Clear Facts about Knowledge-Based Economies
From the origins of human history, knowledge has played a critical role in human development. However, in today’s chaotic world, which is driven by high levels of competitiveness and pandemic outbreaks, knowledge generation has lately become a more essential element.
As a result, some economies are putting a greater emphasis on information generation, transmission, and preservation in order to face current and future challenges.
Some developed economies have adopted an essential policy for generating revenue in an economic system to expand the stock of knowledge generated in order to appropriate the profits for the application of this new information.
As a result, there is a twofold effect: increasing information stock has a beneficial influence on GDP, while increasing GDP leads to more resources available for new knowledge development.
The knowledge economy is supported and fueled by innovation, research, and rapid technological advancement. The existence of a greater percentage of highly trained individuals whose occupations demand specific abilities characterizes the knowledge economy.
Unlike in the past, when the economy was based primarily on unskilled labor and the production of physical goods, the modern economy is based on service industries and jobs that require critical thinking and data analysis, as well as the development of algorithms and artificial intelligence, which are becoming increasingly important.
Furthermore, in the modern knowledge economy, a company’s most valuable assets are frequently intangible resources, such as patents, copyrights, or proprietary software or procedures.
It differs from earlier economic eras, such as the agricultural economy, in which land was generally the most valuable asset, and the industrial economy, in which manufacturing plants and equipment were the most valuable assets for most enterprises.
The Main Cornerstones of the Knowledge Economies
It is clear that any knowledge-based economy is entirely reliant on a number of pillars in order to create high-quality information and achieve long-term economic growth objectives.
- Innovation Capability
The ability to develop innovative, possibly value-adding initiatives is described as innovation capability. For effective idea and innovation management, as well as the execution of disruptive ideas, innovation competency is a must. When an organization’s capacity to innovate is limited, the innovation process can be sluggish and inefficient. However, if the firm is inventive, the same procedure may be incredibly efficient.
In the knowledge production, leadership team play an important role in providing strategic visions, motivating others, effectively communicating, acting as a change agent, coaching others, modelling good practices, and carrying out the agenda. It is also accepted that leaders should communicate the aims of information management to all parties involved on a regular basis so that everyone can understand their roles in attaining those knowledge goals.
- Human Capital
Human capital is described as the qualities, skills, and attitudes that enable people to generate economic value. A workforce that is highly skilled, well-educated, and creative is more likely to provide information goods and services that can be valuable. Creating knowledge economies, on the other hand, is challenging in nations where a significant percentage of the workforce is deemed “fragile human capital.”
- IT Resources
These IT resources, including hardware, software, and telecommunications networks, contribute to the creation and dissemination of information. These resources are one of the primary motivators for the creation, dissemination, and preservation of knowledge in many forms across the world.
- Financial Resources
Financial resources facilitate the production of knowledge products in all phases, from performing research to disrupting knowledge outputs, in order to produce knowledge.
- Innovative Climate
New ideas are the foundation for all advancements. Some climates are conducive to creative thinking, while others are not. Individual independence, psychological safety, support and healthy connections among team members, supervisory vision, creative encouragement, purpose clarity, accessible resources, and even joy are all elements of a creative atmosphere
Despite the fact that knowledge has always been a key component in economic growth, economists are increasingly looking into methods to incorporate knowledge and technology more directly into their theories and models.
The endeavor to comprehend the role of information and technology in promoting productivity and economic growth is known as “new growth theory.”
Investments in research and development, education and training, and innovative management work arrangements, in this aspect, are critical. Knowledge dissemination through formal and informal networks, in addition to knowledge investments, is of great importance to economic performance.
In the growing “information society,” knowledge is being formalized and transferred through computer and communications networks.
Government policies will need to place a greater emphasis on improving human capital by promoting access to a variety of skills, particularly the ability to learn; enhancing the economy’s knowledge distribution power through collaborative networks and technology diffusion; and creating the enabling conditions for organizational change at the corporate level to maximize the benefits of technology for all.
The scientific system, which mostly consists of public research laboratories and higher education institutions, performs critical tasks in the knowledge-based economy.