How Asia Can Become a Knowledge Economy

University students at Institut Teknologi Bandung learn advanced computer skills during IT class. Information technology is one of Indonesia's education priorities.
University students at Institut Teknologi Bandung learn advanced computer skills during IT class. Information technology is one of Indonesia's education priorities.

By Shanti Jagannathan

There are cost-effective approaches that developing countries can actively consider in traveling on the road to becoming advanced knowledge-based economies.

Asian countries at or approaching middle income levels need to strengthen themselves as knowledge based economies (KBEs) to compete globally in higher order goods and services that embody technology, skills, brand value and sophistication. KBEs are usually associated with middle and high-income countries with advanced industrialization and maturity of the services sector. 

However, the application of information and communication technology (ICT), higher levels of skills, education, and innovation can transform low income economies as well - technology options to reduce delivery cost of government services; e-learning can promote inclusive education; higher skills and technology can benefit agriculture in frontier areas such as biotech and can increase the productivity of services. KBEs require developing countries to invest in “knowledge infrastructure” in the form of ICT, R&D and science and technology, tertiary education, innovation capabilities such as technology parks as well as a supportive economic and institutional regime that supports entrepreneurship.   

"The current set of circumstances put developing Asia in an advantageous position."

The current set of circumstances put developing Asia in an advantageous position - growing share of trade within Asia, which was 58% of total trade in Asia; the potential of an expanding ‘middle pyramid’ of a large and growing middle class, projected to account for 50% of the world’s middle class and over 40% of global middle class spending by 2020; the popularization of low-cost or ‘frugal’ innovation specifically tailored to mass markets; the unprecedented advent of mobile telephony with Asia expected to gain a share of 47% of global mobile data traffic by 2017; boom in demand for frontier technology areas such as semiconductors, biotech and solar photovoltaic; and leading in outsourcing of global services for IT, BPO and voice services. 

While developing countries in Asia have a lot to catch up on in terms of investing in KBE, such trends provide alternative paradigms to developing Asia as KBEs. The paper highlights some of the game changing trends that could be tapped by developing Asia to catch up faster with the developed economies – the promise of development applications for mobile phones, the use of social, mobile, analytics and cloud (SMAC), the use of tablets and game-based and simulation-based pedagogies in education, the advent of massive open on-line courses (MOOCs) and increasing adoption of cloud computing and “on-demand” IT services. 

These trends are already transforming business models and offer cost-effective approaches that developing countries can actively consider in traveling on the road to becoming advanced knowledge-based economies.