under this sub-pillar are: ICT Price Basket; IInternet provide efficient, comprehensive infrastructure that and telephony level of competition; and laws relating supports knowledge production and associated digital to ICTs. They reflect the relative price of ICT services content at affordable prices. In addition, a legal framework across countries over time, as well as their quality and is required to govern and protect ICT activities, encourage ease of access. investment and provide quality assurance. ICT outputs From a development perspective, these efforts offer added value for those with relatively low incomes living in rural The availability of an advanced, integrated ICT areas with poor infrastructure and limited access to public infrastructure is a necessary precondition for realizing services compared to urban populations73. They increase the benefits of these technologies, but it is not sufficient. opportunities for balanced and sustainable development, Balanced use of these services by individuals, organizations and greater cohesion across regions, while also creating and governments is the third and most vital condition. The 28 Global Knowledge Index 2017

most important aspect of the government’s role in the social and commercial fields. ICT use - especially in sector is its commitment to ICT integration in economic relation to basic services such as education, healthcare, and social development policies. The government must etc. - simplifies peoples’ daily lives and empowers therefore assure the public sector’s adoption of the latest individuals in society by affording access to information technologies and create a suitable environment for the at minimum cost and effort, thereby allowing them to development of the sector as a whole. conduct independent studies or establish their own business. Individuals’ use of ICT services also plays a key Public and private organizations participate in ICT role in developing and enriching digital content, which sector development by incorporating technology into in turn attracts more users; as such, the development professional activities and services, thereby contributing of individuals both influences, and is influenced by, the to progress towards achieving excellence in both the expansion of the Internet. Global Knowledge Index 2017 29

The outputs pillar comprises four sub-pillars that reflect such rates are high, they negatively affect creative and the contribution of ICT to comprehensive and sustainable innovative products and investments in the sector. development through its effects on business, organizational and social models: - Impact on development: measuring innovation in ICT and its effects on society provides another indicator for - Subscriptions: this sub-pillar covers fixed-telephone evaluating the efficacy of the sector. An increase in the subscriptions, mobile–cellular subscriptions, fixed- use of, investment in and competitiveness of the ICT broadband subscriptions and active mobile-broadband sector results in more innovative products and impacts subscriptions, all measured per 100 inhabitants. It labour market dynamics, which affect the broader reflects the penetration of ICT services among the economy and society. This sub-pillar comprises three population of a given country. variables with equal weights, illustrating the outputs of innovation in ICT, the impact of ICT on new business - Usage by individuals: this sub-pillar comprises three models, and the social impacts of ICT. variables: percentage of IInternet users; use of virtual social networks; and business-to-consumer Internet Relative weighting use. Measuring individuals’ use of the Internet is important because the number of users and the extent The weights of the indicators were distributed as follows: of their usage play a key role in Internet growth. Social networks connect large numbers of people - The inputs pillar: this pillar was assigned a relative and constitute a fast and effective means for sharing weight of only (3/10) in view of the fact that inputs are information and solutions to common issues facing necessary, but not sufficient, for evaluating the position users across regions and nations. The growth of social of a country in this sector. Each of the two sub-pillars networks offers increasing opportunities for trade was assigned a weight of (1/2), equally distributed as companies embrace the Internet as a channel for among its variables. marketing and selling their commodities and services. This results in a growing number of commercial - The outputs pillar: this pillar was assigned a relative transactions being conducted through the Internet, weight of (7/10) to highlight the importance of the including via e-commerce or in the form of financial use of available technology by all social categories. or customer services, which leads to higher cash flows The weights of its sub-pillars vary as follows: into the country’s traditional economy from the digital subscriptions (4/14); usage by individuals (3/14); usage economy.75 by government and institutions (4/14); and impact on development (3/14). Variables under each sub-pillar - Usage by government and institutions: this sub-pillar had equal weights. consists of four variables with equal weights. They relate directly to the absorption of modern technology; use Economy Index of the Internet for business-to-business transactions; the importance of ICT to government strategies for If the essence of economics is the optimal utilization of achieving comprehensive and sustainable development; scarce resources to meet seemingly unlimited human needs, and the availability of e-government services, which the knowledge economy is the best available solution for reflects the levels of efficiency of public administration, bridging the gap between scarce resources and demand, transparency, governance and accountability. This both in terms of quantity and quality. With the advent of sub-pillar also includes government success in ICT the knowledge economy, a paradigm shift has occurred promotion, and another variable that illustrates in the way limited national resources can be transformed unlicensed software installation rates - in cases where into global wealth that is less restricted by factors of time 30 Global Knowledge Index 2017

