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India as a Knowledge Economy

Authors: Devon Christian, Maria Corbett, AJ Nelson, Hannah Smaby

Introduction to the Knowledge Economy

A knowledge economy uses knowledge to generate ideas and values that are both tacit and explicit. It is a shift in economies from traditional values to one where information gathering and use is the most important. As technology has advanced so has the need for information technology and thus the knowledge economy has steadily increased in importance. It is very important as knowledge is one of the prime factors in communication and communication is what allows a country to focus its values and ideas and push its economy forward. As a country increases its knowledge economy, it increases the well-being of its citizens. The well-being of citizens is elevated because improved use of knowledge, technology, and communication improve the economy and thus improve the standard of living.

India has one of the world’s largest economies. India has made large strides in research and development related to information technology and has many qualified people. However, this is only a tiny fraction of the mass population that resides within India. The country has made large improvements to the economy and social well being over the past two decades. Since they implemented a program to become a technology superpower in the late 90’s they have made great progress in pharmaceuticals, medical science, and information technology. However, there is still much that they can improve upon (Worldbank.org, 2005). Part of the problem is India’s education program is lacking and there is mass poverty inflicting many parts of the country. As for the highly educated and talented individuals that India produces; they must be able to retain these talented people who will stimulate the workforce. One way to retain the talented youth is to provide challenging and quality higher education. This contributes to the very low Knowledge Economy Index Score that India has of 3.06 (1-10) gradually falling 3.57 in 1995.

Due to the mass population, India has its pick of talented individuals and many go on to higher education and help advance the country’s economy. India is definitely a leader of information technology however the mass population of 1.25 billion people, many of them in poverty status or lower, drags the country’s KEI extremely low despite its leadership in information technology around the globe. India is very competitive in the knowledge economy however, there is much the country needs to do in order to improve their status among other top countries. One of the most important factors would be to improve the public education system. An informed and educated population would improve the country’s knowledge economy greatly and help pull the country out of the poor record it has maintained over the past few decades. This would also help pull the population out of poverty. Unfortunately, due to the culture and caste system of India it is very difficult for many to receive a proper education and then use that education to earn a living. Much talent goes to waste in this way and prevents India from rising in the knowledge economy ranks. India has made some large strides in becoming a technology superpower, however much of the country has been left behind. With such great information technology and innovation the country should be able to rise out of the decline and poverty that afflicts much of the nation and become an economic and knowledge superpower in the world.

Evaluation of the Four Pillars

The importance of these four pillars is to promote knowledge, creativity, creation, and application. The four pillars include a quality education system, a high speed broadband infrastructure, public support for innovation, as well as quality governance. This section will go further into the strengths and weaknesses, significance, goals, and relation to knowledge and power India has with each pillar.

Quality Education System

Education is fundamental to the knowledge economy. The knowledge economy of the twenty-first century demands a set of new competencies for all working individuals, which includes not only Information and Communication Technology skills, but also such soft skills as problem solving, analytical skills, group learning, working in a team-based environment, and effective communication. While a basic education should be the foundation of learning, secondary and tertiary education should develop the critical thinking and creativity necessary to become competent in the work force. Unfortunately, the average number of completed school years for individuals fifteen and older in India is only five. A strong basic education system is necessary in order to enhance India’s efforts in furthering the productivity and efficiency of its economy. “India has made substantial progress in increasing literacy and increasing primary and secondary enrollments and overall education attainment. But the country still accounts for one-quarter of the world’s 104 million children out of school. The participation of girls in the 6- to 14-year-old age group in elementary education is low. And considerable gaps exist in access to secondary education, particularly for girls.” (Dahlman & Utz, 2003).

Although, India has attempted to improve overall secondary school attendance they are still behind most countries in literacy and secondary schooling. India also has a large pool of highly educated, qualified people who are making their mark, domestically and globally, in science, engineering, IT, and research and development. However, these individuals make up only a small fraction of the population whereas the majority still live in poverty. In order to vastly improve the education system India will need to enhance public resources for education, enhance the quality of primary and secondary education, create a more efficient and consistent system, raise the quality of all higher education not just the ITT’s, and promote gender equality within all elements of their education system.

