The knowledge-based economy
There is a university report that 34% of young people between the ages of 18 to 32 are either planning to start a business or had already done so. Many are university students who recognize that entrepreneurship is a viable career path. To meet this demand, universities are beginning to offer entrepreneurship programs at the graduate level (MS degree). They are working closely with industry to improve its trainings to focus on how to develop and commercialize technologies. Almost all top U.S. universities have specialized people dedicated to facilitating entrepreneurship and technology commercialization.
Recently governments also realize that entrepreneurship is critical to the development and the well-being of their society. Entrepreneurs create jobs, drive innovation, and accelerate changes in the economy. Entrepreneurship is a catalyst for economic growth and national competitiveness. By having more companies, more competition, more products, their economies could improved significantly and lift them out of the current recession. This already happened in the U.S., India, China, and Brazil as more companies are opened, more jobs are created.
There are two types of entrepreneurship with different impacts: The “Necessity” entrepreneurship which occurs when unemployed persons start small businesses just to make a living when there are fewer jobs available. This type happens mostly in less developed countries but has limited impact as it only helps an economy benefit from self-employment. On the other hand, “Opportunity” entrepreneurship which occurs in mostly in developed countries, leverage technology innovation to start businesses that often grow larger, employ more people, and create big impact to the economy.
To improve the economy, it is important to focus on the creation of the fast growth, high tech companies that employ more people but the challenge is how to attract, develop, train, and graduate the right people with the right skills to start technology company.
Countries with good supply of skilled workers, produced by good education systems are often able to develop high value startups. Countries without a good education systems often choose the “Necessary driven” type by create small companies just to survive. However without a long term plan to improve the education systems, this type of entrepreneurship will not last and the economy eventually ends up in poverty.
Globalization allows countries to compete with each other. Economically successful countries have significant competitive advantages over others. A well known economist said: “In the past countries compete on wealth, today they compete on skills. In the past countries compete on natural resources; today they compete on education systems.” In general, successful countries that have many “Opportunity driven” startups would be capable of getting their economies at a level where they have competitive advantage over the others and dominate the global economy.
Of the top 100 companies leading today’s global economy, half are on science, technology, health care, communications and transportation. A third is in fields that have been transformed by technologies, such as business, banking, energy, and natural resources. In this fast changing world, many companies are struggled to survive and most of them are in obsolete areas such as traditional agriculture, labor manufacturing, and low cost crafting such as shoes, clothing, and furniture. Differences in education training levels have been cited as a significant factor that separates rich and poor countries. Of course obtaining a higher level of education carries a cost but a country does not need extensive education systems in every field in order to reap the benefit. It can start by focus on few areas and still see economic improvements. For example, twenty years ago, India decided to focus on information technology instead of others and was able to move their economy to a powerful position today. In startup businesses, a person’s intellectual ability is an asset. This asset can be used to create products and services which can then be sold. The more knowledge workers employed by startups, the more these startups can grow bigger. An economy in which companies treat education as an asset in this manner is often referred to as a knowledge-based economy.
Sources
- Blogs of Prof. John Vu, Carnegie Mellon University
