In the epoch of modern globalization, knowledge economy has become a prolific approach in the 21st century because of its self-sustaining capability to survive in the coming global economic battle and its growing importance as one of the key sources of growth in the global economy where organizations and people acquire, create, disseminate and use knowledge more efficiently for the greater aspect of economic and social development as well. It has a unique role to restructuring at the latest stage of development considering its core philosophy towards the sustainable global economic challenge. Here, the core idea of the knowledge driven economy is not merely a demonstration of high tech industries; it means something more than of its traditional concept, a set of new sources of competitive advantage which can easily be applied to all sectors, all companies and all regions at the same time to establish its feasibility in an effective manner.
“Knowledge Economy”, the phrase was popularized by Peter Drucker as the title of Chapter 12 in his book “The Age of Discontinuity”. But, 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 subtle difference between the manual worker and the knowledge worker. According to him, the manual worker works with his or her hands and produces goods or services. In contrast, a knowledge worker works with his or her head, not hands, and produces ideas, knowledge and information.
There are three driving forces of knowledge economy such as Globalization, Information or Knowledge Intensity, and Networking and Connectivity. Here, the impact of globalization is obvious in the fields of R&D, technology, production, trade, finance, communication and information, which has resulted in opening of economies, global hyper competition and interdependency of business. But, an efficient production relies on information and know-how; over 70 per cent of workers in developed economies are information workers; many factory workers use their heads more than their hands. And last of all, networking and connectivity that bring the 'global village' ever nearer.
In true sense, significance of knowledge economy utterly depends on the proper utilization of a country’s tangible and intangible assets both to boost up the sustainable economic growth and the social development; but, comparatively, intangible assets such as knowledge, skills and innovative ideas have become the key resources in the present global economic battle. Here, innovative technologies, creative ideas, economic competition, abundant information, and vast quantities of data are significant factors to be acknowledged to materialize the concept of knowledge economy meaningful and effective.
Designing framework is an integral part of knowledge economy and so, it should be innovative and concrete. The purpose of the World Bank's Knowledge Economy framework is to evaluate the quality, adaptation, and use of knowledge in an economy with the goal of creating effective knowledge economies to compete with the advanced world. Therefore, it is knowledge economy which utilizes knowledge to develop and sustain long-term economic growth.
According to the World Bank, an innovative knowledge economy framework consists of four pillars that help countries articulate strategies for their transition to a knowledge economy and these are needed to support a successful knowledge economy. The first pillar of knowledge economy is an economic and institutional regime that is helpful to the creation, diffusion, and utilization of knowledge. The second pillar is a well-educated and skilled population that creates, shares, and uses knowledge efficiently. The third pillar is a dynamic information infrastructure that facilitates the communication, dissemination, and processing of information and technology. The forth and the final pillar is, an efficient innovation system of firms, research centers, universities, consultants, and other organizations that applies and adapts global knowledge to create new technology. With the proper combination of these pillars, any country can pave its long-term sustainability in the prospect of economic growth.
In the global economic battle technological perfection is highly desirable, which largely depends on the technological creative knowledge; where internet, mobile technologies and social media are interdependence to each other that make global economy journey sustainable and feasible to go ahead smoothly. Here, it is also predicted by the researchers that the most important thing in the coming economy model will be knowledge and skills intensive economy, not the material products or the infrastructures. Therefore, it is important to know for a country or an organization how to refocus on knowledge, innovation and collaboration in a constant way to evolving and changing work environment.
The concept of “knowledge revolution” which manifests itself in many different ways: there are closer links between science and technology where innovation is more important for economic growth and competitiveness. Importance of education and life-long learning are highly appreciable. More investment is undertaken in intangible values such as R&D, Software and Education which is even greater than investments in fixed capital.
In Asia, developed countries like Japan, Singapore and South Korea are going ahead with credits and rest of the developing countries in Asian yet lagging behind and so, to keep peace with the advanced world they need to invest more specially in higher education and training, innovation and information technology as well. According to the World Bank, countries that score higher on knowledge economy indicators have higher levels of economic development.
