Knowledge Economy

Our economy is shifting from the industrial to knowledge economy, this shift is not direct and there are stages between, where meaning of product and workers changes gradually. In 18th century industrialization begun, where technology was first invented, mass production and production line was introduced. (Drucker, 1998) The farmers were brought in to the industries to do the work and they were taught to perform repeated task every days. At the end of 19th century, productivity set off, where knowledge was first introduced in work and workers; knowledge was used to find the better way to improve the work. "Frederick Winslow Taylor" (Drucker 1998) was the first to introduce the idea to improve the living condition of an ordinary worker by making education and knowledge necessary. In early 20th century, management era started and education became necessary for ordinary worker, knowledge is considered as essential resource in all the field and it became vital factor for the workers. The essential change happened in all these phase was the change in the meaning of knowledge .Now knowledge is in action and results are outside, in the society or economy. (Drucker, 1998) In the Industrial economy natural resources were the main resources. In Productivity, product was the key resource and management was the answer to the Management economy. In knowledge economy where knowledge of product, customer, partner and environment is essential resources.

It is very difficult to exactly pin point the definition of Knowledge Economy .Literature is lacking with the proper definition but we can get idea from the different definition given by (Powell & Snellman, 2004), (Leadbeater, 1999), (ESRC, 2005 cited in Brinkley, 2006) and form a definition according to their view.

Effective utilization of intellectual asset such as knowledge, skills and innovative in all manner of economical activities to create wealth

This definition explains that knowledge become more important than before as an input for the products and give rise to new form of trades. Codification of that knowledge will help in gathering wealth. This concept give birth to two type of knowledge in economy .First knowledge as product where it is used to earn wealth and second knowledge as a tool to gather intellectual asset, as it is believed that knowledge increases as we share, so organization use this tool to explore and excavate the knowledge and share it with partners and vendors to get competitive advantage on others. But in this article I am referring knowledge economy as a tool which is also called Knowledge based economy.

Factor that bring this change

It is argued that there are two main factors which cause this shift to new economy, first is Globalization and revolution in information and communication technologies (ICT).

Globalization is the phenomena of making world more connected, interdependent, share knowledge and resources of the world. It is about interconnection of economic, social, culture, technology, commercial among the organizations and peoples, which bring them together to form one interdependent community. The enlargement of globalization is due to the decrease in tariffs, foreign direct investment barriers and reduced power of national monopoly in telecom, air traffic (Houghton, Sheehan, 2000). Many western countries started investing in the developing countries where resources and cheaper, which also helps developing countries to generate the new revenue stream. Second main reason of Knowledge economy is rapid availability of information technology and communication. Internet was first introduced as for research bases but over few decades it developed in to necessity for every person. In economical term, ICT provide the easy was to store and transfer information which was not previously possible and the cost of storing this information is marginally zero. This helps the knowledge to apply and facilitate in all economical activities.

Knowledge Worker

Previously the term 'worker' was used for the person which uses their hand to perform work but now in knowledge economy workers mostly use their ideas and judgment to find new methods to improve their daily activity, they are consider as knowledge workers. They are benefiting companies by using their intellectual capability and experience for example software developers, system administrators, technical writers, lawyers, teachers, and scientists are knowledge worker in this new economy. Knowledge workers spend most of their time analyzing diagrams and chart to come up with new idea to improve the process of an organization. It is estimated that by the year 2000 there will be 59 per cent of work (Horibe, 1999)

Conclusion

Knowledge was always present whether in an industrialized economy or in knowledge economy, but now we start using it to get intellectual advantage because ability of the world to generate resources for us is a constant, for example consider circle as whole resources and every one wants to take their share, the only way to get a bigger share is to have competitive advantage on others, everyone is trying to get or increase their share of world resources, which is limited and in some cases declining. We are finding and introducing new ways to get our bigger chunk of share of the world economy.

Reference List

Drucker P., 'From capitalism to knowledge society' in Neef D. 1998, The Knowledge Economy, Butterworth Heinemann, p.15

Horibe F., 1999, Managing knowledge workers: new skills and attitudes to unlock the intellectual capital in your organization, Edition: illustrated Published by John Wiley and Sons

Houghton J. and Sheehan P., 2000, A Primer on the Knowledge Economy, Centre for Strategic Economic Studies Victoria University February 2000

Leadbeater C., London D., 1999, NEW MEASURES FOR THE NEW ECONOMY, International Symposium Measuring and Reporting Intellectual Capital:Experience, Issues, and Prospects Amsterdam 9-10 June 1999

Powell W. W., and Snellman K., 2004, The Knowledge Economy, Annual Review of Sociology Vol. 30: 199-220 (Volume publication date August 2004) Viewed on 24th March 2009
http://arjournals.annualreviews.org/doi/abs/10.1146/annurev.soc.29.010202.100037?cookieSet=1