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The knowledge economy is an organization of consumption and production based on intellectual capital.
It refers specifically to the capacity to profit from scientific discoveries and applied research.
In the majority of highly developed economies, the knowledge economy dominates economic activity.
An essential portion of the value in a [knowledge economy] may consist of intangible assets such as workers’ knowledge or intellectual property.
Understanding the Knowledge Economy
- Developing economies tend to place a greater emphasis on agriculture and manufacturing, whereas highly developed nations emphasize service-related activities.
- It includes knowledge-based economic activities, such as research, technical support, and consulting.
- The market for the production and sale of scientific and technological discoveries is the [knowledge economy].
- This knowledge can be monetized through patents and other forms of intellectual property protection.
- The producers of this information, such as scientific experts and research facilities, are also part of the [knowledge economy].
Knowledge Economy and Human Capital
The [knowledge economy] examines how education and knowledge that is, “human capital” can function as a productive asset or business product.
That can be sold and exported to generate profits for individuals, businesses, and the economy.
Instead of natural resources or physical contributions, this economic sector relies heavily on intellectual capacity.
In a [knowledge-based economy], products and services based on academic expertise advance technical and scientific fields, fostering innovation throughout the economy.
Four pillars define knowledge economies according to the World Bank:
- Institutional structures that encourage entrepreneurship and the application of knowledge
- Access to skilled labor and a solid education system
- Access to infrastructures for information and communication technology
- A thriving innovation ecosystem comprises academia, the private sector, and civil society.
Example of a Knowledge Economy
- A knowledge economy comprises academic institutions, companies engaged in research and development (R&D).
- Programmers creating new software and search engines for data, and health professionals using digital data to improve treatments.
- These economic intermediaries disseminate the results of their research to workers in more traditional fields.
- Such as farmers who use software applications and digital solutions to manage their crops better.
- Advanced technologically-based medical procedures such as robot-assisted surgeries, and schools that offer digital study aids and online courses.
How Big Is the Knowledge Economy?
- Because the global knowledge economy is not a clearly-defined category like manufacturing, it is difficult to assign a precise value to it.
- However, it is possible to arrive at a rough estimate by estimating a few of the knowledge economy’s major components.
- According to the U.S. Chamber of Commerce, the total intellectual property market in the United States is worth $6.6 trillion.
- And IP-intensive industries account for supplementary than a third of the GDP. The additional market size of the nation’s higher education institutions is $568 billion.
Which Skills Are the Most Valuable in the Knowledge-Based Economy?
- According to the Organization for Economic Cooperation and Development, communication and teamwork are essential skills for a knowledge-based economy, alongside higher education and technical training.
- These interpersonal and workplace competencies are essential to surviving in a knowledge-based workplace.
- Because it is unlikely that a single knowledge worker can generate ground-breaking innovations alone.
Which Country Has the Biggest Knowledge Economy?
- The United Nations Development Program’s Global Knowledge Index, which replaced the World Bank [Knowledge economy] Index in 2012, measures the factors of a knowledge economy.
- This metric assigns a score to each nation based on “enabling factors” for the [knowledge economy], such as educational attainment, technical and vocational training, innovation, and communications technology.
- According to the most recent issue, Switzerland is the top-ranked [knowledge economy], scoring 71.5%. Sweden and the United States tied for third place with scores of 70.
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