This article may be confusing or unclear to readers.(December 2012)
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The knowledge economy (or the knowledge-based economy) is an economic system in which the production of goods and services is based principally on knowledge-intensive activities that contribute to advancement in technical and scientific innovation.The key element of value is the greater dependence on human capital and intellectual property for the source of the innovative ideas, information and practices. Organisations are required to capitalise this "knowledge" into their production to stimulate and deepen the business development process. There is less reliance on physical input and natural resources. A knowledge-based economy relies on the crucial role of intangible assets within the organisations' settings in facilitating modern economic growth.
A knowledge economy features a highly skilled workforce within the microeconomic and macroeconomic environment; institutions and industries create jobs that demand specialized skills in order to meet the global market needs.Knowledge is viewed as an additional input to labour and capital. In principle, one's primary individual capital is knowledge together with the ability to perform so as to create economic value.
In a knowledge economy, highly skilled jobs require excellent technical skills and relational skillssuch as problem-solving, the flexibility to interface with multiple discipline areas as well as the ability to adapt to changes as opposed to moving or crafting physical objects in conventional manufacturing-based economies. A knowledge economy stands in contrast to an agrarian economy, in which the primary economic activity is subsistence farming for which the main requirement is manual labour or an industrialized economy that features mass production in which most of the workers are relatively unskilled.
A 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 an information economy, which emphasizes the importance of information as non-physical capital, and a digital economy, which emphasizes 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.
An economic system that is not knowledge-based is considered to be inconceivable.It describes the process of consumption and production activities that are satisfied from the application of workers' expertise - intellectual capital and typically represents a significant level of individual economic activities in modern developed economies through building an interconnected and advanced global economy where sources of knowledge are the critical contributors.
The present concept for "knowledge" is origins from the historical and philosophical studies by Gilbert Ryleand Israel Scheffler who conducted knowledge to the terms "procedural knowledge" and "conceptual Knowledge" and identified two types of skills: "routine competencies or facilities" and "critical skills" that is intelligent performance; and it's further elaborated by Lundvall and Johnson who defined "knowledge" economically highlighting four broad categories:
In a knowledge economy, human intellectual is the key engine of economic enhancement. It is an economy where members acquire, create, disseminate and apply knowledge for facilitating economic and social development.The World Bank has spoken of knowledge economies by associating it to a four - pillar framework that analyses the rationales of a human capital based economies:
The advancement of a knowledge-based economy occurred when global economies promote changes in material production, together with the creation of rich mechanisms of economic theories after the second world war that tend to integrate science, technology and the economy.
Peter Drucker discussed the knowledge economy in the book-The Effective Executive 1966,where he described the difference between the manual workers and the knowledge workers. The manual worker is the one who works with their own hands and produces goods and services. In contrast, the knowledge worker works with their head, rather than hands, and produces ideas, knowledge as well as information.
Definitions around "knowledge" are considered to be vague in terms of the formalization and modelling of a knowledge economy, as it is rather a relative concept. For example, there is no sufficient evidence and consideration in whether the "information society" could serve or act as " knowledge society" interchangeably. Information in general, is not equivalent to knowledge. Their use depends on the individual and groups preferences which are "economy-dependent".Information and knowledge together are production resources that can exist without interacting with other sources. Resources are of highly independent of each other in a sense that if they connect with other available resources, they transfer into factors of productions immediately; and production factors are present only to interact with other factors. Knowledge associated with intellectual information then is said to be a production factor in the new economy that is distinguished from the traditional production factors.
From the early days of economic studies, though economists recognised the essential link between knowledge and economic growth, it was still identified only as a supplemental element in economic factors. The idea behind has transformed in recent years when new growth theory gave praise to knowledge and technology in enhancing productivity and economic advancement.
