The Role of Knowledge Based Economy in the Technology Gap Ratio of Iran’s 1404 Vision Plan

The importance of the technology gap ratio among the countries of the region can be examined not only from the perspective of the role of technology, but also from economic competitiveness point of view. This study examines the role of knowledge-based economy in the technology gap ratio using frontier and meta frontier production functions during 1995–2015 in 24 countries of Iran's vision plan. In this regard, the countries of the region were classified into three groups based on the components of knowledge economy and cluster analysis. The results showed that countries in the first group with an average gap of 95 percent are closer to meta frontier technology (1), and also the average technology gap ratio in the other groups  is 94% and 67%. Investigating the role of components of knowledge based economy in the technology gap ratio between countries, indicated the very important role of the institutional regime and economic incentives component in decreasing the technology gap ratio based on the computational elasticity of each component between these countries. Thus to decrease the technology gap ratio, there is an emphasis on upgrading such component indicators, which include removing tariff and non-tariff barriers, the rule of law, and the quality of laws and regulations.