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The knowledge economy (or the knowledge-based economy) is the use of knowledge to create goods and services. In particular, it refers to a high portion of skilled workers in the economy of a locality, country, or the world, and the idea that most jobs require specialized skills. In particular, the main personal capital of knowledge workers is knowledge, and many knowledge worker jobs require much thinking and manipulating information as opposed to moving or crafting physical objects. It stands in contrast to an agrarian economy (where the primary activity is subsistence farming for which the main requirement is manual labor) or an industrialized economy (which has mass production but where most jobs are relatively unskilled). Knowledge economy emphasizes the importance of skills in a service economy, the third phase of economic development, also called a post-industrial economy. It is related to the terms information economy, which emphasizes the importance of information as non-physical capital, and digital economy, which emphasize the degree to which information technology facilitates trade. For companies, intellectual property such as trade secrets, copyrighted material, and patented processes become more valuable in a knowledge economy than in earlier eras.
The global economy transition to a knowledge economyis also referred to as the Information Age, bringing about an information society. The term knowledge economy was made famous by Peter Drucker as the title of Chapter 12 in his book The Age of Discontinuity (1969), that Drucker attributed to economist Fritz Machlup, originating in the idea of scientific management developed by Frederick Winslow Taylor.
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:
It can be defined as:
[P]roduction 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 initial foundation for the knowledge economy was introduced in 1966 in the book The Effective Executive by Peter Drucker. In this book, Drucker described the difference between the manual worker (page 2) and the knowledge worker. The manual worker, according to him, works with their hands and produces goods or services. In contrast, a knowledge worker (page 3) works with their head, not hands, and produces ideas, knowledge, and information.
The key problem in the formalization and modeling of knowledge economy is a vague definition of knowledge , which is a rather relative concept. For example, it is not proper to consider information society as interchangeable with knowledge society . Information is usually not equivalent to knowledge. Their use depends on individual and group preferences (see the cognitive IPK model) which are "economy-dependent".
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). This latest stage has been marked by the upheavals (sometimes referred to as the knowledge revolution) 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). Thomas A. Stewartpoints out that just as the industrial revolution did not end agriculture because people have to eat, the knowledge revolution is unlikely to end industry because people still need physical products.
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, Michael 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".Consequently, the technical STEM careers including computer scientists, engineers, chemists, biologists, mathematicians, and scientific inventors will see continuous demand in years to come. Additionally, well-situated clusters, which Michael Porter argues is vital in global economies, connect locally with linked industries, manufacturers, and other entities that are related by skills, technologies, and other common inputs. Hence, knowledge is the catalyst and connective tissue in modern economies. Ruggles and Holtshouse argue the change is characterized by a dispersion of power and by managers who lead by empowering knowledge workers to contribute and make decisions.
With Earth's depleting natural resources, the need for green infrastructure, a logistics industry forced into just-in-time deliveries, growing global demand, regulatory policy governed by performance results, and a host of other items high priority is put on knowledge; and research becomes paramount. Knowledge provides the technical expertise, problem-solving, performance measurement and evaluation, and data management needed for the trans-boundary, interdisciplinary global scale of today's competition.
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. Many other cities and regions try to follow a knowledge-driven development paradigm and increase their knowledge base by investing in higher education and research institutions in order to attract high skilled labor and better position themselves in the global competition.Yet, despite digital tools democratizing access to knowledge, research shows that knowledge economy activities remain as concentrated as ever in traditional economic cores.
It has been suggested[ by whom? ] that the next evolutionary step after knowledge economy is the network 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. It has been hypothesized that the gradual evolution of network economy would create a well interconnected economic order, which would then begin to concentrate on the passion of individuals, gradually leading to a Passion based economy.
The technology requirements for a national innovation system as described by the World Bank Institute must be able to disseminate a unified process by which a working method may converge scientific and technology solutions, and organizational solutions.According to the World Bank Institute's definition, such innovation would further enable the World Bank Institute's vision outlined in their Millennium Development Goals.
The United 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 report further suggests that developing countries to develop the required ICT strategies and policies for institutions and regulations taking into account the need to be responsive to the issues of convergence. Inspiration Economy
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Kista is a district in the borough of Rinkeby-Kista, Stockholm, Sweden. It has a strategic position located in between Sweden's main airport, the Stockholm-Arlanda International Airport and central Stockholm, and alongside the main national highway E4 economic artery. Kista comprises residential and commercial areas, the latter in the highly technological telecommunication and information technology industry. There are large research efforts in this entire area, which therefore is dubbed Kista Science City. It is the research park of KTH Royal Institute of Technology.
Innovation in its modern meaning is "a new idea, creative thoughts, new imaginations in form of device or method". Innovation is often also viewed as the application of better solutions that meet new requirements, unarticulated needs, or existing market needs. Such innovation takes place through the provision of more-effective products, processes, services, technologies, or business models that are made available to markets, governments and society. An innovation is something original and more effective and, as a consequence, new, that "breaks into" the market or society. Innovation is related to, but not the same as, invention, as innovation is more apt to involve the practical implementation of an invention to make a meaningful impact in the market or society, and not all innovations require an invention. Innovation often manifests itself via the engineering process, when the problem being solved is of a technical or scientific nature. The opposite of innovation is exnovation.
