Investigating the distributional effects of knowledge-based economy in selected Islamic countries (Fully Modified Least Squares Approach)

The existence of income inequality in all societies and Islamic countries brings unfortunate and fragile consequences. In any society where income inequality prevails, the possibility of increasing corruption in the field of trade and commerce, reducing the motivation for economic, social and political activity, production and industry, and increasing crimes. Political, increasing unemployment, pessimism between the government and the nation, etc. can disrupt the stability and endurance of the economic system of a country and society. This caused economists to find solutions to control income inequality and balance income distribution. There are many factors that affect income inequality and reduce income inequality in societies, the most important factors that reduce income inequality in Islamic countries are the increase in national income, financial development, human capital, gross domestic product, rule of law and External factors have been identified. Among the factors that have been effective on income inequality in Islamic countries in recent studies, according to scholars and researchers, is the knowledge-based economy and its components.
The knowledge-based economy includes innovation, socialization and innovation, self-creation, technological progress, structural evolution in important economic sectors, improving the efficiency of production inputs and achieving continuous development. The knowledge-based economy is mainly based on the use of ideas rather than relying on physical abilities. Today, a knowledge-based economy is mentioned in economic literature and is considered an important and influential factor in income inequality. A knowledge-based economy with entrepreneurship, creativity and innovation, technological progress, structural adjustments in important economic sectors, improving the efficiency of production inputs, reforming business processes, economic growth and income equality, according to the definition of the World Bank, is a knowledge-based economy based on four components. Knowledge, education, innovation and incentive system are based on the fact that each of these four components plays a significant role in economic growth, national welfare and economic progress of the society. And what is the relationship between income inequality in Islamic countries? Can the knowledge-based economy reduce income inequality and make changes in it? What is the rate and percentage of influence of knowledge-based economy components and indicators on income inequality in Islamic countries?
The effect of the knowledge-based economy and its components including knowledge index, incentive system, education and innovation on reducing income inequality between Islamic countries is the aim of this research. Using the econometric method of panel data (completely modified least squares) factors affecting the reduction of income inequality in selected Islamic countries (Iran, Iraq, Lebanon, Pakistan, Qatar, Tajikistan, Turkmenistan, Saudi Arabia, Egypt, Bahrain and Syria) during the years 2008 Estimated to 2019. To analyze the data, the econometric method of panel data (completely corrected least squares) was used in Eviews10 software. To check the stationarity of the variables and also the long-term relationship between the variables, the unit root test and the Kao co-integration test were used, and for the panel significance test and the origin width effects test. Flimer and Hausman’s test was used for the observations, which was confirmed with a 99% probability level of the test being a panel and also with a 99% level of width from the origin with fixed effects. The combination of the components of the knowledge-based economy, which is a combination of indicators (knowledge, education, incentive system, and innovation), has a negative and significant effect on income inequality in the long term, in such a way that with one percent change in this component, the income inequality will decrease by 0.01 percent. Therefore, it can be said that the knowledge-based economy is effective in reducing income inequality, and the more knowledge-based economies of Islamic countries become, the more income inequality decreases, and the reduction of income inequality brings economic justice. The inflation variable has a positive and significant effect on income inequality. and according to the findings of the research, it can be written that an increase in inflation causes an increase in income inequality in Islamic countries so with a one percent increase in inflation, income inequality increases by an average of 0.025 percent. Inflation increases income inequality. Gross domestic product also has a negative and significant effect on income inequality in the long term, so a one percent increase in gross domestic product reduces income inequality by 0.06 percent on average. Therefore, as much as the GDP increases in Islamic countries, income inequality decreases by a factor of six percent. The education component has a negative and significant effect on income inequality so that a one percent increase in the education component reduces income inequality by 0.27 percent in Islamic countries. The knowledge component also has a negative and significant effect on income inequality in Islamic countries in such a way that a one percent increase in knowledge causes a 0.007 percent decrease in income inequality, and an increase in GDP and inflation also affects the income inequality of countries. According to the results of this research, points are suggested to reduce income inequality in Islamic countries in order to make the right policies for these countries with the aim of creating national welfare and economic justice. The relationship between the composite index of the components of the knowledge-based economy and income inequality is negative and significant, that is, the knowledge-based economy reduces income inequality. reduces, so Islamic countries need to strengthen and improve all the components of the knowledge-based economy, keeping in mind the conditions of their countries. Therefore, in order to reduce the inequality in income, in addition to economic prosperity and applying monetary and financial discipline policies to control inflation, the economic policymakers of Islamic countries should put increasing educational skills, increasing growth and technology centers, suitable business conditions and developing new businesses in their agenda. Development of skill-oriented manpower training infrastructures; Development of skill-oriented faculties; synergy between different educational authorities at different educational levels among Islamic countries; Establishing joint colleges and educational centers between Islamic countries; expanding science parks and growth centers in Islamic countries; Identifying business obstacles, especially in the field of internal regulations of countries; Creating clear and supportive laws for the development of knowledge-based businesses; creating national and joint funds in Islamic countries to support creative and knowledge-based businesses; Expanding the relationship between the academic community and the industry to create an incentive system should be put on the agenda.