Towards a knowledge economy

In the last quarter century, after the end of the Second World War, developed countries entered a new phase of development and scientific and technological knowledge.
The rate of knowledge creation and dissemination has increased significantly due to the rapid progress in ICT, which has declined significantly, especially the costs of computing and electronic networks. With increased affordability and the use of computing power and electronic networks, their frequency has increased with the efficiency and quality of knowledge, rapid progress in R & D, new knowledge and technology.

This progress has emerged in the form of a range of innovations. These scientific and technological evolutions may result in huge economic returns that cannot be hidden and have resulted in economic changes that have led to the emergence of various economic forces, all trying to move the economy towards its goals and interests, as well as the so-called phenomenon of globalization.

Knowledge is the engine of productivity and economic growth, it focuses on the role of information and technology, and it teaches how economic performance is. This increased speed in the creation and dissemination of knowledge has led to the rapid spread of modern technology and efficient production, as well as the increased probability of leaps that have led to increased competition at the global level.

The success of the transition to the knowledge economy usually involves elements such as long-term investment in education and knowledge, the development of innovation capacity, the modernization of IT infrastructure and the creation of an enabling economic environment for market transactions. The World Bank has designated these elements as the pillars of the knowledge economy formed within the framework of the knowledge economy.

Transition to a knowledge economy requires long-term strategies that include the understanding of strengths and weaknesses and the combined work of the different society actors to develop policies and investments that are appropriate to trends and objectives. What distinguishes the knowledge economy is the emergence of Knowledge Based Organizations (KBOs) that occupy knowledge makers.
The knowledge economy should be viewed from various aspects.  First by the speed of technological development, especially the development of technologies that generate the knowledge economy, such as information and communications technology. Secondly, from the economic side, where all agricultural, industrial and administrative areas have become knowledge-intensive; Access to knowledge is a necessity for all social groups and leads to the development of human capital through the provision of continuous education for all.

The knowledge economy requires greater efforts in the areas of education and training and requires a new kind of education and training. The number of information workers is steadily increasing, and this requires the formation of scientists and workers in this field and in the fields of information technology. Information technology illiteracy has become a hindrance to progress.

The development of rapid knowledge requires lifelong training, a higher level of scientific and technological employment than before, and the need to acquire a better education has become urgent for workers. Higher wages will be directed towards workers who are able to deal with encoded information and technological knowledge rather than manual labor or physical effort.

Concept and characteristics of the knowledge economy

The concept of knowledge economy or the new global economy is a nascent concept, but it has emerged and developed rapidly and it refers to the working environment where intangible assets exceed material assets in their value and importance. In this economy, knowledge is the focus of work, not just a tool. The product life cycle is short. Numerous labels have been used to denote the knowledge economy such as the information economy, the internet economy, the digital economy….

Several definitions of the knowledge economy have been presented. It is also known as an economy that is based on the production of knowledge and the use of its results and its fruits constitute an essential part of the wealth of the developed society and its social welfare. It is also considered as a branch of the basic sciences that aims to improve the well-being of individuals, organizations and society by studying production systems and designing knowledge and then carrying out the implementation of interventions necessary to develop these systems. As a modern economy, imposing a new spectrum of activities related to knowledge, technology, information, and the most important features of Internet transactions.

Hence, the knowledge economy can be considered as the economy that revolves around acquiring, participating in, using, employing and innovating knowledge in order to improve the quality of life in all its fields through the use of a rich information service and advanced technological applications.

Characteristics of the knowledge economy:

One of the most prominent characteristics of the knowledge economy:

  • Knowledge is the main factor in production.
  • Focusing on the intangible, such as ideas and trademarks, rather than machinery and financial assets.
  • It is networked through the evolution of new communication methods.
  • It is digital, and this has a huge impact on volume, storage and processing information.
  • It is a virtual reality where virtualization became a reality with digitization and networks – the Internet.
  • Diminishing time constraints and low cost with the development of new technology – the Internet.
  • New electronic markets are characterized by rapid flow of information on products, especially prices.
  • The free flow of information through the Internet may also create greater awareness of ethical issues among individuals and institutions.

Importance of the Knowledge Economy:

The knowledge economy is a new economy of a special nature that derives its uniqueness not only from the considerations of the present or the past, but also from the specificity of its role in the future and from the motivations for development and innovation. It is growing at a rapid rate and surpassing all other economies in an unprecedented manner both concrete and intangible.

