There is a high probability that back in your school days, you have heard a quote of famous Benjamin Franklin's words: "An investment in knowledge pays the best interests." I bet you can envision the voice of your tutor saying this aloud to motivate your class to prepare for the midterms. But in the era of the knowledge-based economy, this wisdom starts to have a much more literal meaning...
What is the knowledge-based economy?
According to the most prevalent definitions, a knowledge-based economy describes an economic system of consumption and production based on the intellectual capital – creation, distribution, and practical use of knowledge and information. The key elements on which this system is based are human capital and intellectual property. Predominantly relying on intangible assets, it creates a new, entirely different universe of jobs, qualities, and skills crucial to the employers.
The World Bank listed the four most crucial pillars of the knowledge-based economy: institutional structures encouraging entrepreneurship and using knowledge, skilled labor and a good education system, access to information and communication technology infrastructures, and a vibrant innovation landscape. Such a reliance on the human capital implements that companies need to consciously attract and retain workers valuable for their progress. Obviously, it is also the main driver of human motivation to excel intellectually, which can even have a tremendous effect on global welfare.
Adding the ongoing globalization, knowledge-based economy's change-making potential becomes an incredible tool advocating for global and local progress all around the globe and initiating international conversations or collaborations fostering progress.
Knowledge-based economy and diversity
As an ardent advocate for the benefits of a diverse and inclusive economy, I am sure that multifarious outlooks on the same topics can derive benefits significantly exceeding the ones achieved in homogeneous environments. Nonetheless, Scott E. Page, author of the book "The Diversity Bonus: How Great Teams Pay Off," effectively addresses both topics in a highly objective manner, referring to the results of studies. "In one study involving thousands of predictions by leading economists, the best economist was about 9 percent better than an average economist. If you combined all the economists, you were 21 percent better than an average economist. If you averaged just seven random economists, they were also about 20 percent better. Thus, seven random (and diverse) economists are more accurate than the best economist."
His explanation is crucial in understanding the necessity of a diverse and inclusive environment within the knowledge-based economy. Unconventional solutions provided by people coming from significantly different backgrounds can be far more effective in satisfying consumer needs, especially in the era of globalization.
KBE-related Threats
Being an opensource economy of ideas breeding growth, a knowledge-based economy becomes humanity's unique Perpetuum Mobile, awakening the feeling of no constraints. But to truly derive the most extraordinary profits from this system, we need to understand its drawbacks and find ways to combat them.
Drawbacks of progressing the development of knowledge…?
Before you assume I have just lost the ability of logical reasoning, hear me out.
One of the mightiest dangers related to the knowledge-based economy is the risk of widening the gap between developing countries and highly developed ones due to dynamic technological progress. It is already difficult for third-world countries to fully implement the solutions available for 20 years; meanwhile, the best Silicon Valley facilities continuously upgrade their technologies to develop their solutions further. That propels another significant issue – if all the other countries do not absorb novel technological achievements, the developing ones will be additionally marginalized.
Moreover, the quantity of high-skilled jobs is not unlimited. According to Andre Spicer's article for The Guardian: "for every job as a skilled computer programmer, there are three jobs flipping burgers." Additionally, despite the well-known benefits, the rates of productivity and economic growth have slowed down in recent decades.
What can we do about it?
The biggest questions of this type should be addressed by the world leaders and governmental institutions regulating all sectors. It is an absolutely crucial factor in developing a suitable platform, facilitating a smart and inclusive environment, enabling us to fully benefit from the magnitude of potential characterizing the knowledge-based economy. Furthering the development of new job opportunities would be a crucial decision considering the growing number of people deciding to earn a college degree in areas that require highly specific skills.
It is also essential to make sure that the most pressing mundane matters are solved and settled. After all, the more facilities in all possible places work on a particular solution, the bigger the chances of inventing something truly groundbreaking that can push humanity's potential to the highest standards available.
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