Thus far, the developed society has transitioned from an agriculture-based economy, that is, the pre-industrial age where economy and wealth is primarily based upon agriculture, to an industrial economy where the manufacturing sector was booming. In the mid-1900s, the world economies moved towards a post-industrial or mass production system, where it is driven by the service sector that creates greater wealth than the manufacturing industry; to the late 1900s - 2000s, knowledge economy emerged with the highlights of the power of knowledge and human capital sector, and is now marked as the latest stage of development in global economic restructuring.In the final decades of 20th century, the knowledge economy became greatly associated with sectors based in research-intensive and high-technology industries as a result of the steadily increased demand for sophisticated science-based innovations. Knowledge economy operates differently from the past as it has been identified by the upheavals (sometimes referred to as the knowledge revolution) in technological innovations and globally competitive need for differentiation with new goods and services, and processes that develop from the research community (i.e., R&D factors, universities, labs, educational institutes). Thomas A. Stewart points out that just as the industrial revolution did not end agriculture because people have to eat, the knowledge revolution is unlikely to end the industry because society remains in demands for physical goods and services. .
For the modern knowledge economies, especially the developed countries, information and knowledge have always taken on enormous importance in the development in either traditional or industrial economy, in particular for the efficient use of factors of production. Owners of production factors should possess and master information and knowledge so as to apply it during one's economic activity.In the knowledge economy, the specialised labor force is characterised 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 conventional notion of comparative advantages within a company has changed and is less relevant than the prevailing idea of competitive advantages which rests on "making more productive use of inputs, which requires continual innovation". As such, the technical STEM careers, including computer scientists, engineers, chemists, biologists, mathematicians, and scientific inventors will see continuous demand in years to come. Professor Porter further argues that a well situated clusters (that is, geographic concentrations of interconnected companies and institutions in a particular field) is vital with global economies, connect locally and globally 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 characterised 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, United States; 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 labour and better position themselves in the global competition.Yet, despite digital tools democratising access to knowledge, research shows that knowledge economy activities remain as concentrated as ever in traditional economic cores.
The prevailing and future economic development will be highly dominated by the technologies and network expansion, in particular on the knowledge-based social entrepreneurship and the entrepreneurship as a whole. The Knowledge economy is incorporating the network economy, where the relatively localised knowledge is now being shared among and across various networks for the benefit of the network members as a whole, to gain economies of scale in a wider, more open scale.
The rapid globalisation of economic activities is one of the main determinants of the emerging knowledge economy. While there are no doubts on the other stages of relative openness in the global economy, the prevailing pace and intensity of globalisation are of an extent without precedent.The fundamental microeconomic forces are the significant drives of globalising economic activities and further demands for human intelligence. Forces such as the rapid integration of the world financial and capital market since the early 1980s, which influences essentially on each level of the developed country's financial systems; increased multinational origin of the inputs to productions of both goods and services, technology transfers and information flow etc.
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.
|Wikiquote has quotations related to: Knowledge economy|
Human capital is a concept used by human resource professionals to designate personal attributes considered useful in the production process. It encompasses employee knowledge, skills, know-how, good health, and education, to name a few.
The means of production is a concept that encompasses the social use and ownership of the land, labor, and capital needed to produce goods, services, and their logistical distribution and delivery.
Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy over time. Statisticians conventionally measure such growth as the percent rate of increase in the real gross domestic product, or real GDP.
Internet design and usage influence other areas, and there are discussions about how big the influence of specific media or specific modes of production really is. Frank Webster notes five major types of information that can be used to define information society: technological, economic, occupational, spatial and cultural. According to Webster, the character of information has transformed the way that we live today. How we conduct ourselves centers around theoretical knowledge and information.
The digital divide refers to the gap between those who benefit from the Digital Age and those who do not. People without access to the Internet and other information and communication technologies (ICTs) are put at a socio-economic disadvantage, as they are unable or less able to obtain digital information, shop online, participate democratically, or learn and offer skills. This resulted in programs to give computers and related services to people without access.
