In recent years, emphasis in development studies has shifted toward knowledge creation and innovation that fosters economic growth and sustain development. Globalization is offering new opportunities, especially for developing countries, to acquire knowledge, information and skills for building capacity for development. Modern information and communication technologies (ICTs) are empowering countries to diversify the economic structure and enhance sectoral productivity through access to global markets. In this age of information, individuals, organizations and institutions are able to enhance communication and increase collaboration through social networking aimed at promoting innovation and improving global competitiveness. Digital technologies can be used to bridge the digital divide between rich and poor countries as a mechanism designed not only to increase connectivity and improve services, but also to facilitate innovation and capacity building for development. The aim of this paper is to examine the role that digital technologies plays in economic diversification in GCC countries. Digital technologies encourage investment in manufacturing production and knowledge creation, which stimulates linkages and support diversification. To this end, building capacity for digital economy could have a profound impact on the ability of these countries to speed up the process of socioeconomic transformation involving reduction of dependency on oil production.