The importance of the knowledge economy has grown and has been confirmed by the clear role of knowledge in determining the nature of the economy and its activities. By identifying the means, methods and techniques used in these activities, in their expansion, in their production, in the needs and services provided.  And thus in the extent of the benefits to individuals and society, and to achieve the economy development and growth, and increased the justification for the transition to the knowledge economy and increase the importance is the rapid growth of knowledge, the emergence of new branches of science, as well as the emergence of new technology and products.

Its main benefits can be presented as follows:

  • The scientific knowledge contained in the knowledge economy is the basis for wealth generation and accumulation.
  • To contribute to improving performance, raising productivity and reducing the cost of production, and improving its quality through the use of advanced technical means and methods, especially in the industrial fields, which highlight the industries of precision electronic devices and equipment and computers and software.
  • Contribute to the generation of jobs in the areas that are using the advanced technologies included in the knowledge economy and generate employment opportunities that are constantly expanding for employees with specialized scientific skills and abilities.
  • Contribution of the contents of the knowledge economy and its data and techniques in providing the necessary basis for stimulating the expansion of investment, especially investment in scientific and practical knowledge in order to create knowledge capital that contributes to the production of knowledge.
  • The contribution of the knowledge economy to achieve clear and tangible structural changes in the economy. Such as the relative importance of knowledge, production and increased investment in knowledge to increase knowledge capital and to increase the relative importance of workers in the fields of knowledge associated with the use of advanced technologies and to increase the importance of exports of knowledge products.

Factors contributing to the emergence of the knowledge economy:

Many factors have contributed to the emergence and the development of the knowledge economy, among these factors:

  • The development of the third sector, service and intangible activities and the increase of their contribution in the economic outputs.
  • Technological development: especially information and communication technology (ICT), biotechnology, etc., which constitutes what is called the new economy.
  • The evolution of the concept and applications of the economic intelligence, the clusters, as well as the relations of exchange and partnership among many economic agents.
  • The phenomenon of globalization, which has reduced the physical labor wages in exchange of an increase in the level of intellectual work.

Measuring the knowledge economy:

Knowledge and other components of the knowledge economy have been difficult to measure. The World Bank has developed a knowledge economy methodology called the Knowledge Assessment Method (KAM) and the Knowledge Economy Index (KEI), known through a set of indicators. It consists of four pillars or key indicators (organizational performance, innovation, human resource management, information technology), each of which contains a set of sub-variables.

1.    Organizational performance

The concept of performance has always been a subject of studies and researches because of its importance, which imposed the need to focus on the introduction of alternative concepts to it and the attempt of researchers to accurately identify and study the factors affecting it. Most modern and old organizations focused on performance, the success of any organization is measured by its performance.

Organizational performance is the factor that evaluates and measure the ability to contribute to the achievement of the objectives of the company. It is referred to as the ability of the organization to achieve its objectives by using available resources in efficient and effective methods.

Organizational performance is defined by focusing on maximizing the profitability of the organization, which is the narrow concept of organizational performance. It is the main factor to determine and achieve the objectives of financial performance and is used to measure financial indicators such as return on investment.

Organizational performance is one of the methods by which an organization can identify and evaluate its various internal activities, identify its strengths and weaknesses, and evaluate its performances in comparison with the performance of other competing organizations that carry out similar or similar activities in the same industry. Market share, cost reduction, profitability, customer satisfaction are common metrics for measuring organizational performance.

2.    Innovation

It is a set of quantitative and behavioral variables such as hopes, aspirations, previous experience, need, self-capacity and other variables in organizations. It is also seen as a collective organizational process that aims to ensure new changes to the organization. These changes are new inputs to the organization (invention and ideas) and / or motivating workers to make proposals for change.

Innovation is a process that involves looking at things and problems with a new and unusual is the use of unconventional thinking to present new and innovative ideas in which the individual interacts, investigates, and connects things, leading to the production of something new, original and valuable to society.

3.    Human Resource Management

The human element occupies the fundamental importance of any evolution in the world in all ages and times. Human development is the centerpiece of all developments that the human society has been able to achieve in various fields. The recent technological developments in the field of information and communications systems and technology and the requirements of globalization, free trade, total quality and sustainable development constitute stations of great importance in the context of the development of the present century. Without human development and human resources, these stations would not have achieved their development prospects and means of success, based on the importance of information and its distinctive role in our contemporary lives.