Knowledge transfer refers to sharing or disseminating of knowledge and providing inputs to problem solving. In organizational theory, knowledge transfer is the practical problem of transferring knowledge from one part of the organization to another. Like knowledge management, knowledge transfer seeks to organize, create, capture or distribute knowledge and ensure its availability for future users. It is considered to be more than just a communication problem. If it were merely that, then a memorandum, an e-mail or a meeting would accomplish the knowledge transfer. Knowledge transfer is more complex because:
The creative industries refers to a range of economic activities which are concerned with the generation or exploitation of knowledge and information. They may variously also be referred to as the cultural industries (especially in Europe or the creative economy, and most recently they have been denominated as the Orange Economy in Latin America and the Caribbean.
Knowledge workers are workers whose main capital is knowledge. Examples include programmers, physicians, pharmacists, architects, engineers, scientists, design thinkers, public accountants, lawyers, editors, and academics, whose job is to "think for a living".
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.
Post-capitalism is a state in which the economic systems of the world can no longer be described as forms of capitalism. Various individuals and political ideologies have speculated on what would define such a world. According to some classical Marxist and some social evolutionary theories, post-capitalist societies may come about as a result of spontaneous evolution as capitalism becomes obsolete. Others propose models to intentionally replace capitalism. The most notable among them are socialism, anarchism, and degrowth.
In economics, deskilling is the process by which skilled labor within an industry or economy is eliminated by the introduction of technologies operated by semi- or unskilled workers. This results in cost savings due to lower investment in human capital, and reduces barriers to entry, weakening the bargaining power of the human capital. Deskilling is the decline in working positions through the machinery introduced to separate workers from the production process.
Innovation economics is new and growing field of economic theory and applied and experimental economics that emphasizes innovation in business and entrepreneurship, also entrepreneurship and innovation. It comprises both the application of any type of innovations, especially technological, but not only, into economic use, in classical economics this is the application of customer new technology into economic use; but also it could refer to the field of innovation and experimental economics that refers the new economic science developments that may be considered innovative. In his 1942 book Capitalism, Socialism and Democracy, economist Joseph Schumpeter introduced the notion of an innovation economy. He argued that evolving institutions, entrepreneurs and technological changes were at the heart of economic growth. However, it is only in recent years that "innovation economy," grounded in Schumpeter's ideas, has become a mainstream concept".
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:
The Knowledge Indexes were designed as an interactive tool for benchmarking a country's position vis-a-vis others in the global knowledge economy. It was created by the World Bank Institute using the Knowledge Assessment Methodology (KAM). The World Bank discontinued the index after 2012. 'A joint initiative between the United Nations Development Programme (UNDP) and the Mohammed Bin Rashid Al Maktoum Knowledge Foundation (MBRF)' created 'The Global Knowledge Index (GKI) from Knowledge4All' as a replacement. An EBRD 'Knowledge Economy Index' documented in a 2019 publication uses indicators like institutional & legal frameworks , number of technical graduates, research spending number of patents, some measure of collaboration, and amount of venture capital. In total there are 38 contributing indicators described in the ERBD index methodology.
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.
Technology society and life or technology and culture refers to the inter-dependency, co-dependence, co-influence, and co-production of technology and society upon one another. Evidence for this synergy has been found since humanity first started using simple tools. The inter-relationship has continued as modern technologies such as the printing press and computers have helped shape society. The first scientific approach to this relationship occurred with the development of tektology, the "science of organization", in early twentieth century Imperial Russia. In modern academia, the interdisciplinary study of the mutual impacts of science, technology, and society, is called science and technology studies.
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.
21st century skills comprise skills, abilities, and learning dispositions that have been identified as being required for success in 21st century society and workplaces by educators, business leaders, academics, and governmental agencies. This is part of a growing international movement focusing on the skills required for students to master in preparation for success in a rapidly changing, digital society. Many of these skills are also associated with deeper learning, which is based on mastering skills such as analytic reasoning, complex problem solving, and teamwork. These skills differ from traditional academic skills in that they are not primarily content knowledge-based.