The world economy is in transition or more accurately I should I say it has been in transition for some time now but I am not sure whether we have actually noticed. Economists and political scientists have coined this new era as the knowledge economy. It marks the transition from the post – industrial mass production and interestingly service economy models to an economy based on technology and the exploitation of human capital.
I think that we have all noted the increasing importance of technology as a key tool for creating greater efficiencies and innovation. We can also speak in unison without disagreement on the need to increase our human capital and strengthen the relevance of our higher education institutions to meet market needs. However, we often talk about increasing our human capital so that they can become better workers in the production of goods and services. The knowledge economy turns that notion on its head.
In the new emerging economy, knowledge is seen as a good in itself. The generation of new knowledge is what leads to job creation. Key people in the organization are no longer hired because they can do one specific thing rather they are hired by whether they can create new thinking which can propel growth. In this new configuration know-how and having a learning workforce are as critical as other economic resources.
What does having a learning workforce mean?
It means that people can perform at multiple levels; their key skill is being able to understand, anticipate and analyze processes across fields. This is not a static skill it is dynamic, learning workers do not just understand how to do something, they engineer what needs to be done and how it should be corrected in the future. I am sure that many persons might be saying that what I am taking about is a specialized skill or something within the domain of the manager – that is exactly the new angle that the knowledge economy brings. It is the creation of a mass base of knowledge workers who can function at the highest levels while at the same time getting the everyday work done but doing it better.
One commentator on the knowledge economy suggests that it is an economy in which knowledge is both an input of increasing significance into the productive process and a product. In a knowledge economy, labor costs become progressively less important, and scarcity of resources and economies of scale cease to apply. Essentially we are moving away from the notion of comparative advantage to competitiveness advantage based on the notion of taking greatest advantage of inputs primarily, human capital.
At present, my analysis is that we are one step behind the new economy. We are still in the post – industrial mass based economic model struggling to transition to a full service economy model when the world has already moved on. This is not to say that there may not be inkling of the knowledge economy emerging but at this point it is not enough for us to say that we have a good grasp of the change and how to capitalize on it. We may recognize that the world is changing but unless we know what that change means and how to address it, we will be doomed to forever star gazing-passive actors in a dynamic scenario.