Towards a global knowledge economy

In the epoch of globalization, knowledge economy has become a prolific approach because of its self-sustaining capability to survive in the coming global economic battle and its rising 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.

 It has a unique role to restructure 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 its traditional concept, a set of new sources of competitive advantage that can easily be applied to all sectors, all companies and all regions at the same time to establish its feasibility in an effective manner.

The term "Knowledge Economy", was popularized by Peter Drucker in the title of Chapter 12 in his book "The Age of Discontinuity". But, the initial foundation for knowledge economy was introduced in 1966 in his book "The Effective Executive".

 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.


Peter Drucker also emphasizes that knowledge economy is a relative concept? a vague definition of knowledge, which creates the key problem in the formalization and modeling of knowledge.

 Because, it is not proper to consider information society interchangeable with knowledge society; information is usually not equivalent to knowledge as their uses depend on individual and group preferences which are "economy-dependent".

 Here, due to the recent triumph of ICT, all traditional economic patterns have been changed now; a new concept of knowledge economy has been introduced which is playing a vital role to meet up the today's challenge of globalizing.

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 competition and interdependency of business.

But an efficient production relies on information and know-how; over 70% of workers in developed economies are information workers; many factory workers use their heads more than their hands and networking and connectivity that bring the people nearer.

In true sense, significance of knowledge economy utterly depends on the proper utilization of a country's both tangible and intangible assets 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 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 that largely depends on the technological creative knowledge where internet, mobile technologies and social media are interdependent that make global economic journey sustainable and feasible to go ahead smoothly.

 The concept of "knowledge revolution" 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 that 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 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. 

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.

On the other hand, in the undeveloped and developing countries most of the valuable assets of development are greatly absent which are the yardstick of progress. So, the gap between the developed and the undeveloped 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.

With the passage of time, the developed countries have gradually transitioned from an agricultural economy to knowledge economy. In the knowledge economy, the dedicated labor force is regarded as computer literate and well trained in handling data, developing systems and simulated models.

Michael Porter, a professor of Harvard Business School 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". Therefore, innovation with every new products and processes is highly desirable that will definitely develop from our research community.

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 and Innovation Policy program includes five main product lines that focus on clients' transition to the knowledge economy and sustainable knowledge management system.

Firstly, knowledge economy products 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 are helpful to build up knowledge and skills.

Fourthly, knowledge product tools support our learning events, websites, and the knowledge assessment methodology. Finally, knowledge management system promotes economic sustainability. However, the importance and the advantages of evolving knowledge economy have some negative impacts on our total global economy. It creates a 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 decreases employment opportunities as it requires fewer workers to perform.

 So, low demand contributes to decreasing wages whereas, high demand will lead to increasing wages as employers compete for the short supply of skilled workers. Having some demerits, knowledge economy still creates its unique value towards a sustainable global economy with the help of modern technology, globalization and creative ideas collectively.

It is obligatory to analyze whether we should go through the recent concept of global knowledge economy or to harmonize the traditional one. In this regard, it will be a difficult one to predict its sustainability. Someone prefers to keep traditional concept of economy; someone likes to take new challenges and rest of the groups observe the situation eagerly and seize the opportunity in time.

 In true sense, knowledge is the most valuable skill based product to be sold where a good education is no longer just a pathway to opportunity; it is the demand of true economy to encourage workers with higher education degrees and all workers having broader knowledge and skills at the same time.

To win the battle of coming global economic challenge, we need a sustainable global economic policy, innovative ideas, advanced technologies and knowledge intensive economy. I will obviously go with the recent concept of global knowledge economy as it endows with unique ideology, self-sustaining methodology, efficient policymaking ideas targeting facts and strategy ?all these ingredients make it unique 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 many opportunities to demonstrate Bangladesh as an emerging talent before the world in the arena of global knowledge economic challenge emphasizing its recent achievements in the field of economic success and the technological advancement as well.

The writer is Assistant Deputy Secretary in Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA)