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Knowledge as a Factor in Economic Development


Development is always supported by knowledge and skills proficiency within the workforce. Basically, countries with people who possess skills and knowledge have always registered a higher social, economic, and political growth than those with the majority of unskilled people. This is because knowledge and skills encourage creativity and innovativeness which are vital to a country’s development. It is believed that a country dominated by the unskilled labor force suffers relatively reduced wages and heightened unemployment levels. In some cases, a country may suffer from the two problems. It is because of this reason that the growth rate of the developing and the less developed nations has continued to be low compared to that registered in the developed countries. This paper seeks to analyze how developing countries can enhance development through a knowledge-based economy.

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The skills-based economy

Countries should always aim at promoting local institutions which are responsible for nurturing and developing skills and knowledge amongst their people living. By so doing, domestic production and trade are improved. Considering the continued decline in demand for unskilled labor in the market, the unemployment level has continued to go up in developing and less developed countries. A quick measure therefore ought to be established to ensure that the literacy and skills level of people in a country is improved. By boosting the skills and knowledge development, the country will ensure both market and product competitiveness in its economy. Moreover, the enlargement of the skills-based workforce will also assure and develop innovativeness in the domestic industries (Davidson & Matusz, 2004, p. 32). The local industries will make tremendous savings as they will utilize the locally available skills to run their activities instead of outsourcing or acquiring experts from other countries. Indeed, modern world development has also shifted from unskilled-intensive to skilled-intensive labor. The more skilled force the country has the more income per capita it has and consequently the higher the standard of living. The skilled labor force also enables the development of innovative industries locally.

The established domestic industries assist the country to lower the unemployment level which causes sluggish growth within a country. With a more enlightened society, domestic trade is elevated since it accommodates new technology which also gives it a competitive advantage. The country should therefore enhance its local industries since only then can they be able to have a comparative market advantage from the imported products in the local market. As a country, people should also learn to be loyal and patriotic, something that can be exhibited by purchasing more locally manufactured goods in the market. However, this trend and behavior can only be guaranteed if and only if the locally manufactured goods meet the required quality and standards. To enhance quality production, the country must undertake measures as discussed in the following section.

The developing and the less developed countries should purpose to invest in quality education since it’s the only way they can establish economic sustainability. Quality and excellent education system, which incorporates both the theoretical and practical skills and knowledge, needs to be installed within a country. The higher learning institutions should also encourage creativity and innovativeness to the students. This is because the same students will be used to transform the industrial and manufacturing industries within the nation. Basically, these institutions should focus on providing knowledge and skills which suit the country’s market. Moreover, the institutions should aim at providing the nation with both a skilled and dedicated workforce that is ready to transform the current situation into a better one.

These nations should also use their cultural knowledge to boost their domestic economy. Nurturing and developing culturally-based goods and services will not only encourage domestic tourism but will also increase international tourism in the subject country. Such development also builds a good reputation amongst the local people and also improves the country’s image in the international market. As a result, more foreign investors will wish to operate and invest in such nations and thus increasing capital inflows. It is therefore substantial for the developing nation to aim at establishing a knowledge-based economy since it offers sustainable growth in the economy. Such development also enables the productions in such countries to meet the global standard level and thus enhancing their competitiveness in the market. The local industries are also relieved of the problem of acquiring qualified and competent employees as they are locally available in the market.

A good example of a knowledge-based economy is Singapore, which, throughout its operations, has managed to build a knowledge-related economy that has enabled it to create new employment opportunities and accumulate wealth among its subjects. A knowledge-bases-economy can simply be defined as an economy that distributes knowledge in the production sector thus enhancing wealth accumulation and employment in the local and domestic industries (Leydesdorff, 2006, p. 1). It is however important to understand that a knowledge-based economy can only be attained if and only if the information and communication technology program is efficiently employed in the overall process.

The combination of the two enables local firms to be creative and also to easily and quickly disseminate information within and outside their jurisdictions. It also improves the quality of the product as new technologies are adopted in the overall process. This can be boosted by the enhancement of a constant renewal of human and organizational capacities amongst people. Equally important, a country should provide a better environment that encourages learning, exchange of skills and knowledge, creativity, and innovativeness amongst its residents.

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The government’s commitment towards establishing a knowledge-based economy may assist a country to have an enormous and successful transition into an industrialized economy, more so through the enhancement of innovation (Reinert, 2004, p. 306). In addition, effective utilization of the acquired knowledge and skills may be important in innovating new productions techniques in the local industries (Yigitcanlar, Velibeyoglu & Baum, 2008, p. 61). Moreover, knowledge development may contribute to the establishment of new ideas on how to improve domestic trade, thus boosting the economy.

