What Knowledge Economy Is - Essay Example

Introduction The economics which emphasizes innovations has often put focus on learning just like public policy for science; innovation and technology have all the time been aimed mainly at generating and diffusing information. Over the recent past, nonetheless, education and knowledge has continued to attract more interest because of alleging that knowledge-intensive companies or industries are currently at the heart of growth. Economy experts say that we have entered into a new kind of economy which is being termed as knowledge based in a society which is being termed as knowledge society. So what is knowledge based economy? (Gibbons, et al., 1994) This study paper will define what knowledge economy is, underscore the characteristics of a knowledge based economy. Against this background the paper will give an empirical detailed example of such an economy, and finally give recommendation on how best to improve such an industry then close with a conclusion. Knowledge economy Many scholars argue that we are currently moving towards a fresh “knowledge based economy”, where the function and importance of knowledge as a vital input to the economic progression has vitally changed. In other cases, it is being argued that this depends on the information technology advancements that are creating a certain “paradigm change”. The notion here is that we are having basic modifications in the where the economy is functioning, which have affected the economic rules and also the manner in which business and policymakers are conducting business. (Gibbons, et al., 1994) Over the past, Organization for Economic Co-operation and Development (OECD) have embraced the concept of knowledge based economy in that they are founded on both knowledge and information. Meaning of knowledge What is it implied when one talks about “knowledge economy”, from the onset there is no clear definition of the phrase. However according to the OECD, knowledge based economies are those economies that are directly founded on production, distribution and are using knowledge and also information technology. Knowledge is now recognized as a force of economic augmentation and efficiency thus resulting to a new focal point on the function of information, know-how and education in economic perspective. (Gibbons, et al., 1994) The rising codification of understanding modern knowledge and its diffusion through interactions and computer systems have resulted to what is referred to as up-and-coming information culture. Firms’ requirement for employees to obtain an array of proficiency and to incessantly become accustomed with such proficiencies triggers the development of learning economy in the current world. The significance of knowledge and innovation dissemination necessitates superior acceptance of knowledge systems and what is referred to as general innovation structures. More significantly, new matters and problems have crop up concerning the supposition of this knowledge-based economy particularly for employment and the function of administrations in the expansion and preservation of the knowledge foundation. Four advances to knowledge economy There appears to be four main views concerning the changed importance of knowledge, these are; Knowledge as qualitative: knowledge has become highly qualitative and more important as an input than in the past. Peter Drucker states that knowledge is currently becoming more important just like labour and capital. Knowledge is more important than a product: this is being proven by the fact that knowledge product are being traded to enhance production. Codified knowledge is more important: there is a view that codified knowledge is in a way an important factor as an element of economically related knowledge. Technological changes knowledge: this view holds that knowledge economy depends on technological changes happening in the ICT (information and communication technology). The ICT provides the knowledge based economy with a fresh and also diverse technological base that drastically alters the conditions of production. (Drunker, 1998) The importance The recent argument, being brought forward that “knowledge is currently sidelining capital” has it basis on the notion that one can separate knowledge build up (technology advance) from capital increase. However, thought there it is common amongst the polemicists to allege that knowledge is currently in a way more significant than capital in a business, there is no adequate empirical evidence to support this claim. The claim that knowledge is more significant than a product is normally based on allegations of increasing importance of knowledge based business. It should be noted that, our comprehension of what is being experienced in the knowledge-based economy is limited by the degree and superiority of the accessible pointers of such economy. Conventional general accounts structures have been on the record not giving persuasive descriptions of drifts in economic expansion, output and employment opportunities. The improvement of pointers of the knowledge-based economy has to commence with development to further conventional contribution pointers of research and development expenses and study persons. Superior pointers are moreover essential particularly of knowledge supplies and surge, predominantly regarding to the dissemination of information technologies (Gibbons, et al., 1994) Knowledge based industries The standard method in the area of classifying industries which are knowledge based was developed by OECD in 1980s. According to this method, industries are classified in relation to R&D intensities. Those companies which spend over 4% of their turnover such as pharmaceuticals or technology being classified as high technology, while those which spend 1-4% (chemical or vehicles) turnover are termed as