The developing pattern of Knowledge Based Economy (KBE) causes essential changes in economic-social structures in which education is one of the important infrastructures. According to The main pillar of this new pattern that is effective use of human capital, all levels of education especially the basic education, which is the main basis of the other levels, become more important than before. But developing countries have serious problems in this level. Investigating this issue includes other important subjects such as the role of institutional framework of economy and the effects in labor market. Therefore this article focuses on the explanation of importance of basic education in achieving KBE in Iran and identifying the related challenges based on institutional theory. Results of this survey -using descriptive-analytical procedure- shows that first; the institutional structure in Iran has not been based on knowledge, so that it cannot lead the economic activities toward it. The second is that although the percentage of employees with basic education degree is higher than other formal educational levels in labor market in Iran, this level and its challenge shave not got enough attention. By continuity of these two, Iran will face lots of problems in achieving KBE.