The twenty-first century is undoubtedly a knowledge-driven one. Knowledge is now considered "the miracle of the human universe." In fact in the present societies, the basic economic resource is no longer capital, labour or capital; it is the knowledge (Drucker, 2012, p. 435). All companies are information based on knowledge and the work of managers is to manage knowledge to sustain their growth and competitiveness. This is the essence of a knowledge-based economy. A knowledge-based economy is one whose growth and development is stimulated through creation, dissemination, and use of knowledge and the basic building framework (David, and Foray, 2002, p. 13). The production, use, and distribution of knowledge building information are crucial for economic growth and development. The economy is science- and technology-intensive as a means through which the complex nature of knowledge base is manipulated for productive activities. This means that for a modern economy to expand and increase its growth rate, the focus has to be on improving the pace at which knowledge is created and disseminated within the economy for rapid development. Knowledge is created through research and innovation. Such a process cannot be possible without robust policy frameworks and funding support. This calls for cooperation among various players in the economy including government as the leader in steering the process. In a knowledge-based economy, the government should support research and innovation because it is a way of stimulating economic growth and development, competitiveness, reducing poverty and leveraging costs; government support can be outlined through policies in the four main areas of the economic and industrial regime, dynamic information infrastructure, human resource, and innovation system.
Knowledge-based economy stands on four critical pillars that when strengthened through government support in research and innovation would lead to growth and development (Chen and Dahlman, C., 2005, p. 35). The four pillars include the business environment, dynamic information structure, human resources and efficient innovation system. The business environment is defined as an institutional and economic regime that offers incentives for efficient creation, dissemination, and utilization of existing knowledge (Leydesdorff, 2006, p. 245). In this pillar, the government can provide incentives to individuals and organisations with a view to encouraging research that result in innovations for stimulating economic growth and development. The dynamic information infrastructure entails a framework for facilitating effective communication such that the new research findings are efficiently processed and disseminated among the key players in the economy. Here the government plays a vital role in the establishment of a robust information technology infrastructure such as communication lines and networks that allow people to efficiently share information for building knowledge and increasing economic activity that results in growth and development. The human resources pillar encompasses the human labour needed in a knowledge-based economy to stimulate growth. The government should support efforts in establishing an educated and skilled population that will, in turn, create and utilize knowledge. Arguably, attaining a knowledgeable and skilled population capable of creating and utilizing knowledge is expensive and cannot be achieved through private investments. This position justifies the involvement of the government in providing education and improving the knowledge of the citizens in a knowledge-based economy so that it can stimulate economic growth and development. On the other hand, an efficient innovation comprises research centres, firms, consultants, universities and other vital institutions that can tap into increasing stock of global knowledge and digest and adapt it for local consumption as well as create and disseminating new knowledge. Again such endeavours may be so expensive and futile without government support yet they are crucial to the establishment of knowledge in a country that will equip the people and organisations so that they can revitalise the industries and the economy. The four pillars upon which a knowledge-based economy stands require heavy investments to assimilate and create new knowledge to support the economy which necessitates the involvement of government support.
Also, the government plays a vital role in the regulation of creation and dissemination of knowledge to ensure the protection of innovations. In recognising the importance of research and development in stimulating economic growth, the government, being the sole regulatory body in a knowledge-based economy, should ensure that individuals take credit of innovations so that they are encouraged to create new knowledge. For example, the government should play the task of instituting and enforcing intellectual property rights through effective copyright and patent laws that inhibit piracy and plagiarism (Nicolaides, 2014, p. 3). Such support from the government ensures that knowledge is not copied; rather created from day to day leading to higher innovation in the economy.
