Knowledge Economy

Knowledge Economy

 Knowledge economy draws strength from knowledge-intensive activities in the scientific and technological domains. Those nations and organizations that hold cutting edge knowledge will have better competitive advantage than others. A look at the skills that are essential for those who want to participate in the knowledge economy.

    Peter Drucker in 1950s predicted that a new kind of workers and organizations will emerge by the end of the twentieth century, and they will bring tremendous societal changes. Drucker's prophecy was true, a new age economy has already emerged i.e. knowledge economy. In contrast to the conventional economic system which emphasizes the labour productivity, capital inputs and raw materials as the key components of economy, knowledge economy draws strength from knowledge intensive activities in the scientific and technological domains. The key factor of the knowledge economy is knowledge workers rather than the physical commodities, natural resources or machineries.

     In knowledge economy, technical progress and knowledge creation are considered as the determinants of growth. It is assumed that those nations and organizations that hold cutting edge knowledge will have better competitive advantage than others. For entering into the world of knowledge economy, a nation must shift its economic activity from pure manufacturing to service offerings that involve production and consumption of knowledge and information.

   One of the classic examples of a knowledge based firm that is participating in knowledge economy is Amazon.com. The company is engaged in e-commerce of books and other related products, but it provides information and knowledge based services such as recommendation. of product to its customers. For example it displays a set of books under the label "customers who bought this book also bought the following books." This service may look simple, but it is a knowledge in put to the customer. The company utilizes its information bank and converts it into a knowledge-offering to the customer, and manages a unique customer relationship.

Types of Knowledge

   It is well established by now that in knowledge based economic system, knowledge is both an input and output of the economic endeavour; it is a key ingredient in the system. Knowledge is a much broader concept than information. When information is applied meaningfully by humans it becomes knowledge. For example, there are 15 million cars in India', is just a piece of information. But when we meaning fully apply this information for a purpose, it becomes knowledge.

   According to OECD (Organization for Economic Cooperation and Development), for an effective economic analysis, knowledge (depending on its characteristics and values) can be classified into four, i.e. Know-what, know-why, know-how and know-who.

     Know-what is information or facts. For example, 1.25 crore people live in the city of Mumbai, Iddli is a south Indian food, Summer Olympics is held every four years, etc. are factual knowledge. The information and data such as these are considered as knowledge, because in certain jobs the experts must have this knowledge to perform effectively. Medical doctors and practitioners of law must have know what in their profession. Know-what can be codified and stored in external memory systems such as books, CD-ROMS, memory cards, etc.

     Know-whys are explanations about a particular phenomenon in a body of science. Principles, laws, theorems, postulates, theories, etc. belong to this category of knowledge. Technological advancements, inventions and solutions to problems depend on this kind of knowledge. This set of knowledge is harboured in universities, research organizations and consulting firms. For accessing this kind of knowledge, the seeker must interact with the knowledge institutions. Many scientists, consultants and academicians have know-whys in their knowledge repositories. This kind of knowledge also can be codified and can be reproduced explicitly to a large extent, though it is comprehensible only to the trained persons Know-how is related to intellectual skill, competency or capability to performance action or produce certain kind of result Stock brokers who forecast the rise and fall of the share price, the top artists, craftsmen, sportspersons, technical professionals, etc belong to this category of knowledge capital. Know-how cannot be codified easily, it can be transmitted to other people only through training and constant social interactions.

    Know-who is a complex set of knowledge. It is about who knows what and the potential of each individual in specific conditions. The know-who develops by inter acting to a social network and by forming special social relationships. Experts, leaders, and pioneers belong to this category, and interacting with such people has the potential to open up innovative and creative opportunities. As indicated, know-what and know why can be codified, stored in databases and transmitted through lectures, external memory systems, etc. But know-how and know-who is complex and cannot be codified, they are also called 'tacit knowledge Tacit knowledge cannot be transmitted through books, CD-ROMS or other memory systems. It can be learned only through socialization with the experts

   The gharanas of the Hindustani classical music is an example if a person wants to learn a particular gharana, he or she has to spend time with the master practicing the music. Because tacit knowledge cannot be stored, it is lost when the expert leaves the organization, nation, or is dead