and space. Knowledge is transferred quickly, expanding determining factor of its nation’s level of economic horizons and driving the development and progress of development; rather, the main determining factor is now nations; as such, the concept of the knowledge economy is the openness of the state to the integration and use of broader than ever before, and for the past two editions of knowledge. the Arab Knowledge Index, economy was incorporated as one of its six main sectoral indices.76 Structure of the Economy Index

Studies have shown that the introduction of knowledge The Economy Index is based on a group of select knowledge economy is essentially related to levels of knowledge enablers that strongly influence the six other indices of the production, dissemination and use, whether such Global Knowledge Index. The Economy Index comprises knowledge is implicit (as represented by individuals’ three pillars, namely: financing and value added; economic experiences, knowledge, relations and interactions) or openness; and knowledge competitiveness. Each of these explicit (in the form of databases, information and has several sub-pillars and variables to measure aspects software). Unlike the traditional concept of economic within the broader relationship between the knowledge resource analysis and availability, knowledge economy economy and economic development (Figure 9). is primarily based on providing economic resources - particularly human resources - with knowledge tools, Knowledge competitiveness including digital and technological knowledge assets as well as innovative and creative skills. Competitiveness is one of the most important elements of knowledge exchange. The more competitive an economy In his review of the methodological framework of is, the more it is able to penetrate other markets with its the relationship between knowledge and economic commodities and services; and the more competitive the development, Peter Meusburger points out that this issue investment environment is in a given country, the more relates not only to the availability of knowledge, but also successful it will be in attracting foreign investment and to differences in the timing and the speed of adoption of inward knowledge transfer. Competitiveness, and its two advances in the competitiveness of individuals, institutions primary components (a competitive enabling environment; and nations.77 This means that the transmission and and the response to that environment), is the real catalyst dissemination of information does not guarantee its for the transfer, localization and use of knowledge. acceptance and use by recipients, which depends on Thus, economic infrastructure and competition and political and economic will, and the acceptance by society competitiveness drivers are the two sub-pillars that of new knowledge which may initially appear unfamiliar.78 primarily aim to describe the role of competitiveness in It is logical today to classify countries according to general, and in particular the positive correlation between their levels of development based on their ‘openness’ competitiveness and knowledge, and its role in supporting to knowledge, rather than traditional determinants like the overall development of an economy. wealth, trade openness or even relative economic weight within the global economy. Those economies that are - Economic infrastructure and competition: this sub- most open to new knowledge - including its generation, pillar consists of several variables that reflect two key localization, dissemination and/or use – rank highest on aspects. The first illustrates the competitiveness of the the scale of economic development and are best able to economic environment in terms of local and foreign move to a higher level of development. investment; and the second indicates the presence of a local environment that is a catalyst for knowledge. Therefore, in developing the indicators for this sector, The variables of this sub-pillar represent the key the Global Knowledge Index took into account the fact enablers of competitiveness, starting with the ease of that the size of an economy is no longer the primary starting a business, which covers ease of transferring Global Knowledge Index 2017 31

Figure 9: Structure of the Economy Index

Economy

Financing and Economic openness (1/4) value added (2/4) (1/4)

Economic Domestic value Competitiveness Creative Trade Financing and taxes infrastructure and added drivers economy (1/2) competition (1/2) (1/2) (1/2) (1/2) (1/2)

Ease of starting a Business Total tax rate (% High-technology Trade of commercial High-skilled business impact of rules employment (1/6) net exports (% of (% of GDP) profits) on FDI ) share as a total trade (1/2) (1/4) percentage of (1/5) (1/3) the total number Ease of enforcing of employed people (%) a contract Exports of Foreign direct creative services Prevalence of Soundness of (1/2) (1/6) investment, net (% of total trade non-tariff barriers banks ( ) in services) (1/2) Manufacturing, inflows % of GDP (1/4) value added (% of Gross fixed capital (1/5) (1/3) GDP) formation (% of (1/2) ( GDP Global Values and shares Domestic credit