Knowledge Economy Index includes some measures such as economic incentives for using new and existing knowledge, a highly educated and skilled population, an efficient system for innovation adoption including research centers and the use of information technologies. Here, ADB mentions that major advanced countries in the OECD (Organization for Economic Co-operation and Development) more than 50% of gross domestic product is estimated to be knowledge-based, made the transition to knowledge economies decades ago. So, there is huge potential for Asia to take the lead globally.
In this connection, the advanced countries will be beneficiary because they have all the elements such as highest rate of education, research-based work, innovative ideas, skilled manpower, equal opportunities for all and many more rare qualities that are greatly urged for the sustainable developmental efforts whereas, in the undeveloped and in the developing countries most of the valuable assets of development are greatly absent which are the yardstick of any kind of progress. So, the gap between the developed and the underdeveloped or the developing countries are ever widening because of their limited awareness, poor economic incentive regimes, and weak institutions. Therefore, to capitalize on the knowledge revolution, developing countries need to enhance their strengths and carefully plan for appropriate investments in human capital.
Without having good policies, it will be beyond our imagination to make the economic environment sustainable and favorable to the market transactions. Therefore, an effective policy plays a vital role to make any effort to be a successful one. The Skills & Innovation Policy (SIP) program includes five main product lines that are focused on clients' transition to the knowledge economy and sustainable knowledge management system. Firstly, knowledge economy products that allow us to meet the needs of different clients of different countries; secondly, knowledge economy studies which create opportunities to have the real taste of global learning and experience; thirdly, learning events that are helpful to build up knowledge and skills; fourthly, knowledge product tools which support our learning events, websites, and the knowledge assessment methodology and finally, knowledge management system that promotes economic sustainability.
Therefore, it is important to apply policy effectively. Traditional measures of economic success must be supplemented by new ones and the economic development policy should not focus only on 'jobs creation' but on infrastructure for sustainable 'knowledge enhancement' that acts as a magnet for knowledge-based. A new forms of collaboration need to stimulate market development as well.
But, the journey of knowledge economy is not smooth enough to go; there remains a lot of challenging issues for the policy makers and business leaders. They know it well that it will be a difficult one to 'go it alone'. Sharing ideas of a successful business journey, earnest efforts and initiatives are the key factors to overcome a challenging situation.
Though the importance and the advantages of evolving knowledge economy have been demonstrated mostly throughout the writing, nevertheless, it has some negative impacts on our total global economy. It creates an arguable criticism regarding employment opportunity, job security and wage inequality. A significant mismatch has been noticed between the skills of a large number of workers and the skills required for success in a knowledge economy and these differences in skills contribute to the growing wage inequality in the job market and this is why, demand for low-skilled labor is much less in comparison with demand for high-skilled workers. Here, technology based knowledge economy increases our productivity and at the same time, it decreases employment opportunities as it requires fewer workers to perform.
To win the battle of coming global economic challenge, we need a sustainable global economic policy, innovative ideas, advanced technologies and knowledge intensive economy. Myself, as an opinion writer, I will obviously go with the recent concept of global knowledge economy as, it endows with unique ideology, self-sustaining methodology, efficient policy making ideas, targeting facts and strategy -all these ingredients make itself unique one that surpasses all of our traditional concepts of economy. But, it will be a daunting task especially for the third world countries like Bangladesh to execute the concept as we have limited resources, ever-growing population, poor technology and poor literacy rate; nevertheless, we have ample opportunity to demonstrate Bangladesh as a new comer before the world in the arena of global knowledge economy challenge emphasizing its recent achievements in the field of economic success and the technological advancement as well.
The writer is Assistant Deputy Secretary, Bangladesh Knitwear Manufacturers and Exporters Association, (BKMEA). E-mail: [email protected]