Knowledge Society: Lessons to be learned

Today Asia has an important role in high technology business. It is the source of many high-tech products and services export to Europe and United States. The combined high technology exports in world's market from China, South Korea, Malaysia, Singapore, and Taiwan, increased from 8 % in 1980s to 68% market in 2007. This hundred billion dollars business continues to grow every year as the demand for high technology products continues to increase. High tech has been considered as the key factor in stimulate economic growth and jobs creation. However, behind the impressive technological development, especially in China and Malaysia are some major weaknesses: Many large high technology companies are owned and operated by foreigners and most products designs are created by those outside the region and only manufactured there for the low costs advantages. It is for this reason that the profit issues have become so important, those who owned these companies enjoy significant advantages and profits although the host countries also share the advantage in having their people employed and their local economies improved.

The main reason for this situation is the education systems in many Asian countries have not changed for years and could not produce talents for management and innovation skills. According to the study of the World Bank, over 80% of Asian universities do not have enough laboratories or research facilities to seriously engage in improving innovation capabilities at the national level or international level. With the exception of Japan, S. Korea and Singapore that already demonstrated some successes, most countries do not even invest or encourage research and development (R&D) or other incentive programs. Clearly, the ability to innovate, manage and do business at the highest levels varies from countries to countries but there are lessons that we could learn.

For slow adopting countries, it will be many years before they can establish strong advanced science and engineering education or research excellence, and until then, the dependency to foreign ownership and technological supports are unavoidable. They will be the high technology manufacturing areas for foreign countries as long as their labor costs are competitive. There is no guarantee that the manufacturing will remain there for some time. When there are better areas, better government incentives, and lower labor costs, foreign companies can close business, relocate to other countries and that could create devastating effects to local economy. With the current financial crisis, it already happened in some countries and many will experience it in the next few years.

The fast adopting countries understand the risk of foreign dependency. Many years ago, they have issued aggressive policies designed to improve their education systems, especially in science and technology and enhance skill trainings to improve their relative positions in the global market. The evolution of education systems among these advancing countries was very interesting as it affects the strategic balance of powers in Asia. Among these countries there were different strategies as they pursued their goals, each led to different path and consequences. Japan and S. Korea focused mostly on electronics, China focused on heavy manufacturing and India focused on information technology, some advanced faster and some struggled along the way, but they all learned from their mistakes and continue toward their goals. Of course, they were under enormous competitive pressures from the other global innovators in Europe, North America as they tried to establish themselves but overtime, some have achieved considerable successes in changing the balance of trade and moving up the value chain in global production networks. Today, Japan and Korea dominate electronics and automobile industries, China controls heavy equipments industry and India is world class in Information technology. It all begins with the improvement of their education systems as their governments put forward the changes needed to enable their countries to be the top high technology producers and innovators rather than just lower cost labor countries.

By examine their strategies and plans we can see that they were long and hard journeys. In all four countries, there were strategic plans based on visions that by investing in university education with well-established research systems, they could generate innovation for new products and processes, allowing them new opportunities for maximum economic gains. However, they all faced obstacles from the “Old education” institutions who do not believe in their visions and their goals of scientific realization. For many people, the first priority should be focused on taking advantages of their own groups of inexpensive labor and kept them employed by issued more incentives for foreign direct investment (FDI) rather than invested in scientific education for few “elite students”. The debates between two different views and priority for change had been going on for many years, preventing the education reforms from advancing further in India and China but it won public supports and rapidly accelerated in Japan and S. Korea. In the end, Japan and S. Korea, advanced much faster, had stronger positions in the global economy, and broke out positions of “technological subordination” through their own research and industrial innovations. Today these two countries occupied the top position among “Ten most advanced technological countries”. The key lesson here is by focus on improving education and develops innovative capabilities from R&D establishments seriously; countries could catch up quickly and occupy better positions than the others.

