Knowledge economy

An effective innovation system: a great level of innovation within firms, industries, and countries to keep up with the latest global technology and human intelligence so as to utilize it for the domestic economy

Institutional regime that supports incentives for entrepreneurship and the use of knowledge: An economy system should offer incentives to allow for better efficiency in mobilizing and allocating resources, together with encouraging entrepreneurship.

In a knowledge economy, human intellectual is the key engine of economic enhancement. It is an economy where members acquire, create, disseminate and apply knowledge for facilitating economic and social development. The World Bank has spoken of knowledge economies by associating it to a four - pillar framework that analyses the rationales of a human capital based economies:

An educated and skilled labour force: The establishment of a strong knowledge-based economy required workers to have the ability to continuously learn and apply their skills to build and practice knowledge efficiently.

A dense and modern information infrastructure: is of the easy access to the information and communication technology (ICT) resources in order to overcome the barrier of high transaction cost, and to facilitate the effectiveness in interacting, disseminating and processing the information and knowledge resources.

Know-who : refers to the specific and selective social relations, that is the identification of the key persons that know the solutions and are able to perform under difficult scenarios. Finding the right people can be more essential than knowing basic scientific knowledge for the success of innovation.

Know-how : is of an individual's skills and experience to do different kinds of things on a practical level. Individuals share experiences in groups with uniform practices. It constitutes the human capital of enterprises.

The present concept for "knowledge" is origins from the historical and philosophical studies by Gilbert Ryle and Israel Scheffler who conducted knowledge to the terms "procedural knowledge" and "conceptual Knowledge" and identified two types of skills: "routine competencies or facilities" and "critical skills" that is intelligent performance; and it's further elaborated by Lundvall and Johnson[29] who defined "knowledge" economically highlighting four broad categories:

Know-what : is of the knowledge about "facts", presenting the ownership of information. Examples include population of a country and history evidence. As with information revolution is emerging, complex occupations such as law and medicine remain highly demanding for knowledge and expertise under this category.

Know-why : is of the study within the human mind and society at the base of the knowledge of principles and laws of motion in nature. It concerns the theoretical research of scientific and technological fields, which is essential for allowing innovation in the production process and products development in areas such as universities and specialised firms. It can also reduce error frequency in procedures.

The present concept for "knowledge" is origins from the historical and philosophical studies by Gilbert Ryle and Israel Scheffler who conducted knowledge to the terms "procedural knowledge" and "conceptual Knowledge" and identified two types of skills: "routine competencies or facilities" and "critical skills" that is intelligent performance; and it's further elaborated by Lundvall and Johnson[29] who defined "knowledge" economically highlighting four broad categories:

The global economy transition to a knowledge economy is also referred to as the Information Age, bringing about an information society. The term knowledge economy was made famous by Peter Drucker as the title of Chapter 12 in his book The Age of Discontinuity (1969), that Drucker attributed to economist Fritz Machlup, originating in the idea of scientific management developed by Frederick Winslow Taylor.

Knowledge-based economy and human capital

An economic system that is not knowledge-based is considered to be inconceivable.It describes the process of consumption and production activities that are satisfied from the application of workers' expertise - intellectual capital and typically represents a significant level of individual economic activities in modern developed economies through building an interconnected and advanced global economy where sources of knowledge are the critical contributors.

A knowledge economy emphasizes the importance of skills in a service economy, the third phase of economic development, also called a post-industrial economy. It is related to an information economy, which emphasizes the importance of information as non-physical capital, and a digital economy, which emphasizes the degree to which information technology facilitates trade. For companies, intellectual property such as trade secrets, copyrighted material, and patented processes become more valuable in a knowledge economy than in earlier eras.

In a knowledge economy, highly skilled jobs require excellent technical skills and relational skills such as problem-solving, the flexibility to interface with multiple discipline areas as well as the ability to adapt to changes as opposed to moving or crafting physical objects in conventional manufacturing-based economies. A knowledge economy stands in contrast to an agrarian economy, in which the primary economic activity is subsistence farming for which the main requirement is manual labour or an industrialized economy that features mass production in which most of the workers are relatively unskilled.

A knowledge economy features a highly skilled workforce within the microeconomic and macroeconomic environment; institutions and industries create jobs that demand specialized skills in order to meet the global market needs. Knowledge is viewed as an additional input to labour and capital. In principle, one's primary individual capital is knowledge together with the ability to perform so as to create economic value.

The knowledge economy (or the knowledge-based economy) is an economic system in which the production of goods and services is based principally on knowledge-intensive activities that contribute to advancement in technical and scientific innovation.The key element of value is the greater dependence on human capital and intellectual property for the source of the innovative ideas, information and practices.Organisations are required to capitalise this "knowledge" into their production to stimulate and deepen the business development process. There is less reliance on physical input and natural resources. A knowledge-based economy relies on the crucial role of intangible assets within the organisations' settings in facilitating modern economic growth.