High Speed Broadband Infrastructure

According to wikipedia, India is ranked 10th in the amount of fixed-broadband users and 4th in the amount of mobile users when compared the other countries in the world. They are however, 137th in terms of percentage of people in their country who have fixed-broadband access and 98th for mobile (wikipedia, 2016). This is due to much of the country living in poverty, many people do not have access to high speed broadband internet. Many of the poor villages and towns do not have access to high speed broadband internet even if the people could individually afford it. This is one of the core pillars that the country needs to work on.

Public Support for Innovation

Innovation in a developing country concerns not only the domestic development of frontier-based knowledge. But, It also relates to the application and use of new and existing knowledge in the local context. India, with its relatively small formal sector, a very important part of its innovation system relates to how modern and more efficient practices can be diffused to the greatest number of users. This applies to both domestic and foreign knowledge. India has done a remarkable job of diffusing knowledge and technology, especially in agriculture. “India’s “white revolution” in the production of milk has helped it to achieve the twin goals of raising incomes of rural poor families and raising the nutrition status of the population,” (Dahlman & Utz, 2003). However, the need to build on its innovative domestic strengths as well as undertake efforts to improve the productivity of agriculture, industry, and services is great. This includes strengthening technology involved with extending agriculture and industrial extension, productivity-enhancing organizations, and technical information agencies. In India, where large disparity exists between the most and least efficient producers in any sector, considerable economic gains can also be made from moving the average domestic practice to the best domestic practice, not to mention best international practice.

Quality Governance

Which growth path India embarks on in the future will depend on how well the government, private sector, and civil society can work together to create a common understanding of where the economy should be headed and what tools it needs to get there. India has a great opportunity to reap economic gains by developing strategies as well as policies that focus their attention on creative more effective knowledge that will in turn increase the overall productivity of the economy as well as the welfare of its population. In doing so, India will be able to improve its international competencies in order to join the ranks of the higher developed countries that are making a more successful transition into the knowledge economy.

Opportunities and Challenges

There are many opportunities that come with India's transition to a knowledge-based economy. By transitioning to a knowledge-based economy, India has a better chance at benefiting greatly from globalization and outsourcing (calling on outside forces to aid in completing the work that India needs to get done, as a means of reducing the cost). India's demographics are also favorable for transitioning to a knowledge-based economy. Lastly, because of the current state of the Indian economy, the likelihood of India becoming much more efficient is very likely.

While there are benefits of India making the transition to a knowledge-based economy, like with anything, there are also drawbacks. By transitioning to a knowledge-based economy, India will end up being faced up against inflation, as well as the negative impacts that inflation makes on the economy, a poor education system, a much lower standard that they hold education to, a poor infrastructure, unbalanced payment, high amount of debt, large budget deficit, and lastly, very stiff labor laws and expectations of the Indian people.

What Does This Mean For The Individual?

An individual looking for a job in the knowledge economy in India has a similar interfacing with upskilling as an individual from most other countries. Upskilling is an increase in the basic level of education and skills required to enter a certain work force. India has a vast disparity in the level of education achieved by its citizens, as stated earlier the majority of people have not completed schooling past the age of fifteen years old. However, India also is one of the premier locations for acquiring highly trained workers in the fields of science and technology. For individuals who are among the group able to afford and complete the education required, they will be quite profitable in the knowledge economy. Those who receive the education are often recruited by large technology companies and move to countries such as the United States of America for work.

The skills required in a knowledge based economy are slightly different than they have been before. Much less emphasis is placed on the specific classes taken or learned information. This is a result of the shift to more specified white-color jobs. These jobs often have on the job skills that are quickly learned but the person must be a good communicator and able to learn quickly. This shift has brought several new competencies and given others more importance. Teamwork and leadership capabilities are of more importance due to many people working on small parts of the same objective. Ability to learn, problem solving, effective communication skills, ability to critically analyze, and a wealth of motivation are also very important in this new knowledge economy. These changes do not discount the fact that many jobs still require a baseline level of education which has risen with the rise of the new economy. More jobs are popping up in the white-collar sector that before, these jobs generally require a bachelor's degree or above. Therefore, many countries have a higher level of education to be successful. These new skills are not much different from the skills of the past. However, there use to be more emphasis on the skills acquired from school than before. Also there were less white-collar jobs than there are now.