(1/6) Entrepreneurship of creative goods to private sector (% of GDP) Index exports (% of (1/5) (1/4) total trade in Logistics goods) Performance Annual investment (1/3) Index in telecommunica- (1/6) tions services (% Bank deposits to of GDP GDP (%) Intensity of local (1/5) competition (1/4) (1/6) Venture capital availabil Availability of (1/5) latest technologies (1/6) knowledge without local administrative obstacles willingness of the economy to introduce valuable new and the availability of incentives that encourage knowledge to the production process. technology transfer. The ease of enforcing a contract variable describes the ability to enforce contracts and - Competitiveness drivers: this sub-pillar is similar to the the number of days this requires. The third variable is first in terms of its focus on the potential to attract gross fixed capital formation, which reflects the size knowledge investments and the importance of joint of investments in the country, as well as real capital investments in supporting the knowledge economy. expenditure. In addition to the above, this sub-pillar Enablers for domestic and foreign investments are includes three other variables. These are: logistics considered essential prerequisites for improving levels performance index, which reflects the ability to serve of knowledge transfer and localization, as well as the transfer, localization and use of knowledge in the supporting productivity and business. In this context, economy; intensity of local competition, which relates business impact of rules on foreign direct investment to competition in the transfer of new knowledge; and reflects the level of real interest in implementing the availability of latest technologies, which indicates the enablers of knowledge transfer and localization. Foreign 32 Global Knowledge Index 2017

direct investment, net inflows as a percentage of GDP illustrating the real openness of countries to importing enhances these enablers. Finally, annual investment in products from other countries, and thus importing the telecommunications services (percentage of GDP) and knowledge of others. venture capital availability indicate the willingness to apply new knowledge developments in the ICT sector Financing and value added to support its role in the transfer, localization and use of knowledge. The third pillar represents the efficacy of local financing and institutional components in supporting the country’s Economic openness knowledge capacity and demonstrates the willingness of countries to transfer, localize and use knowledge. This The economic openness pillar is key to understanding pillar comprises two sub-pillars: the role of knowledge - be it exported or imported - in developing the production of a given country, - Financing and taxes: this sub-pillar illustrates streams and therefore in driving economic growth and local of public financing from country revenues and private development. The more a country imports products and financing from banking institutions. In terms of public services from abroad, the more it can access and develop financing, the first variable, total tax rate (percentage the knowledge of others. The same applies in the case of of commercial profits), describes whether sufficient knowledge exports; where a country provides the world incentives are provided for companies to operate with knowledge services or products, adding value from a and invest in the economy. This is an important combination of local and imported knowledge. Variables factor in enabling the transfer, localization and use under this pillar are grouped into two sub-pillars: of knowledge. Private financing under this sub-pillar is represented by three variables: soundness of banks; - Creative economy: this sub-pillar comprises three domestic credit to private sector (percentage of GDP); variables: high-technology net exports, exports of and bank deposits to GDP (percentage). This sub- creative services and share of creative goods exports pillar reflects the premise that the knowledge economy from total goods exports. These reflect the extent is enabled by an institutional environment in which the of creative knowledge transferred, which necessarily banking system acts as a catalyst. The more credit is leads to improved levels of global development and available to the private sector, the more likely it is that general knowledge exchange, especially in relation to development, economic expansion, investment, and innovation and creativity in technologies, commodities knowledge transfer, localization and use will occur. and services. Although technological exports are one of the most important examples of the transfer - Domestic value added: this sub-pillar is essential for of knowledge between countries, this sub-pillar is illustrating the extent to which countries are able expanded to include all levels of creative exchange to localize and use knowledge, and contribute to its between countries through exported goods and transfer abroad through skilled human resources and services. local industry components. Hence, the high-skilled employment (percentage of total employed people) - Trade: this sub-pillar reflects the extent to which variable within this sub-pillar reflects the human obstacles to trade are overcome to enable cross-border component of the economy and its importance in knowledge exchange. Hence, the variable foreign trade terms of national added value. It also reflects the level as a percentage of GDP is a real indicator of the level of of workforce participation in knowledge activities, knowledge exchange between states and the openness including knowledge transfer, localization and use. The of states to others. Prevalence of non-tariff barriers is last variable, manufacturing, value added (percentage another variable that also reflects this willingness, by of GDP), refers to the ability to make better use of Global Knowledge Index 2017 33

