Understanding Knowledge Driven Economy and Society: Why it takes different policy?

Dr. Sikder Md. Anowarul Islam

Knowledge based economy is a growing stimulus in the digital age and connectivity. Low and middle income countries are overpopulated and fatality rate is very high compared to industrialized countries. The government has ample challenge to mitigate the growing needs of the competitive society, especially focusing on employment generation and infrastructure development. But poor knowledge infrastructure especially in case of higher education is under confused destination in terms of quality education and revenue maximization-with a view to private sector education management and development. Public sector education in the developing countries is mismatched by the incentive government intervention with view to cater the needs of so called political agenda. As otherwise, the private sector higher education are suffering from low infrastructure-controlling by the so called elite society, of those, who are very much eager to maximize revenue instead of building and focusing quality education, so far. Private education market is very much venerable with the supply of confused education standard, which are rationing by the recruiters for their own interest of recruitment policy. Recently, higher education is banding by the accreditation agencies to overcome these adverse situation, but the process is still debatable in many countries.  Therefore, dream of building quality education in the low and middle income countries-with a view to explore global standard of ‘knowledge driven society’ is far away to drive the equitable knowledge driven economy-with a lead to  knowledge based society. The low and middle income country may increase by 3 percent GDP growth if they are able to compete global new knowledge by improving knowledge driven economy. Less competitive knowledge driven economy can’t comply ‘extensive research and development’- which are the key source of economic growth and productivity-where human capital are surplus and easy to grow. Nations Commission on Science and Technology for Development report (UNCSTD, 1997) concluded that for developing countries to successfully integrate ICTs and sustainable development in order to participate in the knowledge economy they need to intervene collectively and strategically. Such collective intervention suggested would be in the development of effective national ICT policies-that support the new regulatory framework, promote the selected knowledge production, and use of ICTs and harness their organizational changes to be in line with the Millennium Development Goals. The knowledge economy is the use of knowledge to generate tangible and intangible values. Technology and in particular knowledge technology help to transform a part of human knowledge to machines. This knowledge can be used by decision support systems in various fields and generate economic values. Knowledge economy is also possible without technology. Other than the agricultural-intensive economies and labor-intensive economies, the global economy is in transition to a “knowledge economy” as an extension of an “information society” in information age led by intensive modern innovation and technology. The transition requires that the rules and practices that determined success in the industrial economy need rewriting in an interconnected, globalized economy, where knowledge resources such as trade secrets and expertise are as critical as other economic resources. A key concept of the knowledge economy is that knowledge and education (often referred to as “human capital’’) can be treated as one of the following two:

  • A business product, as educational and innovative intellectual products and services can be exported for a high value return.
  • A productive asset

It can be defined as production and services based on knowledge-intensive activities that contribute to an accelerated pace of technical and scientific advance, as well as rapid obsolescence. The key component of a knowledge economy is a greater reliance on intellectual capabilities than on physical inputs or natural resources. The knowledge economy is also seen as the latest stage of development in global economic restructuring. Thus far, the developed world has transitioned from an agricultural economy (pre-Industrial Age, largely the agrarian sector) to industrial economy (with the Industrial Age largely the  manufacturing sector) to post industrial/mass production economy (mid-1900s, largely the service sector) to knowledge economy (late 1900s – 2000s, largely the technology/human capital sector sector). This latest stage has been marked by the upheavals in technological innovations and the globally competitive need for innovation with new products and processes that develop from the research community (i.e., R&D factors, universities, labs, educational institutes). In the knowledge economy, the specialized labor force is characterized as computer literate and well-trained in handling data, developing algorithms and simulated models, and innovating on processes and systems. Harvard Business School Professor, Michale Porter asserts that today’s economy is far more dynamic and that comparative advantage is less relevant than competitive advantage which rests on “making more productive use of inputs, which requires continual innovation”. Worldwide examples of the knowledge economy taking place among many others include: Silicon Valley in California; aerospace and automotive engineering in Munich, Germany; biotechnology in Hyderabad, India; electronics and digital media in Seoul, South Korea; petrochemical and energy industry in Brazil. It has been suggested that the next evolutionary step after knowledge economy is the networking economy where the relatively localized knowledge is now being shared among and across various networks for the benefit of the network members as a whole, to gain economic of scale in a wider, more open scale. Commentators suggest there are various interlocking driving forces, which are changing the rules of business and national competitiveness:

  • Globalization— markets and products are more global.
  • Regulatory Framework– Equitable international regulatory framework for open access to goods and services.
  • Information technology, which is related to next three:
    • Information/ knowledge Intensity — efficient production relies on information and knowhow; over 70 per cent of workers in developed economies are information workers many factory workers use their heads more than their hands.
    • New Media New media increases the production and distribution of knowledge which in turn, results in collective intelligence. Existing knowledge becomes much easier to access as a result of networked data-bases which promote online interaction between users and producers.
    • Computer networking and Connectivity– developments such as the  Internet bring the ” “Global village” ever nearer.

As a result, goods and services can be developed, bought, sold, and in many cases even delivered over electronic networks. As regards the applications of any new technology, this depends on how it meets economic demand. It can be argued that the knowledge economy differs from the traditional economy in several key respects:

  • The economics are not of scarcity, but rather of abundance. Unlike most resources that become depleted when used, information and knowledge can be shared, and actually grow through application.
  • The effect of location is either diminished, in some economic activities: using appropriate technology and methods, virtual market places and virtual organizations that offer benefits of speed, agility, round the clock operation and global reach can be created.
  • or, on the contrary, reinforced in some other economic fields, by the creation of business clusters around centres of knowledge, such as universities and research centres. However, clusters already existed in pre-knowledge economy times.
  • Laws, barriers, taxes and ways to measure are difficult to apply solely on a national basis. Knowledge and information “leak” to where demand is highest and the barriers are lowest.
  • Knowledge enhanced products or services can command price premiums over comparable products with low embedded knowledge or knowledge intensity.
  • Pricing and value depends heavily on context. Thus the same information or knowledge can have vastly different value to different people, or even to the same person at different times.
  • Knowledge when locked into systems or processes has higher inherent value than when it can “walk out of the door” in people’s heads.
  • Human capital — competencies — are a key component of value in a knowledge-based company, yet few companies report competency levels in annual reports. In contrast, downsizing is often seen as a positive “cost cutting” measure.
  • Communication is increasingly being seen as fundamental to knowledge flows. Social structures, cultural context and other factors influencing social relations are therefore of fundamental importance to knowledge economies.

These characteristics require new ideas and approaches from policy makers, managers and knowledge workers. The knowledge economy has manifold forms in which it may appear but there are predictions that the new economy will extend radically, creating a pattern in which even ideas will be recognised and identified as a commodity. This certainly is not the best time to make any hasty judgment on this contention, but considering the very nature of ‘knowledge’ itself, added to the fact that it is the thrust of this new form of economy, there certainly is a clear way forward for this notion, though the particulars (i.e. the quantum of the revolutionary approach and its applicability and commercial value), remain in the speculative realm, as of now. The low and middle income countries have to value the knowledge driven economy to absorb their surplus labour in the information technology module. Extensive budget on information technology development, knowledge management, intellectual property rights and efficient regulatory framework are essential to comply with global standard knowledge driven economy and steady state productivity in both developing and industrialized countries. References:

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