Nurturing a Knowledge Economy in Qatar

Knowledge, as it is applied in entrepreneurship, research, and product design, is one of the key sources of sustained growth in the global economy. The advancement of a knowledge economy is a central feature of developed and developing countries alike. Innovation, along with rising investment in “intangible” assets, such as research and development (R&D) and information and communication technologies, has become ever more important as a driver of growth. Zamila Bunglawala explores whether Qatar – a country highly dependent on its oil and gas revenues – can innovate, diversify, and ultimately reach its aim of creating a knowledge economy.

Recommendations for the Qatari government and public institutions:

  • Looking to the Small Business Innovation Research program in the United States as a model, the Qatari government should help to generate demand for research that is then transformed into viable businesses through public procurement initiatives. The Small Business Innovation Research program allocates 2.5 percent of the total research budgets of all federal agencies with budgets over $100 million to contracts or grants for small businesses. The Qatari government could set a similar target of funds from research budgets to be allocated to small businesses.
  • Prizes should be granted for business ventures and innovations. The National Business Plan “Al Fikra” competition offers a useful model for incentivizing entrepreneurial ideas. The competition allows undergraduate and graduate students, as well as professionals, to present business plans to a consortium of higher education institutions and business development groups, who then help convert the best ideas into viable businesses by providing advice and funding.35 Public institutions, such as the Ministry of Business and Trade, Enterprise Qatar, and the Ministry of Higher Education should now take similar action. In so doing, risk-taking behavior will be encouraged and entrepreneurs rewarded early on in the innovation process, encouraging them to continue taking risks. Additionally, national prizes would add to the prestige associated with innovation and business development and therefore grant greater cultural acceptance. The National Business Plan competition, launched in 2011, is the first of its kind to seek to reward innovative ideas, rather than only final products. Such projects should be emulated.
  • Enterprise Qatar should provide financial incentives for Qatar’s equity funds and venture capital entities to invest in and provide financial support for SMEs. This will increase small and fledgling businesses’ access to funding, through private or public-private equity funds, enabling entrepreneurs to advance their projects and ideas.

Recommendations to Qatari schools and universities:

  • Schools and universities in Qatar can help foster a culture of business development and risk-taking by ensuring that these skills are taught as an integral part of the educational curriculum. This, in turn, will encourage more students to become involved in business and eventually contribute to the transfer of knowledge. By adding such classes, a new generation of Qataris will be more likely to venture into the private sector, thus contributing to the development of a knowledge economy.
  • Universities should expand the incubation role currently offered by QSTP for technology innovation, through which students can gain access to the support of Enterprise Qatar, Silatech, as well as QSTP. In this way, a stronger link can be forged between education and business creation. Business incubation by universities will help subsidize risk-taking, thereby reducing risk aversion. It will also help foster an environment in which universities and students are willing to adopt new ways of learning through a combination of research, education, and business creation. Universities should therefore provide institutional support to young people with viable business ideas by absorbing the initial start-up costs and risks as well as providing infrastructure support. By doing so, institutions of higher education can enable real projects to be designed and implemented by students, within universities, in their early stages.
  • Qatar’s education system, from the primary school to university level, needs to support and meet the requirements of its economy to ensure immediate and long-term stability and growth. A comprehensive reform program of how schools and universities in Qatar can meet the government’s objectives for a knowledge economy, as outlined in the National Development Strategy and Qatar National Vision 2030, should be undertaken. Courses emphasizing cognitive problem-solving, creative thinking, and vocational and technical skills should be emphasized.

Recommendations for the private sector in Qatar:

  • Qatar’s private sector can aid in the development of the knowledge economy by improving access to finance. The QCCI and QBA should lobby financial institutions in Qatar to increase bank lending for local enterprises from the current 0.5 percent to the current non-GCC level of 13 percent, and the World Bank target rate of 21 percent for SMEs.
  • The QCCI and QBA, working in conjunction with Enterprise Qatar and similar organizations, should draw up a new regulatory framework to increase transparency and banking competitiveness in financial lending to SMEs. In this way, subsidized bank lending can be effectively monitored and evaluated to ensure that it facilitates the establishment of new businesses and new growth for existing ones.

Recommendations for international organizations:

  • Drawing from the Tunis Declaration, the World Bank, through its Education for Knowledge Economy program, can provide Qatar with direct support, guidance, and expertise to advise on improving the Qatari education system. The Bank and similar organizations can also help ensure that networks of innovation and knowledge economy experts are made known and available to Qatar. This support will help Qatar further advance its knowledge economy by increasing the skills levels of the workforce, guiding local businesses, and ensuring positive movement toward meeting the World Bank target of 21 percent bank lending for SMEs.