local resources and combine them with those from provides the impetus for increasing investment and the abroad to create a local product that represents a participation of international companies in the provision contribution to knowledge. of communication services including Internet and mobile applications. Similarly, international studies indicate that Relative weighting the success of countries in research, development and innovation (RDI) is linked to economic performance, The three pillars vary in terms of their weight, while the political and legal environment, and the fulfilment the variables are assigned equal weights in the absence of social development goals. Preserving the natural of justifications for unequal relative allocations. The environment and safeguarding public health are also key knowledge competitiveness pillar is assigned a weight of actions in providing an environment conducive to RDI. 50 percent because it comprises 11 variables distributed The general enabling environment of a national socio- over two sub-pillars: economic infrastructure and economic framework - especially in terms of gender competition and competitiveness drivers. The other two equality - is a key factor in supporting knowledge indicators pillars, economic openness and financing and value added, in the economy, especially those representing local value are assigned equal weights. added and the knowledge competitiveness of countries. Furthermore, institutional political empowerment General Enabling Environment Index provides an environment that acts as a major enabler of knowledge creation in an economy. Value added, internal Based on the methodological framework of the Index, and external competitiveness and economic openness and in order to avoid repetition of variables that could are strongly related to the institutional capacity and undermine the accuracy of weighting or the overall organization of the economy, particularly the quality of value of the Index, the project team agreed to group the its procedures and litigation, the efficiency of government general enabling environment components of the six apparatus, and the existence of political stability. The sectors under a single separate index. Considering these health service, and and environment in a multi-contextual dimensions, three main pillars were specific country are also general factors that enable the devised: the political and institutional context; the socio- economy to create a competitive environment and attract economic context; and the health and environment sustainability-oriented investments. context (Figure 10), which cut across and influence all the other sectoral indices. Structure of the General Enabling Environment Index

Improving the performance and quality of outputs The general enabling environment index consists of three from all stages of the education system requires a safe pillars: political and institutional, which is concerned with environment; an appropriate system to ensure the provision governance and the democratic/political aspects of a of basic health services; and a clean environment free country; socio-economic, which brings together different from and hazards. It also requires an enlightened socio-economic indicators, with a focus on gender societal culture that promotes social justice and high equality; and health and environment, which explores levels of education among all levels of society. There is development in the context of the health of a country’s also a clear need for a stable political environment where natural environment and citizens. These three pillars each individuals’ rights and duties are respected, freedoms are contain two sub-pillars and their related variables. exercised and rule of law prevails. Political and institutional The same is true of the ICT sector; it is clearly influenced by a society’s enabling environment - especially its This pillar encompasses a political sub-pillar and an legislative and political environment. Political stability institutional sub-pillar. The former is mainly concerned 34 Global Knowledge Index 2017

(1/5)

(1/5)

with the overall level of political stability and security in the development strategies. The second sub-pillar focuses on country, which can influence the development of multiple institutional aspects, which include the level of judicial sectors. (For example, countries affected by conflict are independence; regulatory quality; and press freedom. likely to see their development gains and prospects undermined.) In addition to the political stability and Socio-economic absence of violence/ terrorism variable, it includes a variable on government effectiveness, which illustrates how effective The socio-economic pillar comprises two sub-pillars: national institutions are in establishing and implementing empowerment and gender parity. The variables under Global Knowledge Index 2017 35