Human resources management is a management that has strategic and operational functions to fulfill economic, legal, social and ethical responsibilities represented by advisory and executive roles to achieve the use of human resources efficiently and effectively through a harmony and complementarity of the interests of individuals, organization and society together.

4.    Information Technology

Information technology, with its advanced tools, is of great importance in today’s world. This concept has flourished in all fields, professions and disciplines. Nothing has affected human life since the Industrial Revolution, as did information technology. It has become indispensable in the lives of peoples. Organizations invest their funds in information technology in order to provide information with high quality characteristics such as accuracy, speed, relevance, comprehensiveness and reliability that support the decision-making process management.

Other Indicators of knowledge economy In order to understand the possibilities for countries joining this new economy, which is based largely on the knowledge revolution, some indicators must be addressed:

  • R & D Indicator:

Research and development data form the core indicators of the knowledge economy. Two basic indicators are used: R & D expenditures and staff. This research has been used to collect data allowing a dynamic analysis and international comparisons.

  • Education and Training Indicator:

Indicators based on education and training data allow the assessment of knowledge and skills (or human capital) gained through the formal process of education. These indicators also allow inventory valuation and investment in human capital. Education statistics are compiled on an international basis by the Organization for Economic Co-operation and Development (OECD), UNESCO and the European Community, and are usually available over the years. This indicator is highly important because it has a significant impact on the revolution of methodology and knowledge in terms of increasing the proportion of specialists in the different knowledge fields. Thus increasing the productivity. The education and training indicator also allows the supply of stock and investment in human capital.

  • Change in the structure of exports:

The exports of the developed countries, the developing countries and the least developed countries are made up of material goods. Today, exports from developed countries depend on the production, distribution and use of knowledge. Developing countries – particularly the Arab countries – still have a non-significant share of exports, which depends on knowledge of all their exports, exposing them to significant economic challenges. All developing countries must adopt short- and medium-term plans to move to the knowledge-based economy, reform laws and regulations in line with the knowledge economy concept, and increase the volume of knowledge. Agreements and investments in telecommunications information technology, higher education, and vocational training in order to cope with rapid changes in all aspects of life in order to enter the world of the economy of knowledge and positive integration in a world whose knowledge and technology have become an identity.

Knowledge economy vs. knowledge based economy:

Some economists have crossed the knowledge economy in another sense: the knowledge-based economy. However, due to the acceleration of economic transformations and technological developments, some economic researchers have worked to re-examine and distinguish between these two different connotations of the term.

  1. The knowledge economy is about the economics of knowledge processes themselves, i.e. production, knowledge making and R & D. Both in terms of costs of the knowledge process such as research and development costs or business management costs consulting or the preparation and training of experts. Moreover, between the return and revenue resulting from this process as a mere economic process such as the economics of tourism service or hotel or other hand to another.
  2. The knowledge-based economy is an advanced stage of the knowledge economy, that is to say, it depends on the clues of the knowledge economy in various economic and social activities, such as association of information technology with multiple sectors such as communications that make the economy based on knowledge and science. The major industrial countries that have benefited from the achievements of the scientific and technological revolution, have new knowledge, discoveries and advanced technologies that reached the stage of the economy based on knowledge, or what we can call the post-knowledge economy. Countries that seek to produce knowledge from innovation and acquisition, use and storage of knowledge they are still in the process of knowledge economy.

Knowledge-based Economy is the economy in which the generalization and the use of knowledge contributes to an important rate of growth and wealth creation, and the proportion of traditional factors of production, such as physical labor, capital, raw materials … where knowledge is the main factor of competitiveness.

Human capital is the core of the knowledge economy, especially the ability to innovate, and to inspire new ideas, where ICT is the main tool. The human capital is the core of this economy, in particular through the innovation, creativity, generation and exploitation of new ideas.  As well as the application of technologies and the exercise of higher commitment capabilities, making current industries contain greater knowledge density.

As a result, the economy contains more knowledge-based activities, a higher technological industry, a higher employment rates, and a higher proportion of GDP and exports. Knowledge has already become tradable, as it has become a factor of production.

The term knowledge economy is a result of the awareness of the role of knowledge and technology in economic growth. Knowledge as a human capital and a technological content has long been at the heart of economic development.

