Universities play a grave role in the contemporary global economy in terms of providing social, public goods through which they connect the individual to the modern knowledge based economy.A knowledge economy can be simply defined as an economy in which knowledge becomes the key economic resource.While all economies can be seen as knowledge-based, there is a perception that we witness a major shift in the relative importance of land, physical capital and knowledge capital, in favor of the latter. The evidence of this growing importance is widely recognized with the increasing importance of educated individuals in a country’s workforce. According to the OECD report on “innovation, higher education and research for development” (2012) governments all over the world have recognized that one prerequisite for realizing knowledge economy is that higher education, research and innovation systems need to be more tightly linked to economic and social development.
Evidence of the growing importance of a knowledge economy is largely related to the relative growth of highly educated individuals in the workforce of many developed and developing countries ranging from the United States of America to Israel and India. Thus, as Burton-Jones (1999,) attests, the notion that the economy is moving towards a post-industrial, knowledge-intensive phase represents an epochal transformationwhich he vividly stated as follows:
“…future wealth and power will be derived mainly from intangible, intellectual resources: knowledge capital. This transformation from a world largely dominated by physical resources, to a world dominated by knowledge, implies a shift in the locus of economic power as profound as that which occurred at the time of the Industrial Revolution. We are in the early stages of a ‘Knowledge Revolution.’” (Burton-Jones, 1999, p.3)
Subsequently, the concept of a ‘learning economy’ introduced by Lundvall and Johnson (1994) points out that, if knowledge is the most fundamental resource in our contemporary economy, then learning is ‘the most important process.’Further to their argument on the four categories of knowledge: know-what, know-why, know-who (when and where) and know-how, they attach great significance to professional and obsolete skills as well as knowledge on principles of nature and society recognizing the importance of universities, in the plural, as tertiary education institutions in a knowledge based economy. However as Lundvall and Johnson attest economic management at times requires unlearning or ‘forgetting’ the skills of professionalism acquired in higher studies in ‘continuous self-organized learning’ but still the role of universities remain increasingly prominent in enhancing practical skills in production or other spheres of economic activity as universities represent a rich experimentation in organizational forms of knowledge, and certain degrees of adaptation in relation to national, regional and global trends in the contemporary knowledge economy.
Moreover, universities also act as environments which facilitate public space for team work, interaction and leadership development. Despite the fact that the knowledge economy is given a technological definition too often, given the fact that the economy is prominently driven by the changes in information technology which have occurred during the last three decades, this notion is not entirely accurate.One should understand the increasing importance of individualsand organizations, apart from technology as the key drivers of a knowledge intensive economic system. This is because ‘learning’ in organizations consist a fundamental characteristic involving people who act in teams. Hence,according to Paul Davenport (2001), the ability to learn and to interact with others, to learn from others, is at the heart of individual success in the knowledge economy.
Furthermore,the very nature of scholarly activities found in universities; also ensure the development of skills in continuous learning, critical thinking and applied problem solving which generates a strong demand for university graduates in a knowledge economy. Non-university institutions may well play anincreasingly important role in conveying facts and basic skills to young people after school education. As important as facts and basic skills are, however, the knowledge economy is setting a higher premium on the ability to learn continuously, to take risks and to work in teams—the very abilities universities cultivate, given their special position of teaching in a research setting. For examples the conference board of Canada recently noted that they found out thatcompanies look for graduates with the ability to communicate clearly both orally and in writing, which is a skill triggered by the debates, discussions and peer group interactions found in universities to enhance analytical and critical mindsets vital to a knowledge economy.
Moreover, growth in the knowledge economy is founded on discovery and innovation, in which university research gains a central role. There’s an ongoing debate inmany advanced countries about the balance between research in universities and the appropriate degree of government funding for these research projects. However, it is vital to understand that the distance of universities from the market is what precisely makes them such valuable collaborators with competitive firms in the knowledge economy.While technology transfer and industrial collaboration are important, the knowledge economy as a whole will suffer if universities ever lose the focus on basic, fundamental research. In the current world conjuncture, in the aftermath of the world financial crisis in 2008, the leading industrial nations have embarked on substantial increases in their support for universities and for scientific research in particular because countries recognize the importance of R&D in a knowledge intensive economy (Hughes and Mina, 2012). Hence it is apparent that research universities emerge the pinnacle of academic systems across the globe consequently making it a vital point to maintain efficiency within the scope of public funding for research and efficient research management.
Understanding the importance of this concept and applying it to the Sri Lankan context can boost the country’s development. The International Cauldron has published an article before regarding the importance of educational reforms which are more in line with the global demands. Collaborating such reforms simultaneously with much more comprehensive university reforms can truly aid to establish a knowledge based economy within the island. This is in fact a great opportunity and strategy which as a result would make Sri Lanka a significant node in the global economic system. Small countries such as Taiwan successfully followed this development strategy and facilitated it with an effective industrialization drive. Mere reforms for effective universities are not sufficient. The country’s economy should be able to absorb the influx of graduates and retain them within the borders. Sri Lanka suffers greatly due to “brain drain” with graduates and professionals leaving the country for better prospects. Sri Lanka has, perhaps the most important asset in this new knowledge based economy; human capital. It is important that we capitalize on this fact in order to make a truly global impact as a country.
About the Author
Piyumani Ranasinghe, aged 21, a former student of Musaeus College, Colombo, is currently an undergraduate in International Relations at the University of London and also a Law student at the University of Peradeniya who aims to cover a wide array of issues ranging from international affairs to gender based violence and education in Sri Lanka in her writings.
Burton-Jones, A. Knowledge Capitalism: Business, Work, and Learning in the NewEconomy. Oxford: Oxford University Press, 1999.
Deiaco, E. Hughes, A. and McKelvey, M. “Universities as strategic actors in the knowledge economy.”Cambridge Journal of economics Vol.36 (3) (2012): pp. 525-541.
Davenport, Paul. “Universities and the knowledge economy.”Ivey Business Journal May/June 2001 <http://iveybusinessjournal.com/ibj_issue/may-june-2001/>
Lundvall, B.A. and Johnson B. “The Learning Economy.”Journal of Industrial StudiesVol.1(2) 1994, pp.23–42.