An information society is a society where the usage, creation, distribution, manipulation and integration of information is a significant activity. Its main drivers are information and communication technologies, which have resulted in rapid information growth in variety and is somehow changing all aspects of social organization, including education, economy,, health, government, warfare, and levels of democracy. The people who are able to partake in this form of society are sometimes called either computer users or even digital citizens, defined by K. Mossberger as “Those who use the Internet regularly and effectively”. This is one of many dozen internet terms that have been identified to suggest that humans are entering a new and different phase of society.
Information economy is an economy with an increased emphasis on informational activities and information industry.
The United Nations Information and Communication Technologies Task Force was a multi-stakeholder initiative associated with the United Nations which is "intended to lend a truly global dimension to the multitude of efforts to bridge the global digital divide, foster digital opportunity and thus firmly put ICT at the service of development for all".
Knowledge workers are workers whose main capital is knowledge. Examples include programmers, physicians, pharmacists, architects, engineers, scientists, design thinkers, public accountants, lawyers, and academics, and any other white-collar workers, whose line of work requires one to "think for a living".
Directorate-General for Communications Networks, Content and Technology is a Directorate-General of the European Commission. DG Connect is responsible for managing the Digital Agenda.
The term information revolution describes current economic, social and technological trends beyond the Industrial Revolution. The information revolution was enabled by advances in semiconductor technology, particularly the metal–oxide–semiconductor field-effect transistor (MOSFET) and the integrated circuit (IC) chip, leading to the Information Age in the early 21st century.
An economy is an area of the production, distribution and trade, as well as consumption of goods and services by different agents. Understood in its broadest sense, 'The economy is defined as a social domain that emphasize the practices, discourses, and material expressions associated with the production, use, and management of resources'. A given economy is the result of a set of processes that involves its culture, values, education, technological evolution, history, social organization, political structure and legal systems, as well as its geography, natural resource endowment, and ecology, as main factors. These factors give context, content, and set the conditions and parameters in which an economy functions. In other words, the economic domain is a social domain of human practices and transactions. It does not stand alone.
Zoltan J. Acs is an American economist. He is Professor of Management at The London School of Economics (LSE), and a professor at George Mason University, where he teaches in the Schar School of Policy and Government and is the Director of the Center for Entrepreneurship and Public Policy. He is also a visiting professor at Imperial College Business School in London and affiliated with the University of Pecs in Hungary. He is co-editor and founder of Small Business Economics, a leading academic journal.
Informatization or informatisation refers to the extent by which a geographical area, an economy or a society is becoming information-based, i.e. the increase in size of its information labor force. Usage of the term was inspired by Marc Porat’s categories of ages of human civilization: the Agricultural Age, the Industrial Age and the Information Age (1978). Informatization is to the Information Age what industrialization was to the Industrial Age. It has been stated that:
A technological revolution is a period in which one or more technologies is replaced by another technology in a short amount of time. It is an era of accelerated technological progress characterized by new innovations whose rapid application and diffusion cause an abrupt change in society.
Information and communication technologies for environmental sustainability or Green ICT as per the International Federation of Global & Green ICT "IFGICT" is a general term referring to the application of information and communication technologies (ICTs) within the field of environmental sustainability. Information and communication technologies are acting as integrating and enabling technologies for the economy and they profoundly affect our society. Recent changes in ICT use globally have damaged the environment but also have the potential to support environmental sustainability activities, such as the targets set within the Millennium Development Goal (MDG) number 7 (MDG7) to "ensure environmental sustainability".
The Egyptian Ministry of Communications and Information Technology (MCIT) is the government body responsible for information and communications technology (ICT) issues in the Arab Republic of Egypt. Established in 1999, MCIT is responsible for the planning, implementation and operation of government ICT plans and strategies. MCIT is led by the Minister of Communications and Information Technology, who is nominated by the Prime Minister and is a member of the cabinet. The current ICT Minister is Amr Talaat who assumed the position on 14 June 2018. MCIT is headquartered in Smart Village Egypt, in 6th of October, Giza Governorate, in the Cairo metropolitan area.
A knowledge society generates, shares and makes available to all members of the society knowledge that may be used to improve the human condition. A knowledge society differs from an information society in that the former serves to transform information into resources that allow society to take effective action while the latter only creates and disseminates the raw data. The capacity to gather and analyze information has existed throughout human history. However, the idea of the present-day knowledge society is based on the vast increase in data creation and information dissemination that results from the innovation of information technologies. The UNESCO World Report addresses the definition, content and future of knowledge societies.
A creative economy is based on people's use of their creative imagination to increase an idea's value. John Howkins developed the concept in 2001 to describe economic systems where value is based on novel imaginative qualities rather than the traditional resources of land, labour and capital.: Compared to creative industries, which are limited to specific sectors, the term is used to describe creativity throughout a whole economy.
The Ministry of Information and Communications Technology (ictQATAR) was established within the new cabinet formation announced in June 2013 to be an extension of the Supreme Council of Information and Communication Technology that was established under Emiri Decree Law no. 36 of 2004.
Knowledge industries are those industries which are based on their intensive use of technology and/or human capital. While most industries are dependent in some way on knowledge as inputs, knowledge industries are particularly dependent on knowledge and technology to generate revenue. Some industries that are included in this category include education, consulting, science, finance, insurance, health service, and communications. The term "knowledge industry" was suggested by Austrian-American economist Fritz Machlup to describe these industries in the context of his new idea of the knowledge economy.
Digital agriculture refers to tools that digitally collect, store, analyze, and share electronic data and/or information along the agricultural value chain. Other definitions, such as those from the United Nations Project Breakthrough, Cornell University, and Purdue University, also emphasize the role of digital technology in the optimization of food systems.