However, the importance of the knowledge economy has only increased in recent years. This was reflected in the increase in the proportion of advanced industries (electronic media, electronic, space) in the Gross Domestic Product (GDP).. It is estimated that more than 50% of the Gross Domestic Product (GDP) of the major OECD countries depends on knowledge, by making investment oriented and high-tech services especially ICT.

The physical investment in computers and automated media is the fastest growing in this field, in addition to the huge non-material investments of R & D, labor formation, programs and specialized technical competencies. Research expenditures amounted to 3.2% of GDP in the OECD region.

This change has an impact on the labor market: the demand for qualified labor increases more than the unqualified labor, according to the level of education and training, which makes the applicants to new requirements to improve their level of scientific and rehabilitation, and puts countries and governments in front of the obligation to investment more in education and training.

Aspects of the transition towards a knowledge economy:

Technology has transformed advanced economies into knowledge-based economies, which are directly based on the production of knowledge and information distribution and use. Making technology an engine of economic growth more than ever before.

This transformation is about the change in production or the spread of knowledge (especially by ICT). Which changes the consumption plan more than production processes. Technological changes have created large and new possibilities for consumption through product innovation and production processes. Which did change the nature of work from the quantitative side (creation and abolition of jobs), to the qualitative (development of rehabilitation and employment).

This structural shift initially translates into a decrease or demarcation of sectors of activity and the emergence and the growth of other parallel sectors, which redistributes the job position. This is mainly reflected in the growing segment of the services sector, both in the economic sectors (about 2/3 of the production) or (50% of the labor force in view of the lower labor productivity in these sectors). The same development has occurred in the manufacturing industry: the increasing relative importance of the high technology industry (automotive, electronics, aerospace, and pharmaceutical industries).

Media and knowledge economy:

The knowledge economy is closely related to information technology. The knowledge economy would not have existed without the information and communications revolution, which in turn had revolutionized the media, which resulted in the emergence of so-called new media.
Trade was the first of the activities that benefited from the Internet services to enhance communications and exploit them in the conclusion of deals, advertising, promotion, marketing and access to information about competitors around the world.

The media industry in modern times is one of the most powerful industrial structures in the world. The source of its strength lies not only in the enormous funds it invests in, but also in the serious impact it has on individuals, groups, governments and organizations which increase its effectiveness and impact.

There is an economic aspect of the media known as “media economics” which is defined as “a study combining the science of economics and media studies in the sense that it applies the principles of economics to media institutions in society. It explains how economic conditions guide the work of media institutions in the way they produce media programs content and how to make decisions according to the economic opportunities and challenges they are directing.

The subject of media economics was not raised in the forms of the old media. Perhaps because the cost of media before the invention of printing and then the invention of radio and television was not something worthy of research. Therefore, the interest in the ideal form or the content of the message in the old media mostly over what else. Today, the interest in the material form and the cost of the media message stand in addition to the attention to its contents. It should be noted that the transformation of media attention between the past and the present was the result of several factors:

  • Rapid growth of the media industry,
  • Mass media investments,
  • The emergence of multinational or intercontinental companies that have an effective impact on sustainability. Many media are reaching record levels of sophistication due to funding paid from these companies. Among these companies are major American media companies such as AOL – Time Warner – Viacom – Disney- News corporation …
  • Governments’ involvement in this economic activity,
  • The difficulty of production problems in the media.

Industries related to the knowledge economy in some countries:

1.    South Korea:

South Korea achieved excellent results especially in the eighties and nineties, making it one of the four Asian tigers and distinguished for the knowledge economy as follows:

  • Semiconductor: South Korea ranked third worldwide in the production of semiconductor. It constitutes 10% of Korean exports.
  • Telecommunications equipment industry: In the 1980s, investments in R & D contributed to the increase in Korean capabilities in the telecommunications equipment sector. The production ratio doubled from 1998 to 2000, which was exported by 42%. The domestic market for the sector was estimated at $ 6 billion, with imports estimated at $ 2.3 billion for the same period.
  • Software industry: Korea occupies an important position in the software industry. The sector is characterized by an intermediate level of technology and progress, especially in the field of database management systems. Domestic production was estimated at $ 6 billion, and exports were only 2.6%. The delay in this area is due to many problems, including piracy. Korea ranked sixth in the world in many years starting in the year 1994.