Significance of Knowledge Economy

A nation or organization that intends to gain economic competitiveness is bound to recognize the importance of knowledge and its creation as unique source of domestic innovations, discoveries, inventions and designs An economy, rather than investing excessively into physical assets such as machines, equipment, buildings, infrastructure, etc. but, prompts organizations or nations to invest in knowledge as sets such as R&D centers, design facilities, software/computer science development parks, higher education institutions, holding seminars and conferences in cutting edge knowledge domains, etc. is transforming into a knowledge economy. According to OECD three forces act upon every nation to move them towards knowledge economy

The information and communication technology is becoming powerful and affordable leading to elimination of physical and geographical boundaries. This possibility offers opportunities for sharing ideas and information which can lead to innovative collaborations and partnerships. Only a population that is knowledgeable can participate in such virtual interactions and dialogues

Globalisation is creating opportunities for the organizations to access large markets, scale up the operations and identify the niche markets. Organisations and nations that are sensitive to the cross-border opportunities can gain tremendously from globalisation, but it demands multi-dimensional and cross cultural knowledge.

  The consumers across the world are becoming better educated, and they make enormous demand for value added services. For providing, value added, personalized service, the companies need to gather multifarious knowledge, and respond with agility to capture the emerging opportunities. Another important feature for democratic countries is to remain sensitive to the political, economic and technological changes of the world, and make relevant and contemporary legislation. Future law making process is likely to depend on deep knowledge about the socio-political situations within and without the country.

Elements of Knowledge Economy

   In the knowledge economy paradigm, ideas and creativity are the drivers of economic growth. It is through knowledge that the resources of labour, financial capital and technology are integrated. The application of ideas and creativity are expected to increase the output and productivity of goods produced through land, machinery, labour and finance. The ideas, the quantum of knowledge, the knowledge workers and a system that integrates the knowledge with other economic systems are the key elements of knowledge economy.

One of the peculiarities of the knowledge economy is that it works on abundance than on the theory of scarcity Another is, this economy follows the principle of increasing returns than the diminishing one. The knowledge and information can be used repetitively, and its usage does not reduce the resource, rather produces new knowledge and information. Knowledge and Information thus tends to be

Steps to Win in Knowledge Economy

 The nations and organizations need to prepare themselves to gain significantly from the knowledge economy. Several steps are required to raise a country as a significant member of the knowledge economy. One of the steps is orienting the Economic system and Institutions to a transparent and effective regime which includes governments, financial institutions, corporate, media, patenting bodies and IPR regulatory, etc. Second step would be to provide education to all citizens, not just minimal training but unique talent

development system at all levels. Third approach is focusing on building Information infrastructure. Access to information, communication technologies and knowledge databases are the key components of information infrastructure .Establishing an Innovation system could be the fourth step. The original and innovative endeavours of all sections of people must be recognized, promoted and channelized by learning, governing, research and industry institutions. The fifth important initiatives could be establishing sectoral and cluster based schemes such asscience parks, techno parks, R&D centers, cluster support help desks, etc. Finally the governments and the business organizations must develop overarching policies and strategy to participate in the knowledge economy in an effective way.

Preparing for a Career in Knowledge Economy

The skills that will be most important in knowledge economy will be the ones that are connected with the intellect of the individuals and the teams. Those who wish to participate in the knowledge economy must consciously and deliberately develop the following knowledge skills. These intellectual skills may be difficult to comprehend and practice in the outset, but they are required. One is the skill to connect: it is the ability to link the disparate concepts and produce new concepts out of innovative cross-fertilizations. Second skill required, is the ability to observe the differences in the seemingly identical physical and metaphysical phenomena. Third,is developing the tolerance to ambiguities and work with abstractness. Fourth is the ability to apply the principles of one discipline to other fields of science. Fifth is the ability to visualize and manipulate the time and space dimensions of various inci dents. Finally, the skill to disseminate and share the articulable and tacit knowledge to differently-abled groups, communities and societies is an indispensable talent in knowledge economy.

 Conclusion

 India has missed many opportunities of the Industrial revolution, but she can win from the emerging knowledge revolution, by judiciously mending its policies in promoting talents, expertise and intellectual skills among people. In India, the government, organizations and the citizens has to adopt practices to harness their knowledge resources in order to enhance its economic achievements. Originality, creativeness and innovations must be emphasized in the education system and in the work place environments. With a large pool of young population, India can become a knowledge hub, provided it deliberately infuses the knowledge practices grass root level. The future is likely to place value on knowledge assets above the financial assets.

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