THE KNOWLEDGE ECONOMY

The knowledge economy is the use of knowledge to generate tangible and intangible values. Technology and in particular knowledge technology help to transform a part of human knowledge to machines. This knowledge can be used by decision support systems in various fields and generate economic values. Knowledge economy is also possible without technology.

 The global economy is in transition to a knowledge economy as an extension of an information society in the Information Age led by innovation. The transition requires that the rules and practices that determined success in the industrial economy need rewriting in an interconnected, globalized economy where knowledge resources such as trade secrets and expertise are as critical as other economic resources.

A key concept of the knowledge economy is that knowledge and education can be treated as one of the following two:

• A business product, as educational and innovative intellectual products and services can be exported for a high value return.
• A productive asset

Driving forces

• Globalization ,markets and products are more global.
• Information technology, which is related to next three:
• Information/Knowledge Intensity ,efficient production relies on information
• New Media , New media increases the production and distribution of knowledge which in turn, results in collective intelligence.
• Computer networking and Connectivity ,developments such as the Internet bring the global village ever nearer.

Characteristics

• The economics are not of scarcity, but rather of abundance. Unlike most resources that are depleted when used, information and knowledge can be shared, and actually grow through application.
• The effect of location is either diminished, in some economic activities using appropriate technology and methods, virtual marketplaces and virtual organizations that offer benefits of speed, agility, round the clock operation and global reach can be created or, on the contrary, reinforced in some other economic fields, by the creation of business clusters around centers of knowledge.
• Laws, barriers, taxes and ways to measure are difficult to apply solely on a national basis. Knowledge and information leak to where demand is highest and the barriers are lowest.
• Knowledge enhanced products or services can command price premiums over comparable products with low embedded knowledge or knowledge intensity.
• Pricing and value depends heavily on context. Thus the same information or knowledge can have vastly different value to different people or even to the same person at different times.
• Knowledge when locked into systems or processes has higher inherent value than when it can walk out of the door in people's heads.
• Human capital competencies are a key component of value in a knowledge-based company, yet few companies report competency levels in annual report.
• Communication is increasingly being seen as fundamental to knowledge flows. Social structures, cultural context and other factors influencing social relations are therefore of fundamental importance to knowledge economies.

 Conclusion, The knowledge economy has manifold forms in which it may appear but there are predictions that the new economy will extend radically, creating a pattern in which even ideas will be recognized and identified as a commodity. Considering the very nature of knowledge itself, added to the fact that it is the thrust of this new form of economy, there is a clear way forward for this notion.

    By Segesela Blandina

       BAPRM 42663