The term ‘Knowledge-Based Economy (KBE)’ is considered as an important strategy for the development of a country. It plays a crucial role to develop economic processes. It is therefore, critical to assess the KBE based on predefined Key Performance Indicators (KPI).  The aim of this research is to give an overview of the KPIs, which are accumulated based on extensive literature survey and can be usable to assess the Knowledge-Based Economies. This assessment process was specially focused to measure the influence of higher education institutions on corresponding process of transition towards a knowledge-based economy. The research also explores a number of currently available KPI frameworks that are introduced by international organizations (e.g. World Bank Institute, Organization for Economic Co-operation and Development, Asia-Pacific Economic Cooperation, Australian Bureau of Statistics and European Commission) to assess KBE. Based on the shortcomings of available frameworks, this research proposes a hybrid framework that can be used to assess KBE. This proposed framework is more comprehensive in addressing the role of the higher education institutions such as colleges and universities in the development of knowledge based economy.