The formula of economic growth is defined as the sum of adjustment efforts to technological changes by governments, business, and their people to close the dividing gap between developed and underdeveloped countries. This formula has been used successfully by countries that know how to turn knowledge into a major element in their economy instead of the traditional elements such as low cost labor, physical capital and natural resources. To succeed, there are some pre-conditions that must be met: Good education systems, high percentage of young people with college education, a culture that emphasizes education importance, good incentives for efficient performance and good coordination between the academic system and industry. If underdeveloped countries want to have a chance to succeed in today’s highly competitive world, they can follow roadmaps from China, India and S. Korea. In these countries, knowledge economy is conceived by the education and training in technology that generates the knowledge economy (Science and technology – mostly focus on computing, information technology and the Internet). Do not confuse the knowledge economy that generates technologies with the consuming and buying of these technologies. These emerging countries have prospered and created jobs in building and selling technology products. If you only consume these products then you are only in the consuming economy that means you are losing money not making money for the economy. By having a strong education and apply these knowledge (New methods of management use of information technology, qualification of personnel) into areas such as agriculture, business, and industry these countries have experienced significant economic growth and with time all areas of their economy will be saturated with the knowledge and they will emerge from developing to fully developed countries with recognizable benefits.

What the knowledge economy need is workers whose actions reflects performance and if they do not have a specific knowledge, they can find it and as soon as it is acquired, they will know how to use it properly, appropriately, ethically and correctly. Workers do not need to be told what to do as in the traditional way where unskilled labors obey the management. Today knowledge workers need to be educated and directed so they can produce and contribute to the overall goal of the company. It is for this reason that an increasing number of companies in developed countries begin to develop knowledge management rather than people management.
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Prof. John Vu, Carnegie Mellon University
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Source: SEGVN

Since the Information revolution started fifty years ago, all developed countries’ growth and prosperity are mostly determined by the production of knowledge and innovations. Let’s look at the software industry, thirty years ago Microsoft was an unknown company founded by a few students in Harvard University but today it is the largest software company with hundred billion dollars capital and makes its founder, Bill Gates the richest man in the world. Ten years ago, nobody heard of Google but this company, also founded by two students at Stanford University, has become the biggest threat to Microsoft and it is possible that Google may replace Microsoft to be the top company in software industry. What Microsoft and Google have but others do not? The answer is knowledge and that is why I believe having a good education to obtain knowledge will have significant influence on a person’s careers and wealth.

My friend, a professor in history told me that every country must follow phases of economic evolution – from agriculture to industrial then to knowledge based on historical perspective. I did not agree with him because I believe that we can skip the industrial phase and jump directly into the knowledge phase. My logic was: Why do we have to base progress according to historical perspective? Why can’t we break the sequence? My friend cited several economic theories based on evidences in Europe and the U.S that developed countries evolve by following the sequence of agriculture, industrial then moving toward knowledge society. I told him: “In that case, don’t you think developing countries will never be able to catch up and always have to stay behind developed countries? Don’t you think those theories which deeply rooted in “Colonial sentiment” is already obsolete?” My logic: Today there are factors that can accelerate economic progress such as the development of semiconductor technology, the establishment of computing and software industry, and the influence of the internet. These factors contribute to the globalization and the creation of knowledge society that never happen before in human history.

Since he is a history professor, I used India as an example. India is an agriculture society that gained independent in 1947, for almost 40 years India has not making much progress. Its economy had not grown but almost come to the verse of collapse because domestic progress failed to keep pace the rest of the world as its population expanded rapidly. Begin in 1991, the Indian government started economic reforms with many successful actions but one of the key reforms was education that brought India from a “Colonial education system” into a respected “science and technology focus” education system. By having a knowledgeable workforce, India has evolved quickly to establish a knowledge society as evidence by its software industry. In 1990 India’s software industry contribution to GDP was less than 0.1% but today it has grown to 15% of GDP with 80 billion dollars business and over million people employed. India is not known as an industrial country, at least not yet, but nobody can deny its knowledge industry symbolize by the software industry so I think it is possible to skip a phase to go from agriculture to knowledge society.
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Prof. John Vu, Carnegie Mellon University
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Source: SEGVN

By definition, a knowledge-based economy relies on the use of ideas rather than physical abilities and on the application of technology rather than the exploitation of cheap labor. It is an economy in which knowledge is created, acquired, transmitted, and used more effectively by individuals, companies, and communities to promote economic and social development. Today in industrial countries such as the U.S and Europe, knowledge-based industries are expanding rapidly where new technologies have been introduced, demand for high-skilled workers, particularly in information technology workers has increased significantly but at the same time, demand for lower-skilled workers has declined and this put a lot of pressure on the current education system of industrial countries to produce more high skilled people.

