Structure of Global Knowledge Economy

Knowledge rules the world. This is evident as many new firms operate on the capacity of knowledge without the luxury of massive natural resources. While natural resources are still very important for survival and growth of some business models, the world is experiencing a shift where knowledge is a major component of organizational factors of production. Today, at both national and organizational levels, progress in knowledge creation, acquisition and processing is an indication of the state of competitiveness.

Figure below shows the distribution of the global Knowledge Economy Index (KEI) for three nations: Ghana, USA and Brazil representing a combination of a developing nation (Ghana), a developed nation (USA) and an emerging nation (Brazil). Also included are Western Europe and Africa. The figure, obtained from the World Bank/kam (2009), shows that there is a relationship between the level of innovation and education and the degree of national KEI.

To move from a low KEI, a nation must have the capacity to advance its educational program. It is well understood that there is a relationship between education and KEI. Education not only helps in developing new knowledge, it also helps in diffusing technologies and established knowledge. That is why innovation and excellent education are closely related. In other words, education can become a conduit through which major innovations can be introduced in an economy.

These data show that education plays major roles in advancing national KEI and development. It is a very vital component for innovation systems in any economy. It is also a source for creating and assimilating new knowledge. Accordingly, towards advancing emerging technologies in Africa, education must play a very important role. It offers organic succession pathways that will sustain any national progress in technology diffusion. Without solid education in Africa, the sustainability of any technology diffusion program cannot be sustained.

There are two major benefits of developing technology in Africa. It will stimulate the economic competitiveness of the continent. A very vibrant hi-tech industry will expand and diversify the Africa’s economy out of mainly minerals and hydrocarbons. It will increase the level of productivity and massively employ a major population of the citizens. This will become a new dawn in the emergence of Africa’s knowledge workers who will play significant roles in moving millions of the populace from poverty to middle class status. Armies of knowledge workers are needed in Africa as this century is basically a knowledge one and ability to compete will depend largely on the skill capabilities of the citizens.

Closely associated with improved capacity of the continent to compete is outsourcing. Outsourcing is subcontracting a process, such as product design or manufacturing, to a third-party company.  The decision is usually influenced by the desire to lower cost or to make more efficient use of land, labor, capital, technology and resources. This is essentially a division of labor at process levels. With comparative cheap labor in Africa, Africa has immense advantage over other developing nations or emerging nations to attract major outsourcing projects if the knowledge base can be developed.

A lot has to be done if the continent must improve its KEI as shown in the figure. The continent has the lowest values while countries like United States and Western Europe record the highest (8-10). Many African nations have not made progress in their KEI; some of the nations have actually depressed as in Nigeria. This is due to poor funding of education, infrastructure and economic regime. Addressing those challenges will be vital to the success of the continent.

Figure: KEI of Ghana, Brazil, Western Europe, Africa and USA (most recent data compared with 1995: Source, World Bank)