In order to boost the acquired knowledge and skills, the government should fully commit itself to support and finance the willing innovators since that is the only way talents are nurtured and developed. The government should therefore have a well-established infrastructure that ensures that the skilled workforce is able to exercise knowledge and competency. Moreover, it should offer financial assistance to the people who are willing to establish small and medium-scale production units within the economy.

Contribution of the agricultural sector to the overall development

Since the majority of the developing and less developed countries depend on agriculture, more should be done to improve the sector. The government should hire agricultural experts who should offer free training on the improved and better farming techniques in order to raise the sector’s yields. These agricultural officers should be distributed equitably to ensure balanced economic growth within the nation. The government should also lessen the bureaucratic procedures to be followed when applying for financial assistance. It should also ensure that these financial services are distributed near to the local people, through delegation of the task to the local banks and cooperatives.

Proper checks and regulations also need to be put in place to ensure that these local banks and cooperatives do not exploit the local investors while exercising their duties. And to encourage the local investors to obtain loans and other financial assistance, low-interest rates should be charged on the principal amount. Basically, the institutions should not ask for huge collaterals from the loan applicants given that the investors may not have much to present as security, instead, may have an excellent idea which if assisted can greatly contribute to the growth and development of the domestic economy.

Infrastructural growth

The developing countries should ensure the availability of a well-established network of infrastructural facilities ranging from roads, hospitals, schools, banks, urban centers and markets, water and power connections. All these facilities greatly contribute towards economic growth and development within a country. For instance, the government needs to construct road networks to ensure easy accessibility of people and products from and into the market. Such networks will also help the farmers to market their produce in time and thus lessen losses incurred due to products spoilage while in transit. It will also enable farmers to acquire the relevant farming implements which will help them improve their productions and yields.

The provision of water and electricity will also assist farmers to use mechanized farming methods which consequently improve the quality and capacity of their productions. This also assists farmers to actively engage themselves in farming activities during the rainy and dry seasons, therefore helping to improve the reliability of the agricultural sector within a country. The move also enables the country to assure its residents of food security throughout the periods.

Thorough support and improvement of the agricultural sector improve overall economic progress in all the sectors. The government should also assist in the establishment of urban centers, mainly through establishing open-air markets, police posts, and provincial or local government offices within a region. Such establishment will heavily boost domestic trade as it offers an improved and well-articulated environment for products and services marketing.

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Health improvement

The developing countries also need to improve health standards in their institutions to guarantee their residents quality and healthy life. This can be done by ensuring that residents easily access quality and affordable medical care whenever required. The government should also ensure that the health specialists are increased by establishing more medical institutions as this will help to reduce the doctor-patients and the nurse-patients ratio that is currently observed in these nations. The government should also allocate a section of its budget towards improving the health sector operations. By establishing a healthy workforce, the government will experience increased economic growth as residents engage in viable and productive activities. Moreover, the government should establish a research program that seeks to improve both the preventive and curative vaccines (Pan American Health Organization & Quadros, 2004, p. 366).

Investment in research and development programs is an important initiative that a country should consider since it’s only by so doing that economic sustainability is assured. Such programs enable the local residents to use improved and up-to-date techniques in their productions and other development activities. The research and development programs also enable a country to produce and manufacture quality products using efficient and economical means. This department, if well established, will assure the agricultural sector of hybrid seeds and livestock breeds. The latter will also greatly improve the yield capacity obtained in the farms. More improved farm implements and techniques will also be applied while cultivating and rearing livestock and this will certainly lead to an increased output capacity (National Research Council (U.S.) Committee to Review DOE’s Vision 21 R&D Program–Phase 1, 2003, p. 3).

ICT development

Developing countries should also efficiently utilize information and communication technology to enhance efficiency in their domestic trade. The ICT will ensure easy and effective communication between the trading and other operations individuals. The domestic manufacturing industries can also utilize ICT knowledge to creatively and innovatively improve their production activities. Some countries have realized the benefits of investment in the ICT programs which enhances improvement in the production and service delivery in the local industries, as well as promoting creativity and innovativeness by establishing industrial development strategies that enable the country to compete globally (Dunning, 2002, p. 365). The ICT program can also enable a country to be acknowledged as an innovative center thus boosting its competitive advantage as the domestic products and services can match the global standards.

A country may establish creative industries which directly depend on the ICT growth in their operations. For example, a country like Singapore has established ICT in the film making industry which is predominantly an information-intensive sector and through it; the nation has been able to greatly reduce the unemployment level since the sector utilizes intangible resources such as skills, experiences, and the ability to establish a creative idea in the economy (Fassil, 2009, p. 1). Generally, industries that are ICT savvy greatly promote the local talent both in the domestic and global market. This can also boost the country’s economy as more tourists will tend to stream into the country to meet such local talent and learn from them.

