Knowledge is increasingly becoming a determining factor in socio-economic development globally. New opportunities have been created with the fast innovations made in science and countries can now harness knowledge and take part in building the global economy more than before. Developing nations that will make a successful transition to a knowledge-based economy are to benefit from the unparalleled potential to be more competitive in the global market as well as take part in the global information community.
The benefits that knowledge brings will also be extended by novel technologies to every part of the society and assist nations to close the gap between the poor and the rich. There are important steps that countries can take before becoming fully knowledge-based economies. These steps include updating institutional regime and economic inducement, developing human resources ready for a knowledge-based economy, guaranteeing a robust information infrastructure, improving the innovation system, promoting knowledge-based programs.
Revising institutional regime and economic inducement
Among nations that are yet to implement knowledge-based economy, it is important to reexamine the institutional regime and economic incentives that are available for innovators. Key challenges facing such countries include the ease of moving away from the old policies in order to support an adaptable, flexible, and market-based creative society and a networked economy. Structural reforms need to be carried out, including revising the governments’ role in the transition, creating enabling conditions to encourage the entry of new players into the economy, and improving the efficiency and soundness of financial institutions. Within the labor market, the government should enhance flexibility and buttress the institutional infrastructure and strengthen the legal frameworks.
Developing Human Resources Ready For Knowledge-Based Economy
The next step to a successful transition to knowledge-based economy would be to increase adaptability and productivity. The linchpin to such a transition will be to develop robust human resources and ensure that the education system is flexible to develop not only creative citizens but also better skilled and knowledgeable human resources ready to steer innovations in the 21st century. Even in countries where basic education is highly developed, there are questions about whether the education system will afford the required reforms and generate the highly needed human resources for knowledge-based economy transition.
Guaranteeing a Vibrant Information Infrastructure
Governments need to recognize the role of the global networking revolution in building fast-growing economies and to devise strategies ensuring that the nations make a forward step to enjoy the benefits that come with such a revolution. For states that already have fully developed mobile communications and internet access, an educated workforce, and a robust ICT sector, there are still challenges to providing an efficient model of ICT services by strengthening the regulatory environment that might hamper a smooth transition to a knowledge-based economy. There should be an increased allocation of funds to ICT infrastructural investment to further boost growth in the economy apart from minimizing micro regulations that largely impact innovation and ease of doing business.
Improving the Innovation System
Most countries that have weak knowledge-based economic models have had R&D investments in short-term innovations mainly sourced from the private sector. Government spending is largely concentrated on mission-oriented goals although their missions tend to be feeble in terms of diffusion even if their programs are mission-based. Overall, a majority of economies’ science and technology fields have favored rapid exploitation of advanced and mature technologies for the expansion of markets in select industries over the strengthening of the knowledge base.
Promotion of knowledge-based programs
The state of development in most developing economies, compounded with the increasing competition in the volume of standard products as well as the global economic and technological developments have made it easier for the countries to effectively use knowledge in economic progress. The challenge that remains is to increase their competitiveness in knowledge-based industries and activities. These are the areas where the real capacity to innovate is critical. There is a quality gap between developed and developing nations in terms of trade statistics and productivity. Since there is no absolute or static definition of a knowledge-based economy, there are some industries that seem to emerge to be more intensive compared to others in their utilization of knowledge. However, their development can be decisive for use in competitiveness in economic processes.
Transitioning to a knowledge-based economy requires government-led innovations. There is a need to update key institutional policies and economic inducement, develop human resources ready for a knowledge-based economy, guarantee a robust information infrastructure, improve the innovation system, and promote knowledge-based activities. When such changes are effected, most states that depend on manufacturing and agricultural sectors will have a smooth transition to a service-based economy. While it requires intensive investments and changes in institutional policies, the benefits that come with such a transition can be enormous. The levels of uptake of this model among states largely depend on the wealth of nations. Rich economies will tend to take up knowledge-based economic models faster compared to developing states.