Knowledge Economy

The knowledge economy also known as a knowledge-based economy, is an economic system where the production of goods and services is based mainly on knowledge-intensive activities that help contribute to the advancement of technical and scientific innovation. The key element of value in a knowledge economy is the greater dependence on human capital and intellectual property for the source of information, practices, and innovative ideas. Organizations need to capitalize on this knowledge in their products so as to stimulate and improve the business development process. In such an economy, there is lesser reliance on physical input and natural resources. It depends on the crucial role of intangible assets within the settings of the organization in facilitating modern economic growth. A knowledge economy will contain a highly skilled workforce within the microeconomic and macroeconomic context. Institutions and industries help create jobs that demand specialized skills to meet the global market needs. Knowledge is seen as an additional input to capital and labor. In principle, a person’s primary individual capital is knowledge combined with the ability to perform so as to create economic value. In such an economy, highly skilled jobs require technical skills and relational skills like problem-solving skills, flexibility to interface with several discipline areas and the ability to adapt to changes in comparison to moving or crafting physical objects in conventional economies. A knowledge economy stands in contrast to an agrarian economy, where the primary economic activity is subsistence farming, the main requirement for which is manual labor, or an industrialized economy featuring mass production in which most of the workers are relatively unskilled.

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