Figure 11: Correlation of the GKI to the Human Development Index and SDG Index 1.0 100 0.9 90 0.8 80 0.7 70 0.6 60 0.5 50 0.4 40 0.3 30 R² = 0.8009 R² = 0.7431 0.2 20 0.1 10 0.0 0 0 102030405060708090100 0 102030405060708090100

empowerment are multi-sectoral and measure a variety diversify energy sources by increasing renewable energy of indicators including adult literacy rate and mean years consumption. The variables under the health sub-pillar of schooling; GDP per capita; unemployment rate; and track data on under-five mortality rate and . share of youth not in employment, education or training. The gender pillar also touches upon a variety of different Relative weighting sectors, namely political participation (women-to-men ratio in parliament), education (educational attainment) While the political and institutional and the health and labour force participation rate. and environment pillars have the same relative weight (3/10), the socio-economic pillar is considered slightly Environment and health more influential in determining the general enabling environment and therefore has a weight of (4/10). The The first sub-pillar under environment and health contains two political–institutional sub-pillars are equally weighted, variables that seek to measure performance in reducing while the empowerment and the health sub-pillars have carbon emissions, energy efficiency, and capacity to relatively more weight than gender parity and environment.

Table 1: Comparison of Sectoral Average Scores of Top Ranking and Lowest Ranking Countries

Average scores: Top 25 Average scores: Lowest 25 ranking countries ranking countries Pre-University Education 72.43 36.49 Technical Vocational Education and Training 67.50 39.70 Higher Education 56.06 23.37 Research, Development and Innovation 53.98 13.36 Information and Communications Technology 75.69 28.01 Economy 60.25 32.88 General Enabling Environment 78.59 46.78 36 Global Knowledge Index 2017

Key findings the top and bottom of the rankings. Furthermore, correlation coefficient analysis of the GKI and the GKI scores are distributed on a scale from 0 to 100. Human Development Index 201680 showed a very high Higher scores indicate greater progress towards meeting correlation of around 0.862. An equally high correlation of the knowledge requirements of development. Switzerland, 0.895 between the GKI and the Sustainable Development Singapore, Finland, Sweden, the Netherlands and the Goals Index reinforces the conceptual foundation and United States obtained the highest rankings, with scores assumption of the GKI that there is a strong correlation ranging between 67.2 to 71.8. The majority of the high- between knowledge and sustainable human development. scoring countries either belong to the European Union At the sectoral indices level, the lowest scores were or are located in East Asia. In the Arab region, the top- recorded in the RDI sector and ranged from 8.2 to 66.9 scoring country was the UAE, which was ranked 25th. with a global average of only 27.36 out of 100. The Despite their relative high scores compared to others, this highest scores were in the General Enabling Environment group of countries is yet to achieve maximum knowledge (between 32 and 85.3), with a global average of 62.45 efficiency. The lowest scoring countries on the GKI scale out of 100. The same trend was noted when the analysis were mostly Sub-Saharan countries. However, they also focused on the best-performing 25 countries and the included three Arab countries and a number of countries worst-performing 25 countries, although average scores in South and West Asia. varied (Table 1).

Comparing these results to those of the 2016 Sustainable Country scores in the GKI as a whole, as well as in the Development Index79 reveals significant correlation sectoral indices, reflect large gaps between nations. These between the two indices in terms of the countries at gaps also vary between sectors - with the widest being in Global Knowledge Index 2017 37

the ICT, RDI and pre-university education sectors (Figure on the TVET, lowest-ranking countries scored higher on 12 ) - and can be categorized as follows: the TVET index than on the pre-university index. Higher scores were recorded for both groups of countries on the - Gaps between sectors in the same country: this may higher education index than on the TVET index. indicate unbalanced development approaches, which are inconsistent with the concept of comprehensive Regarding the relationship between the sectoral indices and interconnected human development. It could and the General Enabling Environment index, the also indicate ineffective implementation, which would political climate proved to be essential in determining require improved development management and more the performance of most sectors, and may therefore be effective governance. considered a key factor in determining the success of knowledge development. Its impact was felt most in the - Gaps between countries: these gaps require the ICT sector, followed by the economy, higher education attention of the international community and serve as and RDI sectors. It was least felt in the pre-university a reminder, especially for rich countries, of the global education sector. The TVET index was equally influenced commitment of the 2030 Agenda for Sustainable by the political environment and the socio-economic Development to scale up the support to developing environment. and least-developed countries. This not only entails the provision of financial aid and technical assistance, but This brief description of major trends drawn from the also the establishment and consolidation of avenues results of the Index must be complemented by further for ‘knowledge cooperation’. analytical work at two levels:

Further analysis of gaps between sectors and countries - First, by the institution responsible for the development could present opportunities for partnerships and exchange of the Index. Further, more detailed studies of the among top-ranking nations; looking at the top five ranks, various index components and their relationships are it becomes clear that aside from Switzerland - which was required. This necessitates the development of an among the top five in all sectors except for pre-university integrated analytical model that will help determine education - countries’ ranks varied by sector. minimum thresholds for sectoral indices and facilitate cross-country comparisons. In terms of intersectoral interactions, statistical analysis showed a very strong correlation between sectors. The ICT - Second, more detailed analysis must be undertaken at sector emerged as an important component, showing high the country level, by further exploring indicators and correlation coefficients to all sectors. This is not surprising, national context. Countries have different political, given the increasing importance of technology and its role economic and cultural conditions that produce in the development of knowledge in all fields. Meanwhile, different needs and challenges. Therefore, despite the the TVET sector seems to be relatively less connected to importance of analytical studies conducted regionally other sectors, its highest correlation being with the ICT and internationally, countries should be encouraged sector (0.634). The TVET’s lowest correlation was with to conduct national studies that are tailored to their the pre-university education and higher education sectors, specific development goals and resources. which indicates low consistency among the three education systems in several countries. It was also noted that gaps Concluding remarks between scores on the TVET, pre-university education and higher education indices varied between top-ranking ‘Sustainable knowledge-based human development’ and lowest-ranking countries; while top-ranking countries is a multidimensional concept combining a number scored higher on the pre-university education index than of intertwined elements, including: quality education; 38 Global Knowledge Index 2017

scientific research oriented towards development and and international levels. In this regard, the Index may innovation; a sophisticated technological system to facilitate collaborative projects among institutions and disseminate knowledge within society; and a strong organizations that seek to build their own indices to economy that invests in human welfare and in the equitable fill the gaps in existing knowledge and measurement and sustainable advancement of society. In order to systems. identify priorities and drive efforts to achieve sustainable knowledge-based human development, a systematic Finally, it is also hoped that the findings of the measuring tool is required to gauge and track progress Global Knowledge Index will contribute to creating in achieving the optimal conditions for both knowledge a competitive environment that encourages decision and development. Hence the Global Knowledge Index makers and stakeholders to initiate more programs to was created, comprising six sectoral composite indices promote the dissemination and utilization of knowledge and a seventh index measuring the availability of a general to achieve sustainable human development. enabling environment. While recognizing the strength of the methodology and The importance of this initiative stems from the need structure of this first edition, the Global Knowledge to support sound, evidence-based and effective decision- Index will be subject to regular updates, revisions and and policymaking. However, the Index alone will not refinement. This will allow us to develop an increasingly be sufficient to devise new policies or interventions. credible and relevant product that can adapt to global The true function of the Index is to shed light on transformations and remain responsive to evolving the strengths and weaknesses of a given system, not development requirements. In its next edition, more to provide suggestions for how to respond to these space will be allocated to the environment component, strengths and weaknesses. Additional, tailored analysis which constitutes an important pillar in achieving by relevant national, regional and international actors is sustainable human development in its contemporary required to identify appropriate actions and interventions. sense. The process of refining the Index will not be Furthermore, it is important to ensure continuity in data free from challenges, such as creating comprehensive, collection in order to amass information over a sufficient accurate and regularly updated databases, expanding period of time to allow accurate analysis of positive and data sources and developing methodologies that allow negative trends, rather than providing a snapshot of the accurate utilization of big data. situation at a single point in time.81 This first edition will be followed by detailed analytical Another intended benefit of the Index is the facilitation studies on the results and interactions of the indices in of partnerships and exchanges between relevant actors order to further our understanding of the status of both such as governments, decision makers, scholars and knowledge and development, as well as the nature of all other concerned authorities at the local, regional their correlation. Global Knowledge Index 2017 39