The information technology revolution has provided new opportunities for easy access to information from anywhere. It has also created new opportunities for generating and transferring information via the internet, the personal computer, and the mobile phone. Knowledge networks and sharing of information have expedited innovation and adaptation worldwide. Changes in information technology have revolutionized the transmission of information as semiconductors are getting faster, computer memories are expanding, and computing prices are falling. Data transmission costs have fallen dramatically and continue to fall, bandwidth is growing, and Internet hosts are multiplying in every country. Cellular phone usage is also growing worldwide, adding to the pace of and capacity for change and innovation. The information technology revolution has promoted more trading and business worldwide and countries that are able to integrate their economy into the world economy have experienced significant economic growth as in cases of India, China, Ireland and some Eastern European countries. The global economy also provided opportunities to smaller companies to take advantage quickly if they can adapt faster to changes comparing with larger companies because in this new knowledge-based economy, the bigger companies can not overcome the smaller one anymore but it is the faster will beat the slow.

Let me give you some examples: In the early day of the knowledge-based economy around 1990, it took six years to go from concept to production in the automobile industry but today that process takes just two years. Companies like Honda, Toyota create new cars every two years to compete with well established companies like GM, Ford, Mercedes, and Renault which introduce new cars every four to five years. Guess who come out as winners. The same thing happened in the mobile phone business, in the early day Motorola dominates this market by having a new phone every two years then Nokia created new phone every year and eventually took over the market. Today Samsung, LG, Sony and many Asian companies can produce ten to twenty new phones every six months and the competition for global cell phone market continue. How can they do things that fast? By having multiple teams working in incremental overlapping phases of building phone products and invest heavily in education and training or their workers. Many Asian companies such as Toyota, Honda, and Sony have invested significantly in education and training, they also invested a large part of their capital in research and development for the long term perspective where many U.S and European companies are so focus on the short term profits and do not consider education as the high priority.

A typical knowledge economy is based on four components:
1) A supportive government policy on economic to provide incentives for the efficient use of existing and new knowledge.
2) An educated and skilled workers to create, shares, and use knowledge for economic advantages
3) A dynamic information infrastructure to facilitate the effective communication, dissemination, and processing of information such as internet, mobile phones etc.
4) An efficient system of companies, university research centers and government agencies to tap into the growing global knowledge, assimilate and adapt it to local needs, and create new technology.
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Prof. John Vu, Carnegie Mellon University
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Source: SEGVN

Would you recognize a significant IT business trend if you saw one? Over the years, many products, technologies and IT-related business trends have been hyped beyond their significance. But the killers are the ones that go unnoticed and wind up being transformational. It’s difficult to know the difference, but there’s an old journalism adage: Follow the money. With that in mind, here are five things to keep an eye on as we march toward 2011.

1. The recession is transformational. Since late 2008, many companies facing reduced top-line growth have eked out profits with deep cuts. In many cases, those savings have been held aside, awaiting the right moment. Odds are, that moment will come in 2011. For IT shops, business growth could require new technology, but additional IT resources may not be added as quickly. Senior IT leaders should be planning now how to meet the demands of anxious CEOs with smaller staffs and shorter timelines.

2. The spotlight remains on cost-saving technologies. Given the recession, it’s no surprise that virtualization, the head-slappingly obvious money-saver that was hot well before the recession, is even hotter now. A year ago, Gartner named it the No.1 technology for 2010, based on a survey of CIOs. I’d put it there again for 2011, followed by cloud computing, software as a service and, to a lesser degree, business analytics.

In Computerworld’s Forecast 2011 survey, respondents said cloud computing is the most overhyped technology, but they also said it’s No. 2 on the list of technologies with the most promise for 2011. Both sentiments are true. Cloud computing holds even more potential for cost savings than virtualization, but is it ready for prime time? And cost savings might not even be the cloud’s main advantage. Its biggest benefit might be the fact that it makes it possible to provision server and storage capacity quickly.

3. Mobile is exploding. Everyone can see this. But are IT shops focused on the management, support and security challenges that come with mobile computing? A huge percentage of employees are bringing personal quick-access storage devices to work and putting sensitive documents and e-mails on them. And here come tablets. Over 30 new tablets were announced or delivered in 2010, and they’re inexpensive enough that a lot of people are buying them.

4. Software is undergoing rapid change. Take the public-cloud phenomenon and stir in largely Web-based mobile applications, and you’ll see the start of a software trend that could transform the way we work. When you connect meaningful enterprise data to tablet computers served via your data center, private cloud or hybrid cloud, you’ve got a transformational technology. For years we’ve been trying to unchain knowledge workers from their desks so they can interact with one another and work wherever they go. There is a potential to create near-real-time business communication without us having to work at that full time. The days of large, monolithic, LAN-connected, proprietary enterprise apps are numbered.

5. Enterprise 2.0 will run its course. Crowdsourcing information (the real value of wed 2.0 for the enterprise) is a powerful tool. It’s a simple way to help us avoid starting every new undertaking from scratch. It shapes ideas and provides valuable insights. And it’s on its way to becoming pervasive. But it’s not a technology; it’s more like a business strategy. The hype surrounding Web 2.0 technologies will die down, and business use of these tools won’t be thought of as a key trend in 2011.

Scot Finnie, Computerworld’s editor in chief.

Source: Computerworld