Moving from traditional to knowledge economies is a prickly problem for any country, but especially so for oil-bound Middle Eastern states.

This was the key issue at the Economist’s Dubai Future of Work summit on April 29, as the region begins to think about how it can make the shift from oil to innovation and entrepreneurship.

It’s a shift that could be worth up to $18 billion for the Gulf states, according to a report by Ernst and Young (EY), but it won’t be easy managing both the ‘new’ and ‘old’ economies as countries make the transition.

Head of The Economist events Elena Sokachifa describes the shift as moving from a “craftsmanship economy” to one based on thought and office work, where there must be a balance between innovators who design products and the workers who build them.

Dr. Thani Ahmed al-Mehairi, general manager of the National Qualifications Authority (NQA), says the knowledge economy lies in four pillars: it must promote the effective use of existing and new knowledge and support entrepreneurship; support education and skill acquisition; build information infrastructure; and support innovation systems, which allow communities to benefit from global knowledge and implement it locally.

From oil barons to tech-heads

The continued dependence on oil is a big challenge.

Under-secretary of the UAE economic ministry, Abdullah Al Saleh, points to Dubai as an example to follow. He says the oil sector’s contribution to the UAE’s GDP fell from 90 percent in the early days of the Emirates to 30 percent today, and it’s expected to fall further to 20 percent in the coming years.

Additionally, 40 percent of global gold trade goes through Dubai which is counting on trade, aviation, services, foreign investment, and other sectors to shift to an economy based on knowledge and entrepreneurship.

Saudi Arabia is also taking steps towards becoming less reliant on oil says Prince Saud bin Khalid Al-Faisal (pictured below), deputy governor of the Saudi Arabian General Investment Authority and president of the National Competitiveness Center. He says his country is intensifying its efforts towards diversity especially after the 2008 financial crisis.

Training for the future

Better education is one area that will allow MENA countries to make the transition.

Young people between 15 and 29 make up around 30 percent of the Middle Eastern population and the summit speakers agreed on the crucial importance of giving these young people the skills to cope in increasingly advanced technological fields.

Al-Faisal says Saudi Arabia has grown its education sector by 20 percent since 2005, and has a specific focus on the sciences and math. It has established specialized faculties such as the King Abdullah University of Science and Technology (KAUST) to achieve this.

Different skills are needed to survive in a digital or knowledge economy, and there’s a lack of appropriate training for that in the Middle East, Sokachifa says.

“The Middle East… has so much potential. This region, which has financial means (from) natural resources, has the opportunity now to focus on innovation and on training a new generation to enter the economy of the future,” she said.

Lance de Masi, president of the American University in Dubai, says teachers need to be better trained in educating students how to think and learn from mistakes and experiences, rather than follow traditional methods of learning.

The responsibility doesn’t entirely fall on the educational system alone, says CEO of GE MENAT, Nabil Habayeb. He called for cooperation between the public and private sectors to bridge skills gaps and create more job opportunities and referred to GE’s initiative with Wamda, a business collaboration to provide opportunities for young people through mentoring and promoting innovation.