medium- technology, and those industries which spend less than 1% for example food or textiles are classified as low technology. This classification uses direct R&D as one of the indicators to show if an industry is knowledge based or not. (Paula, 1996) Mapping knowledge based activity In the following section we shall examine past empirical studies undertaken in Norway, searching to offer empirical content to the idea of an industry level knowledge based. An empirical method was developed and it was then applied to a food processing industry. The study wanted to map out knowledge bases through identifying and also explaining the following fundamental aspects of the industry production; Core activities; within the industry in relation to technical stages of production, finding out the key technical elements of production activity in the sector, The study also wanted to find out what a company should do so as to be a feasible player in the industry. Core techniques; this implies capital inputs, instrument, equipments and the production routines, which are being used so as to be capable to partake the activities which have been described above. Knowledge bases; in relation to engineering and also scientific knowledge, which is used to support these techniques. Finding the codified knowledge by which technical operations are designed from, analysed and produced from. Institutional framework; finding out the organizational forms, in regards to companies, the research institutions, universities, etc. By which these knowledge are created and disseminated. Generally which company develops the applicable knowledge inputs? (Knudsen, 2000) Food processing knowledge based industry Food processing industry is among the biggest manufacturing and processing industry in the OECD economies. The industry is definitely among the largest in Europe. In order to examine the knowledge based industry in Norway, we shall follow the above outlined method, which seeks to discover the particular activities in the industry, after which the approach will classify the knowledge constitutes of those activities and lastly to draw out producers and suppliers of the knowledge. (An overview will be presented in table 1) When identifying the activities, the standard was that they were particular to food industry and universal to each company in the food industry. On the foundation of this criterion, nine classifications of activities were classified. Four of these classifications explain different phrases in the processes of manufacturing the raw products: (Knudsen, 2000) 1. Assortment and preparation of raw material: which includes activities such as washing, selecting, sorting and filtering 2. Processing: since there are a wide variety of products in food industry, the activities that are connected to processing are highly diverse, this group contains a wide variety of processing tasks, e.g. cooking and pasteurisation 3. Preservation and storing: this is a very vital section in the food processing industry, the activities in this group includes biological, chemical and scientific preservation ways. 4. Wrapping/Packing and coating: this is another significant section that is connected to preservation and also storing, however, it is also linked to aspects of food protection and environment, alongside marketing and also advertising the products. (Knudsen, 2000) Two items of the nine identified activities deals with the real product, raw products and also the end products, these are: 1. Hygiene and safety of food: which, includes maintaining products cleanliness from bacteria and any other type of food pollution through keeping cleanliness within the production surrounding and selecting clean equipments and materials, (for example lubricants, non-toxic, wrapping and detergents). 2. Food quality and nutrition: regards nutritional ingredients of the food products, texture, taste and colour. (Knudsen, 2000) The remaining three groups include the activities which support the real products and also production processes which include: 1. Documentation and quality control: this deals with controlling both the raw products and also the end products together with the production processes in connection to hygienic, nutrition and food quality. This also deals with the documentation of quality standards regarding the authorities and also customers. 2. Transportation and distribution: although it does not appear industry specific, however, since the products have a short durability and lengthy distances between the raw material suppliers and the producers, and also between the producers and their customers logistics is highly significant in the food processing business. 3. Trading/sales/marketing: this also does not seem like industry specific, save for the explicit conditions for marketing and competition and the present advancements in those sections. (Knudsen, 2000) The general map appears as follows; Table 1, showing activity, technology/knowledge is and the knowledge networks in food processing industry in Norwegian. Activity Technology/knowledge area Knowledge suppliers Assortment and preparing of raw material Centrifugal, filtering, washing technology; micro biology, molecular biology, biochemistry and chemistry Matforsk, Norconserv, NVH Processing Engineering, IT and informatics, logistics, molecular biology, microbiology, heating and refrigerating technology Norconserv, Motforsk, NTNU, NLH, Norske Preservation and storing Freeing/cooling technology, sterilisation, vacuum, pasteurisation and homogenisation, bio-technology, biological preservation (fermentation) bacteriology, bio-chemistry, microbiology and analytical chemistry Matforsk, NLH, NVH, NTH and Norconserv Wrapping/packaging and coating Disposal technology, environmental issues, process line, materials technology, design, consumer preferences, microbiology, biochemistry, bacteriology, vacuum, analytical