Another lesson that we could learn is China as this country selected different path and fell behind Japan and S. Korea in the high technology market China's initial plan is to focus on manufacturing, starting with light industries (Textile, shoes, clothes) and eventually move to heavy industry (Steel, machine equipment, energy). Recently, the manufacturing industries, especially heavy industries have advanced rapidly due to significant foreign investment and its economy has more than triple with no sign of cooling off. However, without the proper education to support this growth, China totally has to rely on foreign management to manage these industries. From the outside, one can see all the large manufactures, better infrastructures, better roads, highways and airports for fast transportation of products to the market. By examining closer, one can find that most key equipments of theses industries are all imported therefore the industries also depending on foreign control. Another side effect of the heavy manufacturing development is pollutions and toxic wastes being dumped into rivers, fields and permanently harms the agriculture areas. It did not take long for China to recognize the misstep of destroying their fertile agriculture lands by industrialization and the dependency on foreign equipments and management. Started in 1990, Chinese government began the education “Catch-Up” by leveraging a variety of commercial, governmental, and academic relationships with South Korea. As S. Korea's electronics and information technology industries expanded and moved to China. China also sent many middle-level managers to S. Korea for additional trainings. Chinese government also pursued better relationship with Singapore by collaborating with them on several large infrastructure projects such as building highways, bridges, dams, and electrical facilities. China also invited Chinese researchers from Singapore, many of whom have received advanced training in the U.S, to conduct government funded research in Chinese universities. Today, education improvement is progressing faster than expected with many well-established Chinese professors returning from oversea. By investing seriously in research and development (R&D) China has achieved significant position in scientific and technology innovations. The key lesson here are education should be a priority over industrialization to ensure independent and self sufficiency and by leveraging oversea professionals and advanced neighbor countries, China could improve much faster.

India was probably the slowest among the four in adopting education reform as the debate on education investment is still going on. Started in 1991, India government issued a broad commitment to improve its education system by focusing on information technology. Instead of “products”, India's plan is on “services” to compensate for their large and growing population. To encourage economic growth, India government called for investments from the private sector rather than a national strategy on education improvement. Lacking a cohesive and consistent direction, the quality of India's education system varies a great deal from world-class universities to significant “below average” universities. However, by allowing the private sector to invest in information technology services, India's outsourcing has become the world's largest and fastest growing sector and plays a key role in the country's overall economic growth. Currently, this industry generates 65 billion dollars a year and employs an estimated 1 million people. By 2010, that workforce will grow to 1.5 million people and the industry will account for 15% of Indian GDP. India's number of university graduates is estimated at 14 million, the largest in Asia. It is 1.5 times more than China and 2.3 times more than the U.S. This number is topped up by 2 million new graduates every year. However, only a small percent of them are suited for works due to the unequal quality of its education systems. Because the direction on investment in education is still being debated with conflicting policies depending on which party is controlling the parliament and government, there is a looming shortage of skilled workers in India and without a long term strategy to fix these weaknesses; India may not be able to hold on the top position. The key lesson to be learned here is education system should be a national investment with clear direction, plan and actions. Although private industry can help but it can not raise the country to the next level.

Today, many western countries are showing increasing interest in the science and engineering talent found in Asian countries. Many seek to exploit the professional achievements and cost advantages that they offer. There is potential cost savings through outsourcing to countries such as China and India. Whereas the salary of an engineer in the United States may average $85,000, a comparably skilled and educated counterpart would average only $35,000 in India and $20,000 in China. According to several studies, the critical skills shortage in the west has force many western countries to either open their borders to invite the “Knowledge workers” in or outsource works to these high talented countries. Currently, the balance of economic power is beginning to shift toward some fast adopting Asian countries where their knowledge workers are building their economies for better future. The evolution of science and technology in these countries has demonstrated that investments in education are good investment and the right investment.


  • Blogs of Prof. John Vu, Carnegie Mellon University

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