Knowledge economy

The knowledge economy or a 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 factor of utility is the greater dependence on human capital and intellectual property for the address of the sophisticated ideas, information and practices. Organisations are asked 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' environments in facilitating modern economic growth.

A knowledge economy attaches a highly skilled workforce within the microeconomic and macroeconomic environment; institutions and industries work jobs that demand specialized skills in outline 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 work economic value.

In a knowledge economy, highly skilled jobs require expert technical skills and relational skills such(a) as problem-solving, the flexibility to interface with multiple discipline areas as well as the ability to adapt to remodel 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 attaches mass production in which most of the workers are relatively unskilled.

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 measure 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.

The global economy transition to a knowledge economy is also indicated to as the Information Age, bringing about an information society. The term knowledge economy was presented famous by The Age of Discontinuity 1969, that Drucker attributed to economist Fritz Machlup, originating in the abstraction of scientific management developed by Frederick Winslow Taylor.

Evolution

From the early days of economic studies, though economists recognised the essential connection between knowledge and economic growth, it was still quoted only as a supplemental component in economic factors. The abstraction behind has transformed in recent years when new growth theory filed praise to knowledge and technology science in enhancing productivity and economic advancement.

Thus far, the developed society has transitioned from an agriculture-based economy, that is, the pre-industrial age where economy and wealth is primarily based upon agriculture, to an industrial economy where the manufacturing sector was booming. In the mid-1900s, the world economies moved towards a post-industrial or mass production system, where this is the driven by the benefit sector that creates greater wealth than the manufacturing industry; to the late 1900s - 2000s, knowledge economy emerged with the highlights of the power of knowledge and human capital sector, and is now marked as the latest stage of development in global economic restructuring. In thedecades of 20th century, the knowledge economy became greatly associated with sectors based in research-intensive and high-technology industries as a or done as a reaction to a question of the steadily increased demand for sophisticated science-based innovations. Knowledge economy operates differently from the past as it has been identified by the upheavals sometimes referred to as the knowledge revolution in technological innovations and globally competitive need for differentiation with new goods and services, and processes that build from the research community i.e., R&D factors, universities, labs, educational institutes.Thomas A. Stewart points out that just as the industrial revolution did not end agriculture because people have to eat, the knowledge revolution is unlikely to end the industry because society maintains in demands for physical goods and services. .

For the modern knowledge economies, especially the developed countries, information and knowledge have always taken on enormous importance in the developing in either traditional or industrial economy, in specific for the efficient use of factors of production. Owners of production factors should possess and master information and knowledge so as to apply it during one's economic activity. In the knowledge economy, the specialised labor force is characterised as computer literate and well-trained in handling data, developing algorithms and simulated models, and innovating on processes and systems. Harvard corporation School Professor, Michael Porter, asserts that today's economy is far more dynamic and that conventional notion of comparative advantages within a company has changed and is less relevant than the prevailing idea of competitive advantages which rests on "making more productive usage of inputs, which requires continual innovation". As such, the technical STEM careers, including computer scientists, engineers, chemists, biologists, mathematicians, and scientific inventors will see non-stop demand in years to come. Professor Porter further argues that a living situated clusters that is, geographic concentrations of interconnected business and institutions in a particular field is vital with global economies, connect locally and globally with linked industries, manufacturers, and other entities that are related by skills, technologies, and other common inputs. Hence, knowledge is the catalyst and connective tissue in modern economies. Ruggles and Holtshouse argue the change is characterised by a dispersion of energy and by executives who lead by empowering knowledge workers to contribute and make decisions.

With Earth's depleting natural resources, the need for green infrastructure, a logistics industry forced into just-in-time deliveries, growing global demand, regulatory policy governed by performance results, and a host of other items high priority is add on knowledge; and research becomes paramount. Knowledge makes the technical expertise, problem-solving, performance measurement and evaluation, and data management needed for the trans-boundary, interdisciplinary global scale of today's competition.

Worldwide examples of the knowledge economy taking place among numerous others include: Silicon Valley, United States; aerospace and automotive technology in Munich, Germany; biotechnology in Hyderabad, India; electronics and digital media in Seoul, South Korea; petrochemical and energy industry in Brazil. many other cities and regions effort to adopt a knowledge-driven development paradigm and add their knowledge base by investing in higher education and research institutions in outline to attract high skilled labour and better position themselves in the global competition. Yet, despite digital tools democratising access to knowledge, research shows that knowledge economy activities cover as concentrated as ever in traditional economic cores.

The prevailing and future economic development will be highly dominated by the technologies and network expansion, in particular on the knowledge-based social entrepreneurship and the entrepreneurship as a whole. The Knowledge economy is incorporating the network economy, where the relatively localised knowledge is now being divided up among and across various networks for the benefit of the network members as a whole, to gain economies of scale in a wider, more open scale.