chemistry and modified atmosphere packing Motforsk, Norconserv, NLH, NVH Hygienic and safety Microbiology, biochemistry, bacteriology, analytical chemistry Meierier, Norsk, Matforsk, Potetindustries Laboratorium, SSF Quality and nutrition Chemistry, addictives, textures, microbiology, sensoric analysis and assessment Matforsk, Meierier, Norconserv, NLH, NVH Documentation and Quality control Testing/measurement technology, sensorics, spectroscopology, microbiology, biochemistry, bacteriology, analytical chemistry Meierier, Norske, NVH, Norconserv, NLH, Matforsk Transport and distribution Logistics, IT and informatics ,microbiology, biochemistry, analytical chemistry, general transport technology, cooling/freezing technology SINTEF, NLH, NTNU, NVH, Matforsk Trading/sales/marketing Sociology, (consumer trends and preferences), economy (price elasticises) BI, SIFO, NLH Source; Knudsen, T. B “Innovation and Knowledge bases in the Norwegian Food Processing Industry” (2000) In The third column, the acronyms stand for main publicly assisted research organizations which form knowledge infrastructure for the activities. Evidently a lot of different kinds of skills, knowledge areas and scientific disciplines are engaged in the activities and functions in the Norwegian food processing industry. In general the food processing industry as a whole process as the following: 9 main activity areas 12 main technological fields Around 20 knowledge fields 5 scientific disciplines 16 assisting research institutes 4 research performing colleges/universities (Knudsen, 2000) In spite of the general complexity a lot of this knowledge could be classified into two major knowledge areas, which are food technology and food science. The institute of Food Science and Technology (Britain) gives the following definition for these two terms; Food science, incorporates the application of numerous contributory sciences to food, it entails knowledge of chemical composition of the food materials (since all food comprises whole of chemical substances), their biological, biochemical and physical behaviour, human nutritional needs and nutritional elements in the food materials, the behaviour and nature of enzymes, microbiology of the foods, and the way food components interact with one another, with the air, with contaminants and additives and with the packaging materials; toxicology and pharmacology of the food materials; and the application of statistics for the purposes of designing experimental work and also assessing the results from the experiments. Similarly, food technology borrows from and integrates the use of food, of some other technologies for example, those of glass, plastics, steel, tinplates biotechnology instrumentation agriculture, electronics and engineering. To summarize it, in spite of the fact that food industry is an industry that has relatively low standards of internal R&D, it may be well be asserted that this industry is among the most knowledge based industries in the whole of Norway economy. Most probably this is related to the reality that a lot of the sub-sectors of the food industry are currently witnessing a rapid growth. (Knudsen, 2000) Norway Norway is well positioned to take advantage brought about by the promising Opportunities which are brought about through knowledge based economy (KBE). The country has a high technology, well built technological environment and highly educated human capital; perfect for KBE. (Knudsen, 2000) Areas of improvement Though Norway is showing obvious signs of an improved knowledge based economy, the industry especially the food industry must become a lot more innovative to completely reap the advantage of the latest economy. Norway compares well with other countries in relation to technological infrastructure, however, in the recent past increase in investment has been slowed, both in technology and human capital, this needs to be improved Conclusion Over the recent past, nonetheless, education and knowledge has continued to attract more interest because of alleging that knowledge-intensive companies or industries are currently at the heart of growth. KBE enables high production through use of advanced technology used in the industries. Norway is one of the countries that are witnessing knowledge based economy. And its food industry is well placed and relatively highly knowledge based. Organization Economic Co-operation Development skill, science, and industry guidelines ought to be invented in order to make best use of outcome and interests available to knowledge-based economies. This implies that economies that are mainly founded on the output, sharing and application of knowledge and skills will benefit immensely. Such a reflection can best seen in the inclination in Organization Economic Co-operation Development economies in the direction of expansion in superior technology ventures, well developed firms, more competent employees as well as related efficiency benefits. (Drunker, 1998) Even though knowledge has extensively been a significant feature in economic expansion, many scholars particularly economists are at present discovering techniques to integrate further openly know-how and technology in their suppositions and representations. The New growth model therefore reveals the endeavour to comprehend the function of know-how and technology in motivating output and economic expansion. Therefore ventures in training and development, research and development, efficient managerial skills and learning should be encouraged in order to fully utilize the concept of knowledge-based economy. Organizational guidelines including those of food processing companies ought to focus much on improvement of human resource by availing an array of proficiencies and particularly the capability to learn the significance of knowledge-based economy. Read More