Definition of knowledge economy

The knowledge economy is an economy that relies on the industry, circulation and evaluation of knowledge; Where the importance of labor costs is less, and it does not use traditional concepts of the economy, such as scarcity of resources, and the knowledge economy is defined as a type of economy whose growth depends on the quality and quantity of information available, and the ability to access it. Another definition of the knowledge economy is a type of economic system, in which production and consumption depend on the use of intellectual capital, and the knowledge economy often takes a large share in the economic activities of countries with advanced economic growth.

History of the knowledge economy

The first appearance of the term knowledge economy dates back to the fifties of the twentieth century AD. As it began to spread when the industry sector witnessed a development at the expense of the agricultural sector. This led to the emergence of a new economic sector in developed countries. In order for it to be the nucleus of a new economic system, and it was called the post-industrial stage. Modern economic sectors were built on the idea of knowledge, communications, and information technology, which contributed to a significant development of human activity and thought in all fields. As both oil and gold no longer dominate the traditional industry, rather the possibility of producing information programs has become one of the priorities of the modern economic sectors.

Capital, labor, and land are the main factors of the productive process in ancient economies, while this is different for the modern economy (knowledge economy); Creativity, information, intelligence, and technical knowledge are considered one of the basic components of production, and according to estimates by the United Nations, the knowledge economy controls 7% of the world's gross domestic product, and this economy is witnessing an annual growth rate ranging between 10% - 50% approximately. of the gross product of the member states of the European Union; Because of the interest of these countries in the use of communications and information technology.

characteristics of the knowledge economy

The knowledge economy is characterized by a set of characteristics, namely:

Knowledge represents the capital of this economy, and it is characterized by the fact that it is not monopolized, nor is it reduced, nor is it implemented.
Knowledge is concerned with globalization, adapting to customer desires, and focusing on providing services to consumers.
Knowledge depends on the use of a productive workforce.
Communication and information are the main tool to achieve the effectiveness of knowledge.
Knowledge helps to raise the per capita share of the national gross product.
Knowledge provides an environment that stimulates talent and creativity.

The importance of the knowledge economy

The importance of the knowledge economy emerged with the use of information technologies instead of resources and capital. Which contributed to knowledge becoming one of the most important factors in the transformation of developing countries into developed and modern countries, and the impact of this thing was reflected in international trade, and private investment in technology, creativity, and development constituted a motive to support economic growth, and the following is a set of the most important points that constitute the importance of the knowledge economy:

Knowledge is classified as scientific, and is considered the basis used to produce and increase wealth.
Knowledge contributes to increasing productivity, improving performance, reducing production costs, and ensuring the development of its quality. Through the use of advanced methods and technical means of the knowledge economy.
Knowledge helps support the national income; Through establishing projects and following up on their financial returns, and contributing to the generation of individual income, which is related to the activities of direct or indirect knowledge.
Knowledge contributes to job opportunities; Specifically within the professional fields that use advanced technological techniques within the knowledge economy, and the available job opportunities are diverse, increasing, and wide.
Sharing knowledge to modernize and develop economic activities; Which supports its growth to a large extent, and this leads to the continuation of the rapid development of the economy.
Knowledge contributes to providing the necessary foundations to support the expansion of investment. especially in the fields of practical and scientific knowledge; Which leads to building knowledge capital to generate knowledge production.
Knowledge reduces the use of natural resources; By relying on knowledge resources, and developing the existing ones, and this leads to ensuring the continued development and growth of economic activities without being affected by determinants that limit this, such as scarcity.
Knowledge contributes to changing the structure of the economy. It leads to increased interest in direct and indirect knowledge production, promotes investment in knowledge capital, and supports exports of knowledge products.

requirements of the knowledge economy

The knowledge economy needs a set of basic requirements. In order to ensure its continuity and development, the following provides information on the most important of these requirements:

Knowledge economy indicators

There is a set of indicators related to the knowledge economy, and they are used to indicate that it is the pattern used within the economy. Which contributes to the application of a set of comparisons between countries; In order to determine the level of its economic development, the following is a group of the most important indicators used to measure knowledge:

The percentage of knowledge within the prices of services and goods.
Knowledge trade rate within the trade balance of each country.
Indicators related to society's orientation towards information, such as basic infrastructure rates, including: the Internet, telephones, and digital content.
Number of intellectual property rights and patents.
The number of years of training and study related to the age of individuals.
Spending rate of GDP on development and research.