Knowledge based economy

The concept of Economy based on knowledge has grown in the 90s. It is the economy, in which knowledge is created, absorbed, transmitted and used more effectively by businesses, organizations, individuals and communities, fostering rapid development of the economy and society. Development is based on intensive use of knowledge and experience, it can develop faster than others, because it generates faster technical and organizational progress, has better educated people and more effectively uses human capital and production capital.

The basics

Knowledge-based economy is based on four basic pillars: The first pillar is education and training. Education and qualifications are needed to create, transfer and use knowledge. Expenditure on education and training significantly contribute to increasing the pace of economic growth.

The second pillar is the IT infrastructure. This pillar concerns fast communication and information transfer via the Internet, TV and radio.

The third pillar is economic incentives and institutional conditions. They are related to the free flow of knowledge, supporting entrepreneurship and investment in communication technologies.

The fourth pillar are innovation systems. Through research centers, universities, national research centers, expert teams, public-private partnerships are necessary to use knowledge resources and create new knowledge. It occupies a special place among factors determining competitiveness. It is a factor determining the international competitiveness of enterprises.

Determinants of Knowledge-Based Economy

The following determinants can be distinguished:

• there is a shift process from economy oriented towards the production of goods to a service-oriented economy,
• the number and impact of the class of professional and technical employees is increased,
• information society is organized around knowledge and information,
• research and development, as well as the combination of science and technology and economics are the key to the information society,
• followed by the development of intellectual technology methods.

Threats related to Knowledge-based Economy

Despite the fact that Knowledge-Based Economy has many advantages, we can distinguish the following risks:

• dynamic technological progress may make the gap between the backward countries and the most technologically advanced countries deepen
• there is a risk that if world technological developments are not absorbed by other countries, developing countries will be additionally marginalized
• inequalities in the level of productivity and the pace of economic development in various countries can be deepened by ( diversifying the quality of the organization
• unification of products and services may cause monopolization of the market
• it is assumed that the digital divide may deepen in relation to countries that do not have the resources and skills necessary to use modern technologies
• there may be increasing disproportions in the level of technology use
• over time, the division in the economy into sectors that can apply modern technologies and those that can not use them can be increased
• the spatial structure of the country splits into regions equipped and not equipped with modern infrastructure and suitably qualified human capital
• integration between highly developed countries that support the implementation of modern technologies may lead to a widening gap between this group of countries and other countries

Knowledge based economy — recommended articles

Knowledge economy — Industrial park — Globalization — Sources of innovation — Endogenous growth — Knowledge society — Role of entrepreneurs — Industry 4.0 — Innovative systems

References

• Boden, M., & Miles, I. (Eds.). (2000). Services and the Knowledge-based Economy. Psychology Press.
• Godin, B. (2006). The knowledge-based economy: conceptual framework or buzzword?. The Journal of technology transfer, 31(1), 17-30.
• Leydesdorff, L. (2006). The knowledge-based economy: Modeled, measured, simulated. Universal-Publishers.