2.    Singapore:

Singapore has managed to maintain first place in the Global Competitiveness Report for several consecutive years. Characterized by the following sectors:

  • Electronics: Singapore aspires to progress in the global ranking in this sector by relying on the development and management of new products and applications, the entry of new markets. It aims to increase the sector’s output by 8% per year to reach $ 150 billion and to develop more than 50% of the skilled workforce in the sector by 2018.
  • IT: includes: software, hardware and IT services. Sales to end users amounted to S $ 11.95 billion in 2006. The annual growth rate of this sector amounted to 23%. Exports amounted to $7billion, a growth rate of 37% compared to the previous year, representing 87% of these exports, compared to 6.3% for software and 4.7% for services.

3.    Malaysia:

Malaysia is one of the countries that bet on education and training as a means to achieve high growth rates, and the high proportion of university graduates and higher school graduates compared to its neighbors reflects this bet, especially so-called learning by doing. It has been in advanced positions from year to year in the recent period.

4.    India:

India is one of the countries that has become a model in the field of software not long ago, mainly due to its policies. One of the critical factors in Indian IT success is the development of advanced software solutions. There are many successful Indian experiences, which have undergone years of development. These include e-commerce solutions, database solutions of all kinds, accounting solutions and electronic publishing solutions, making it easier for foreign companies to rely fully on Indian companies to use such solutions. The software export sector is growing at a rate between 40% and 50% annually, making India the second largest export market in the world, with growing companies such as “Wipro” and “Infosys” giving a bright picture of the Indian experience. In establishing a leading competitive knowledge economy.

It is noted through all previous experiences that all these countries have made efforts in the following areas:

  • Development of information infrastructure: including the physical part of computers, lines and communication networks (fiber optics)
  • Investment in education: especially in the field of education, universities in South Korea and Malaysia
  • Developing innovation
  • Maximizing the gains from foreign investment
  • Promoting export-oriented industries


Knowledge is the essential characteristic of human society, through which profound transformations have taken place in almost every aspect of life. Knowledge is undoubtedly one of the important achievements of both the economy and society. In this new emerging economy, it has become the main engine of economic competition. By increasing productivity and demand for new technologies and ideas. These products have effectively combined revolutionary changes in all markets and sectors.

The shift from a capital-based economy to a knowledge economy takes place through the interaction of three forces:

  • Technological change, including information technology and resources, and biotechnology.
  • Trade liberalization and internationalization of production systems
  • Liberalization of capital movement in the global economic system, this requires the restructuring or restructuring of economy, production, energy, transportation and other activities to ensure continuity…

The impact of this transformation has become apparent at the level of states, corporations, individuals and communities. At the individual level, the nucleus of the societies that make up states, they must constantly improve their skills to keep up with the constant and rapid developments and transformations in their workplaces and in the society in which they live.

Access to a knowledge economy requires states to eliminate all unnecessary restrictions, traditional laws, customs, traditions and cultures that restrict development. States and societies with high levels of culture and flexible laws are most able to influence and influence the knowledge economy, so that countries can shift from an economy based on capital and labor to the knowledge economy, this requires them to give the education system adequate attention as follow:

  • The educational system must be flexible so that the state can implement the strategy of transition to a knowledge economy.
  • To develop education policies to ensure that all students have the ability to deal with knowledge and communication technology, and that young people, and that information, knowledge and computer skills are part of the state’s interest.
  • Teachers must be qualified without exception on computer skills and provide them with all necessary equipment to develop their skills and skills in the field of knowledge and communication technology.
  • Provide investment opportunities in training in the field of knowledge and communication technology, to increase the number of employees who are able to participate in knowledge-based industries.
  • Provide training opportunities for old employees in all public and private sectors on computer and Internet skills, so that they will be able to deal with the knowledge economy.

The knowledge economy is intended to use technological techniques in addition to the process of employing them in order to reach a sophisticated life in all fields and activities using technology services and types of Internet and information technology applications. The reason for the growth of the economy in the world and production is knowledge, The reason for this is either to take out and prepare goods and services using information or through the use of technology in old goods and services, i.e. development. There are also several factors necessary for the success of the knowledge economy, namely education, R & D and innovation, in addition to changing the structure of exports.

By Nada and Nadia Berchane, 2017-2018 year group of M2 IESCI at the University of Angers


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