Knowledge Economy part 5
Today, the main driver for economic growth is in the high technology area. Technology is being developed and commercialized in locations where a population with higher education exists to generate new knowledge and new ideas. The StanfordIndustrial Park, built on the university land is the birthplace of the Silicon Valley. The first child was a company founded by two Stanford students, William Hewlett and David Packard in 1937. Today Silicon Valley is home to over three thousand companies, million technology workers and a high concentration of wealthy people than any place on earth. Next to Silicon Valley is the high-technology center along Route 128 near Massachusetts Institute of Technology (MIT) in Boston, It is called the “Capital of Biotechnology” with thousand of scientists and bio technology companies. There are over forty high technology centers like that exists in the world, where start-up companies, research labs, financiers and corporations are converging, creating a dynamic business environment that brings together knowledge, finance and tremendous opportunity. In the 60s and 70s, most high technology centers were in the US and Europe (UK, Germany, France, Finland, and Sweden) but beginning in 1980s several centers were added to the list from Japan, Korea, Brazil, China, Australia, Canada, Singapore, Israel, and India. These centers are the hub of innovation, knowledge creation with many jobs for knowledge workers and eventually economic prosperity.
To be considered as a “High technology center” the country must meet three key factors: 1) A national education system that opens to the masses rather than to a few selected elites, and producing a workforce with a relevant skill; 2) The existence of a Research & Development (R&D) system with the potential to evolve into a fully developed industry and 3) A reasonably developed Information and Communication Technology (ICT) infrastructure represented by electricity and communication devices (Telephone) including the Broadband for Internet. Electricity and the telephone are still a major challenge to many developing countries. According to several government reports, electricity has only reached about a third of the world population. There is 1 phone for every 2000 people in poor countries, 1 in250 in developing countries and 1.2 in1 in developed countries. The Internet, the key enable of the knowledge economy is also a major challenge. There is 1 Internet user per 5000 people in Africa, compared to 1 user per 6 inEurope and North America. The number of computers per 1000 people is less than 1 inAfrica, 22 in the Middle East, 38 inS. America, 172 inSingapore and 348 inWestern Europe. These challenges or the gap between the “Technological Have” and “Have not” clearly divides developed and developing countries according to their ability to use, adapt, produce and transfer technology knowledge. If this gap is left unchanged, many developing nations will keep losing their purchasing power, and gradually fade away from the global market and never be able to recover. This is why it is very important to pay attention to this fact: “With globalization, the fastest will win over the slow ones, and country that adapt quickly will have significant advantage over the rest”.
How can a country become a “Technological Have” or be able to take advantage of technology to build its economy? The United Nation Development Program (UNDP) has introduced a Technology Achievement Index (TAI) to provide a comparison of countries' achievements in creating technology and in building skills to master innovations. The TAI is a composite index based on four factors, together with the quantitative indicators for each:
1) Creation of Technology (Number of Patents granted per capita, Number of Receipts of royalty and license fees from abroad per capita)
2) Diffusion of Recent Innovations (Number of Internet hosts per capita, number of High-technology exports as share of all manufactured goods exports)
3) Diffusion of Old Innovations (Number of telephones per capita (mainline and cellular combined), Number of Electricity consumption per capita)
4) Knowledge & Skills (Mean years of schooling of population aged 15 and above, Gross enrollment ratio at tertiary level in science, mathematics and engineering)
The TAI values thus calculated range from 0.744 for Finland, 0.733 for the USA, 0.703 for Sweden and 0.698 for Japan at the top, to 0.066 for Mozambique at the bottom. In the list of 72 countries for which TAI could be calculated clearly shows four groups:
1) Leaders, with TAI above 0.5, which are at the cutting edge of self sustaining technological innovation.
2) Potential Leaders, with TAI between 0.35 and 0.49, which have invested in high levels of knowledge and skills development but innovate little.
3) Dynamic Adopters, with TAI between 0.20 and 0.34 which are dynamic in the use of new technologies, but in which the application is still incomplete and slow.
4) Marginalized, with TAI below 0.20 in which large parts of the population have not benefited even from the old technologies such as electricity, clean water and phone.
Among the top leaders are Korea (5th with TAI 0.666), Singapore (10th with TAI 0.585) and Israel (18th with TAI 0.585). Potential leaders include Spain (19th with TAI 0.481), Greece (26th with TAI 0.437), Malaysia (30th with TAI 0.396), and Mexico (32nd with TAI 0.389). The Dynamic adopters include Uruguay (38th with TAI 0.343), and Thailand (40th TAI 0.255). The Marginalized is Nicaragua (64th with TAI 0.185), followed by Pakistan with TAI 0.167.
Every year, The Institute for Management and Development (IMD) analyzes the competitiveness of countries and rank them according to their economic performance, effectiveness of government, effectiveness of the private sector, and infrastructure. There is clearly a strong correlation between the technology achievement capacity and the competitive strength of a country in the global market. Furthermore, when technology industry is strong as the cases of Korea and Malaysia, it shows a positive on the competitive strength and high potential for economic growth, even faster than other leaders. According to the IMD, economic growth is measured by the result of increasing inputs such as capital and labor, or using capital and labor in a more productive way such as the application of knowledge in industry production for higher productivity, quality.
The key factor in helping to grow the economy is the education system because it plays a dual role as components of both the national education and R&D systems. Education contributes to the developing skills and knowledge that can foster innovations and bring in more capital to promote economic growth. Today university is considered the “knowledge factory” or the centre of the “knowledge economy”. The basic functions of university are: 1) the capacity to train a qualified workforce, including scientists, professionals, technicians, teachers for primary and secondary education, as well as future government, civil service and business leaders; 2) the capacity to generate knowledge through all sorts of research and development activity; and 3) the capacity to access existing global knowledge and adapt it to local to improve the economy and the competitive strength of a country. A knowledge-driven economy not only requires higher skills of the workforce, but also continuous updating to adapt to changing demand of the market. The rate of increase in jobs that require university -level qualifications is expected to accelerate significantly in the next few years. Lifelong learning and continuing education will be expected to expand to cover all types of workers.
Today in developing countries, university education is coming under pressure to serve more students, including, adults come back to school for additional knowledge or workers who are still working in industry but not many universities are ready to take this next step. Many curricula are still focusing on theories, on obsolete technology, and on knowledge that are irrelevant to the industry. In the knowledge economy, a global education market exists to recruit students from all over the world based on the growing demand for degrees and certificates with international recognition. Therefore many students are seeking university education in top leading countries with the expectation of finding best job offering and live comfortable in the Knowledge society. Universities in the U.S have benefited the most from this trend, each year, nearly half million students from other countries are coming to study in the U.S. contributing $ 11 billion into the US economy. Top ten countries of foreign students in the US were: China, India, Japan, Korea, Taiwan, Indonesia, Thailand, and Mexico.
I believe that in the knowledge economy, policies regarding education must be viewed as integral and complementary components of national economic development policies that are formulated to allow rapid responses to the changing global environment. Universities have to accept the fact that education programs should not be built by academia community alone but must be built by collaboration between university, industry and government. Academic community is not the owners of universities but its citizen, therefore the culture of “Academic privilege at public expense” cannot continue to exist in the knowledge economy. Instead, all education must be tied to the benefits of society, a nation and its citizens.
Sources
- Blogs of Prof. John Vu, Carnegie Mellon University
