Knowledge Indices on offer

Developed economies are now ‘knowledge economies’

Knowledge has become the most valued input resource on which national growth depends – it’s needed for such as:

  • Entrepreneurship
  • Innovation, R&D
  • Product, process and software design

That said, a World Bank report claims that most nations fail to realise the knowledge they have available to them and so the potential they have to build on their strengths , become more competitive and improve growth and welfare

The bank defines ‘four pillars of any knowledge economy’, and three performance measures for each, which enable any country to understand its strengths and weaknesses, and those of its competitors – they are:

  • Economic and institutional regime – to provide incentives for the efficient use of existing and new knowledge and the flourishing of entrepreneurship:
    • Tariff and non-tariff barriers
    • Regulatory quality
    • Rule of law
  • Education and skills – to enable people to create, share and use it well:
    • Adult literacy rate
    • Gross secondary enrolment rate
    • Gross tertiary enrolment rate
  • Information and communication infrastructure – to facilitate the effective communication, dissemination and processing of information:
    • Telephones per 1,000 people
    • Computers per 1,000 people
    • Internet users per 1,000 people
  • Innovation system – i.e. firms, research centres, universities, think tanks, consultants etc. – to tap the growing stock of global knowledge, assimilating and adapting it to local needs, and creating new technology:
    • USD royalty payments per person
    • Technical journal articles per million people
    • Patents grated to nationals per million people

The World Bank says that putting numbers to each of the above allows a country to identify problems and opportunities it faces in becoming a knowledge economy

And that’s where the trouble starts – in order to impress the academically-minded, we’re told: “Comparisons are based on 83 structural and qualitative variables that serve as proxies for the four pillars – and all 83 are normalised”

And headline findings are:

  • “Denmark is the world’s most advanced knowledge economy, followed by Sweden, Finland and the Netherlands”
  • The USA is eighth
  • The UK is nowhere

At this point, and despite allowing for possible bias in my judgement, nagging doubts about the four pillars and 12 performance measures start to emerge

But we are assured that the bank’s KAM – Knowledge Assessment Methodology – is: “Consistently measured, and regularly updated from a variety of sources”

Not only that: “It offers ease of use, transparency and accessibility” – and “It has been widely used by government officials, policy makers, researchers, representatives of civil society, and the private sector” – so that proves it must be OK

Whether it paints the right picture goes without question – at least by the bank

And how come India has a different NKI – National Knowledge Index – an alternative covering eight different variables which aims to highlight India’s competitive edge in the international market – the variable headings are:

  • Overall economic performance
  • Economic regime
  • Governance
  • Innovation system
  • Human capital, culture, skills and competencies
  • ICT and infrastructure
  • Current knowledge position
  • Knowledge competitiveness index

Each is defined in detail by several factors so that, overall, a total of some 100 are involved – and some make one dizzy just trying to understand them – hence, it means the aggregated value of this NKI is meaningless and so useless to all

The problem with both the above indices is that, in the absence of anything else, leaders grab at anything available to help them make important decisions affecting the population – even if it’s seriously flawed

It’s the old story rewritten about nature abhorring a vacuum – economists also abhor a vacuum – so, at national economic level, they’ve come up with GDP to fill the gap and guide our leaders – and now we have this new gap requiring a new star for our wise men and women to follow

Who knows where we’re heading?

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