Knowledge Economy part 1
By definition, a Knowledge-based economy relies on the use of ideas rather than physical abilities and on the application of technology rather than the exploitation of cheap labor. It is an economy in which knowledge is created, acquired, transmitted, and used more effectively by individuals, companies, and communities to promote economic and social development. Today in industrial countries such as the U.S and Europe, knowledge-based industries are expanding rapidly where new technologies have been introduced, demand for high-skilled workers, particularly in information technology workers has increased significantly but at the same time, demand for lower-skilled workers has declined and this put a lot of pressure on the current education system of industrial countries to produce more high skilled people.
The information technology revolution has provided new opportunities for easy access to information from anywhere. It has also created new opportunities for generating and transferring information via the internet, the personal computer, and the mobile phone. Knowledge networks and sharing of information have expedited innovation and adaptation worldwide. Changes in information technology have revolutionized the transmission of information as semiconductors are getting faster, computer memories are expanding, and computing prices are falling. Data transmission costs have fallen dramatically and continue to fall, bandwidth is growing, and Internet hosts are multiplying in every country. Cellular phone usage is also growing worldwide, adding to the pace of and capacity for change and innovation. The information technology revolution has promoted more trading and business worldwide and countries that are able to integrate their economy into the world economy have experienced significant economic growth as in cases of India, China, Ireland and some Eastern European countries. The global economy also provided opportunities to smaller companies to take advantage quickly if they can adapt faster to changes comparing with larger companies because in this new knowledge-based economy, the bigger companies can not overcome the smaller one anymore but it is the faster will beat the slow.
Let me give you some examples: In the early day of the knowledge-based economy around 1990, it took six years to go from concept to production in the automobile industry but today that process takes just two years. Companies like Honda, Toyota create new cars every two years to compete with well established companies like GM, Ford, Mercedes, and Renault which introduce new cars every four to five years. Guess who come out as winners. The same thing happened in the mobile phone business, in the early day Motorola dominates this market by having a new phone every two years then Nokia created new phone every year and eventually took over the market. Today Samsung, LG, Sony and many Asian companies can produce ten to twenty new phones every six months and the competition for global cell phone market continue. How can they do things that fast? By having multiple teams working in incremental overlapping phases of building phone products and invest heavily in education and training or their workers. Many Asian companies such as Toyota, Honda, and Sony have invested significantly in education and training, they also invested a large part of their capital in research and development for the long term perspective where many U.S and European companies are so focus on the short term profits and do not consider education as the high priority.
A typical knowledge economy is based on four components:
1) A supportive government policy on economic to provide incentives for the efficient use of existing and new knowledge.
2) An educated and skilled workers to create, shares, and use knowledge for economic advantages
3) A dynamic information infrastructure to facilitate the effective communication, dissemination, and processing of information such as internet, mobile phones etc.
4) An efficient system of companies, university research centers and government agencies to tap into the growing global knowledge, assimilate and adapt it to local needs, and create new technology.
Preparing workers to compete in the knowledge economy requires a new model of education and training, a model of lifelong learning to keep up with the change in technology. In the past, students go to schools get degrees then go to work in industry and they can function for a long time because what they know are still valid but today information technology revolution changes everything. What was valid few years ago may not be valid anymore. For example, programming languages such as COBOL or FORTRAN are the two main languages in every computer systems during 1950 to 1980 but today most computer systems requires different languages such as C, C++ or JAVA. There is nothing wrong with COBOL or FORTRAN but there is no need for those skills anymore because technology has changed. To stay current with the change, people must learn new thing and continue to learn throughout their life. A lifelong learning encompasses learning from childhood to retirement; it includes formal and informal education: Formal education includes structured training that are taught at universities and recognized by formal education system that lead to degrees and certificates. Informal education includes unstructured training, which can take place anywhere, including the home, community, or workplace. It includes on-the-job training, mentoring and apprentice or workplace learning. In order to make lifelong learning effective, we must change our thinking from go to school for a degree or certificate to attending school to acquire knowledge and to mature as individual in the knowledge–based economy.
From the economic theory, overall knowledge and skills can be accumulated as inputs in the production of economic wealth of a country. In addition to measure capital and production, knowledge-based economy will also measure skills and knowledge, ideas and inventions. Because the speed of change in the knowledge economy, every skill will depreciate over time so to compete effectively in this constantly changing environment, every worker must continue to upgrade their skills and government must keep continue education as the top priority. Because change in the knowledge economy is so rapid companies can not rely solely on hiring new graduates as the primary source of new skills and knowledge but must rely on other training institutions to prepare workers for lifelong learning. Because of the rapid changes, educational systems can no longer emphasize academic theories and task-specific skills such as programming languages in information technology training but must focus instead on the total system such as developing decision making and problem-solving skills and teaching students on how to learn on their own (Learning by doing) and with others (Team learning).
I strongly believe that Lifelong learning is crucial in enabling workers to compete in the global economy. A good education can help reduce poverty and brings prosperity; if countries do not promote lifelong learning, the skills and technology gap between them and industrial countries will continue to grow and it will be very difficult to catch up. By improving people's ability to function as members of their communities, education and training can also increase social cohesion or local ties. We must moving away from sending workers to where the jobs are but creating jobs where people live thereby helping to build human capital, increase local economic growth, and stimulate overall development. In conclusion, I strongly believe that education and training is fundamental to economic development and it is more than ever critical in the knowledge and global economy.
Sources
- Blogs of Prof. John Vu, Carnegie Mellon University
