A knowledge economy or a knowledge-based economy, as commonly put, is a system of production, distribution and consumption largely dependent on information and skills (knowledge) and the deployment of such in economic activities.
A knowledge economy encompasses a maximum level of information and innovation in specific industries and or sectors within those industries.
It entails relying on already existing knowledge, building on it to create new knowledge (innovation) and disseminating the new knowledge or parts of it (distribution) for the overall functioning of the economy (production)
In a knowledge economy, well-organized and appropriately deployed information is the pillar.
It’s about the use of knowledge of various aspects of the ecosystem to run operations in production, distribution and consumption of products-goods and services.
What most people think about knowledge-based economy is that there shall be less crop cultivation and animal farming, for instance, in a predominantly agricultural society like Rwanda, because there’s hype around software products and what they do.
Contrary to this belief, an economy becomes knowledge-based when it’s able to collect, organize and segment, analyze voluminous amounts of data and, consistently and reliably, draw course(s) of action from such data in public and private matters.
Although many confuse a knowledge economy for software and digital products and systems, a knowledge economy is not about software and digital products and systems, it is about what the softwares do and the whole systems built around enabling the softwares to achieve intended usage.
E-commerce software thrives on the successful production of commodities the company deals in, successful handling of logistics around supply of commodities from producers, delivery and a fast secure and reliable payment system.
The value of communications platforms is users’ ability to pass their communications with ease, at the time of their convenience and in as much volume as they see fit.
Software as a means to an end thrives on perfecting solving non-software problems.
In Rwanda’s case, it will take Rwanda to have adequate information about sectors of the economy, associated economic activities and an industry-specific high skilled labor-force to be able to make knowledge-based (informed) decisions.
All innovations are born of knowledge of the existing systems and the interactions between them because innovations happen within systems, industries; not devoid of them.
The underlying phenomena in a knowledge-based economy are knowledge– organized and appropriately deployed information, and innovation– building on existing economic mechanisms to better (economic) activity.
When information is deployed appropriately in the production process, products (goods and services) are produced.
These products may not be entirely new.
They can be old products with new features or the same products, same features but new attitudes around them.
In a knowledge economy you either build new features or new attitudes. You don’t build new products.
And, does the rush to knowledge economy mean we should trash society’s old ways of economic production?
The ultimate response to this could have been “NO,” but the misconception around this phenomenon calls for leaning towards two possibilities: one where we assume new systems will emerge making the old ones obsolete and another where knowledge of our systems will lead us to develop a modified modus operandi to make the old swift and more productive.
In the first instance, the shift to a new type of economic activities will likely kill society’s potential to produce for own consumption. In the situation where a large percentage of the population cannot produce their own food, the burden to feed them is shifted to the few who can produce.
The implication of this is that the unproductive population will pressure the government to provide for their survival and government will transfer this pressure to the few available producers who’ll also trickle the pressure down to consumers in form of product costs.
The outcome of this will be misappropriation of resources and much other inefficiency within the economy.
In the second, understanding core economic activities of a society and drawing upon those to form new product features and a relevant and reliable ecosystem fosters a cost-effective shift to new mechanisms while multiplying output and reach because society gets entirely immersed in the advancement process since society is the chief beneficiary.
In my opinion, therefore, investing to transform an economy to knowledge-based should focus on: a robust long-term practical academic curricula to facilitate acquisition of knowledge on old and present ways of the economic man, formation of a transparent ecosystem with knowledge and tech innovation within domestic systems as central point, research and development in the economy’s driving sectors, and promoting a locally focusing entrepreneurial attitude in which local products and systems are innovated upon and exported.
Steven Caleb Katurebe is a student of Law, Tech Enthusiast, Blogger and a Theoretical economist. His views do not necessarily reflect those of Taarifa’s editorial line.