Since the government's role is to improve the well-being of the people, it has to invest in areas that stimulate growth, create new jobs and reduce poverty. Research and innovation should thus be one of these areas. Productivity growth depends on working smart (Griffith, Redding, and Reenen, 2004, p. 885). For example, for example, mastering the economics of ideas can boost productivity and growth which in turn leads to expansion of businesses, the creation of new jobs and reduction in poverty. This justifies government's involvement in building an innovative economy. Also, it has to be acknowledged that it is through innovativeness that organisations and businesses in a knowledge-based economy that supports competitiveness. Undoubtedly, firms and organisations that do not keep pace with rapid changes in the business environment fall behind (Kaplan and Norton, 2001, p. 57). To avert such situations, the government has to play an active role in formulating robust national strategies and reforms that position firms to utilize new ideas in production which will lower costs of production and help them offer lower prices that in turn create a competitive advantage for them both locally and internationally. This has been realized by some countries. For example, the United States and the United Kingdom have in the past invested heavily in knowledge factors and in return realised rapid and sustained growth. Currently, these countries are the most dynamic and competitive in the world.
Moreover, the government should support research and innovation as it is the only institution that can substantially fund the research and innovation institutions within the economy to generate new ideas. The research foundations, universities, and colleges are the sources of new ideas and depend on government for funding to attain this end (Policy, 2006, p. 5). Since most of the universities and research foundations are government operated, it is only through funding support that they can initiate programs and research projects that result in innovations which are then disseminated within the economy for the firms to implement and realize higher productivity. As the government supports these institutions, it allows for coordination between the researchers in the universities and colleges with research foundations, government departments and business units leading to consolidation of efforts that result not only in higher innovativeness but relevant innovations that meet the needs of the industries. Therefore, through government funding, research foundations, universities and colleges leverage costs and are empowered to create new ideas for the economy.
Policies that Government Should Implement
The government can ensure support for research and innovation in a knowledge-based economy through the formulation of several policies that guide the knowledge creation process, dissemination and application. It means that government policies should be broad enough such that they encompass the entire process from knowledge generation to distribution to the small and medium-sized enterprises in the economy.
The policies should be in line with the four pillars of the knowledge-based economy. For the economic and institutional regime, the government should establish frameworks that create incentives for the businesses and individuals to not only create new innovations but also share with other businesses as well as implementing them. Policies that may be used by the government may include tariff, non-tariff barriers, and regulatory quality. For example, a policy on tariff and non-tariff barriers will eliminate quotas, rates, sanctions and levies that prevent dissemination of knowledge and innovations. Since tariff and non-tariff barriers exist due to the high costs incurred by the researchers and innovators (Hadjimanolis, 2003, p. 559), the government, through these policies, should provide subsidies to facilitate researcher and dissemination of the resulting knowledge. To ensure that resulting innovations are sound and can support sustainable growth and development, the government should also establish quality control measures that ensure researchers and research bodies are licensed to ascertain that they are qualified and experts in the various fields. This will ensure that innovations are sustainable in nature and can support the long-term growth of the economy.
The government can also establish policies to strengthen the dynamic information infrastructure pillar and ensure that information processing and dissemination is enhanced. Policies in this area should focus on accessibility of information by the people within the economy so that they can digest and implement the innovations. Also, the policies under this category should ensure that people have the necessary infrastructure to facilitate research and produce innovations. According to Ghilic-Micu, Mircea, and Stoica (2011), research foundations, universities, and colleges should integrate information technology infrastructure within the institutions to support science research and education activities. Also, the higher education institutions, as well as research foundations, should avail latest computing resources that can efficiently run experiments and analyze results (Perkmann and Walsh, 2007, p. 268). It is also prudent that infrastructure is availed for the businesses and people so that they can access the innovations from the researchers and innovators. For instance, the government can set policies that will ensure that every higher learning and research institutions are equipped with computers and internet connectivity. Also, policies that ensure citizens are connected with internet and telephones should be established. For instance, a policy requiring one computer per 100 people can be set.
Regarding education and human resources, the government can establish policies that ensure knowledge and skill development among the population to drive the knowledge base economy. A knowledge-based economy relies on skilled, knowledgeable and competent workers (Lek and Al-Hawamdeh, 2001, p. 19). Adler (2001) also argues that knowledge and skills are becoming the only source of comparative advantage in a competitive business environment. Given the importance of establishing skilled and knowledgeable workforce in a knowledge-based economy, the government should set policies targeting higher literacy levels. For example, the government can establish policies that ensure many people enroll for tertiary education by providing education loans, study leaves, subsidized college and university education and supporti...
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