Economy in the Age of the Knowledge Economy
This era is called the Age of Knowledge, and this was the result of the new changes in the world in various fields, and the rapid development of the Technology and Information Revolution on a large scale, so that the ability to produce and progress depends on the ability to innovate and adapt, turn information into knowledge, and then turn this knowledge into a distinct product, and it seems that the role of knowledge has become about generating, increasing and accumulating wealth, by contributing to improved performance, raising productivity and reducing the cost of production, which has led to the emergence of the knowledge economy, which develops rapidly, and its principles take root and expand in the face of the traditional economy.
However, we cannot understand this knowledge-based economy if we do not have the knowledge on which the economy is based, in the sense that we will only realize what the knowledge economy is meant to do by knowing the characteristics of the traditional economy, while looking at the characteristics of the knowledge economy, which is evident only in the language of comparison, focusing mainly on the priority of the knowledge economy in comparison.
The characteristics of the knowledge economy and the traditional economy can be accounted for easily by looking at the characteristics of the knowledge economy first. It is an economy of abundance because, unlike most sources, which are depleted by use, knowledge does not suffer from scarcity in the old analytical sense, it has an abundance of resources that continue to be increased through the increasing usage of knowledge and information, and allows the use of appropriate technology to create virtual markets and facilities which eliminate time and space constraints through e-commerce, so information and knowledge can be shared and can grow when used.
We find that the importance of geographical location has faded – one of the most important characteristics of the traditional economy. Using appropriate technology, and appropriate means, virtual markets and virtual organizations provide speed of completion around the clock, and anywhere in the world, so it is difficult to apply laws, barriers, and taxes at the national level. Knowledge is “filtered” where demand is higher, where barriers are lower, and knowledge-based products and services achieve higher prices than similar products that lack cognitive density, while also considering pricing and the value of products or services. They are heavily dependent on context.
Thus, knowledge itself has a different value for different people at different times, and, when knowledge is within systems or processes, it possesses a higher fundamental value than unregulated knowledge in people’s heads, and human capital is the most important component of value in knowledge-based institutions. What distinguishes this new economy is the demand for efficient and knowledgeable labour: knowledge ownership cannot be transferred from one party to another, and it is theoretically known that the economics of things, Materialism, is quite different from the information economy, hence we describe the knowledge economy as an abundant economy.
More than scarcity, it has also been argued, because resources can be depleted by use and consumption, that knowledge of learning, practice, and usage increases, as well as spreads by participation, so reiterating that it is difficult to apply laws, restrictions, and taxes on a purely national basis in the knowledge economy, unlike the traditional economy. Many transformations, a rapid trend towards trade liberalization, a concentrated access to regional blocs, and the emergence of the role of multinational corporations, and technological development, are at the heart of these transformations.
In response to all these transformations, the world has entered a new phase of development, which has made states fall under the obsession with competition, particularly since traditional sources of competition are no longer as important, which has led to an interest in new sources of competition, not only related to capital intensity, but also to the possession of knowledge, information, technologies, skills and the control of modern technology, including the use of sophisticated methods based on creativity, innovation, change and initiative.
One of the most important features of the knowledge economy is that the main factor in production is knowledge, as land was in the agricultural economy, and capital in the industrial economy; Peter Drucker emphasized that knowledge has become an essential resource of production, which means shifting the centre of gravity from raw materials and capital equipment, to focusing on information, knowledge and research, where it is possible to separate the two values, and that knowledge has no economic value (exchange value) except when used, and the cognitive component has increased in the product to a large extent, whether it is a commodity, or service.
The key to value in the knowledge economy is the competitiveness of human capital, as knowledge ownership cannot be transferred from one end to another, unlike the elements of production, in which the focus is on the concept, such as ideas and brands, rather than machines, stocks and financial assets. And to talk the rest.
Author : Manahel Thabet
Published January 01, 2018
Al Bayan Newspaper