Endnotes

1 World Bank, 1999. 2 Eubanks, 2011. 3 United Nations Educational, Scientific and Cultural Organization, 2005. 4 Sharma et al., 2009. 5 United Nations Development Programme and Mohammed bin Rashid Al Maktoum Foundation, 2012. 6 Drucker, 1994 7 Roberts, 2009. 8 Dancy et al., 1992. 9 Thakuria, 2014. 10 World Commission on Environment and Development, 1987. 11 United Nations Development Programme, 2010. 12 World Bank, 2012. 13 World Bank, 1999. 14 World Bank, 2004 15 World Economic Forum, 2004. 16 Leon, 2017. 17 World Economic Forum, 2010. 18 Leon, 2017. 19 Kensho Technologies Inc., 2017. 20 Arab Institute for Planning, 2012. 21 United Nations Development Programme and Mohammed bin Rashid Al Maktoum Foundation, 2015. 22 United Nations Development Programme and Mohammed bin Rashid Al Maktoum Foundation, 2016. 23 Stewart, 1997. 24 Bukh et al., 2001. 25 United Nations, 2015. 26 Diab, 2008 27 Gadrey and Florence, 2003. 28 Booysen, 2002. 29 Boidin, 2004. 30 Joumard, 2016. 31 Organisation for Economic Co-operation and Development, 2008. 32 For more information about Principal Components Analysis see: Hair et al., 2015. 33 The condition was relatively relaxed because the qualifying sample size is 131 countries (conditioned by data availability in credible international sources) 34 f=2 35 For more information about the Budget Allocation Process method, see OECD, 2008. 36 United Nations Educational, Scientific and Cultural Organization, 2016a. 37 United Nations Educational, Scientific and Cultural Organization, 2015b. 38 United Nations Educational, Scientific and Cultural Organization, 2015a. 39 Ki-moon, 2015. 40 United Nations Educational, Scientific and Cultural Organization, 2015a. 40 Global Knowledge Index 2017

41 United Nations Office of the High Commissioner for Human Rights, 1989. 42 United Nations, 2015. 43 See for example: World Bank (https://openknowledge.worldbank.org/discover?scope=%2F&query=vocational &submit=); UNESCO–UNEVOC (http://www.unevoc.unesco.org/go.php?q=page_unevoc_publications); and European Training Foundation (http://www.etf.europa.eu/web.nsf/pages/publications_by_topic). 44 United Nations Educational, Scientific and Cultural Organization, 2012. 45 United Nations Educational, Scientific and Cultural Organization, International Centre for Technical and Vocational Education and Training, 2016. 46 United Nations Educational, Scientific and Cultural Organization, 2016a. 47 United Nations Educational, Scientific and Cultural Organization, 2016b. 48 European Centre for the Development of Vocational Training, 2011. 49 World Bank, 2015. 50 United Nations Educational, Scientific and Cultural Organization Institute for Statistics, 2011. 51 Wilkens, 2011. 52 World Economic Forum, 2015. 53 Shaffer and Wright, 2010. 54 United Nations, 2015. 55 Annan, 2000. 56 United Nations Educational, Scientific and Cultural Organization, 2010. 57 Lalancette, 2010. 58 United Nations Educational, Scientific and Cultural Organization, 2013. 59 World Bank Institute, 2008. 60 World Economic Forum, 2016. 61 Cornell University et al., 2017. 62 University of Melbourne, 2017. 63 University of Melbourne, 2017. 64 Cornell University et al., 2017. 65 United Nations, 2015. 66 United Nations Educational, Scientific and Cultural Organization, World Bank and OECD datasets. 67 Organisation for Economic Co-operation and Development, 2015. 68 Organisation for Economic Co-operation and Developmentand Eurostat, 2005. 69 Khorshid, 2017. 70 Organisation for Economic Co-operation and Development, 2000. 71 World Economic Forum et al., 2015. 72 World Economic Forum et al., 2015. 73 World Economic Forum et al., 2015. 74 International Telecommunication Union, 2005. 75 World Economic Forum et al., 2015. 76 United Nations Development Programme and Mohammed bin Rashid Al Maktoum Foundation, 2015 and 2016. 77 Meusburger et al., 2013. 78 Meusburger et al., 2013. 79 Sachs et al., 2017. 80 See United Nations Development Programme, 2016. 81 Demeuse and Blondin, 2001. Global Knowledge Index 2017 41

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