The ICT growth, therefore, aims at transforming a country’s economy from a knowledge-based to a creative economy. It is important to understand that the creative economy is more advanced than the knowledge-based economy, but the two tend to work simultaneously. The creative economy is usually established by a nation that intends to establish trade networks both locally and internationally. Such economies also improve the efficiency in the market operations as there are easy communication and safe money transfer techniques. With the help of the ICT, program e-business becomes possible. The e-business is the internet buying and selling of goods and services. The activity is enabled by the networking of the financial institutions which facilitate money transfers during the buying and selling process.

The ICT installation within a country however can have a severe impact on the country’s economy due to the high cost involved. Because most of the developing countries rarely have enough resources to finance their expenses, committing them to such expensive ventures can worsen their financial situations. Since most of these countries still depend on international donor funding for their economic sustenance, ICT would be too expensive for them (Publishing Oecd Publishing & OECD, 2010, p. 195). Ideally, the little resource they have should thus be channeled to other important sectors such as health and education. It is important for the countries to first analyze their domestic economy before deciding on the method to use in installing the ICT. This is because it is not advisable for countries with a large number of unskilled laborers to just introduce the ICT in their major economic sectors as such installation can heavily lead to an increase in the unemployment levels. The ICT should therefore be gradually introduced in such economies as most of the industrial and agricultural production use the unskilled-intensive labor force. The gradual implementation is advocated since more jobs will be created as the technology advances thus absorbing the unemployed workforce.

The new production technique which mostly advocates for mass production has been accused of polluting the environment. The production units thus cause dangerous emissions which are not only harmful to the environment but also to any living creature living in the surrounding region. In addition, the high technological production is therefore not eco-friendly as it causes more harm to the environment (Publishing Oecd Publishing & OECD, 2010, p. 150). The continued pollution can also greatly affect the future performances of the industries as the natural resources get depleted with time. This environmental degradation threatens the marine, human beings, and other living creatures around the globe, more so when the right measures are not put to regulate and control the industrialization process. Moreover, more research and development programs need to be established in order to invent eco-friendly production techniques which will not only lessen environmental pollution but also enhance production sustainability in our industries.


In summary, development is a positive transformation of the country’s economic activity from its current status to a more improved status. It is however a lengthy process that requires the total commitment of the government and residents within a country. This can be done by promoting local institutions which are responsible for nurturing and developing skills and knowledge amongst the people living in the country. By so doing, domestic production and trade are improved. Equally important, the government should ensure that it has a well-established network of infrastructural facilities ranging from roads, hospitals, schools, banks, urban centers and markets, water and power connections, all of which are important facets to the economic growth and development of a country. Indeed, developing countries should efficiently utilize information and communication technology to enhance efficiency in their domestic trade, more so by taking the advent of the ICT which will ensure easy and effective communication in the economy. All these should be synchronized together in order to ensure a sustainable growth and development process within the developing and less developed countries; indeed, the case of Singapore gives a clear view of how internal knowledge can promote development.

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Reference List

Davidson, C & Matusz, S.J., 2004. International trade and labor markets: theory, evidence, and policy implications. Michigan, W.E. Upjohn Institute. Web.

Dunning, J., 2002. Regions, globalization, and the knowledge-based economy. New York, Oxford University Press. Web.

Fassil, R., 2009. Making ICT Work for Pro-Poor Development: A Critical Evaluation of Initiatives in Three Sub-Saharan Africa Countries. Norderstedt, BoD – Books on Demand. Web.

Leydesdorff, L., 2006. The knowledge-based economy: modeled, measured, simulated. Florida, Universal-Publishers. Web.

National Research Council (U.S.), Committee to Review DOE’s Vision 21 R&D Program–Phase 1. 2003. Review of DOE’s Vision 21 research and development program: phase 1. Washington, National Academies Press. Web.

Pan American Health Organization & Quadros, C.A., 2004. Vaccines: preventing disease & protecting health. New York, Pan American Health Org. Web.

Publishing OECD Publishing & OECD. 2010. The Development Dimension ICTs for Development: Improving Policy Coherence. New York, OECD Publishing. Web.

Reinert, E. S., 2004. Globalization, economic development and inequality: an alternative perspective. Edward Elgar Publishing.

Yigitcanlar, T., Velibeyoglu, K & Baum, S., 2008. Knowledge-Based Urban Development: Planning and Applications in the Information Era. New York, Idea Group Inc (IGI). Web.

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