Comparative Advantage in the Knowledge Economy

Cover of Comparative Advantage in the Knowledge Economy

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(24 chapters)

Prelims

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Abstract

Globalization and the rapid development of Information and Communications Technology (ICT) have advantaged economies which have invested in (re)skilling their human capital in technical knowledge. Similarly, ICT have spearheaded the growth and development of industrial and service sectors in emerging economies. This accounts for the progress of some Asian economies and the lagging behind of many sub-Saharan African countries, including Ghana. Primarily, reorientation of economic development strategy and human development policy in tandem with the demands of knowledge-based economy (KBE) and related development in ICT explain the differences among the world's economies. Our chapter discusses the extent to which ICT has been incorporated into the educational system to transform it from traditional education in order to reskill human capital in postprimary schools to support the creation and growth of KBE in Ghana. Moreover, the chapter assesses whether ICT infrastructure and syllabuses at postprimary schools meet the challenges of a KBE and an enhanced growth development in Ghana. Using the theories of evolutionary economic change, new growth, technology and knowledge gap, we intend to analyze the progress and challenges faced by Ghana as it strives to build a KBE that thrives on innovation and creativity, which in turn drive economic growth and development. In this respect, we examine postprimary schools in Ghana.

Abstract

Education and knowledge have become the prerequisites for the growth and development of any economy or region. Knowledge is a liberator of individuals and societies from human poverty and is a precondition for rapid advancement in today's global knowledge economy (KE). Any nation or region which does not key into the global KE trend may find it very difficult to catch up and become competitive in the global market so as to benefit from the power of knowledge. The objective of this chapter is to investigate whether knowledge and human capital have contributed to the growth of sub-Saharan African (SSA) countries. Out of the four pillars of KE – the economic and institutional regime (including governance), education and human resources, the innovation system, and information infrastructure – this study focused on education and human capital in the estimation of how knowledge has contributed to growth of SSA countries. The data for the study were sourced from World Development Indicators published by The World Bank Group. Autoregressive Distributed Lag (ARDL) model was applied and the results show that knowledge variables have a significant impact on economic growth of SSA countries. It is therefore recommended that welfare and working conditions of the labor force be improved so as to be more productive; SSA countries should key into the KE policies so as to be competitive in the production, use, dissemination and transfer of knowledge, ICT, and science.

Abstract

The tendency for nations to move toward implementing independent and conservative central bankers has gained momentum over the past two decades. This trend continues despite the fact that the benefits of central bank independence (CBI) are highly contested among economists. The ability of a central bank to boost economic growth has been seriously compromised due to the emergence of the concept, or knowledge, of independent CBI as per the New Zealand model. In this chapter, we will propose a new line of research for the knowledge economy to underscore the ramifications of substituting local, or regional, knowledge by international knowledge. The goal of this chapter is to assess whether the new knowledge has real merits vis-à-vis the old knowledge of central banking. If not, this chapter will issue a caveat to policy makers to be careful in replacing old knowledge by new knowledge – the new does not always mean a better knowledge. In other words, this chapter will highlight the potential dangers of using untested new knowledge and its economic consequences. This chapter contributes to the literature on CBI by introducing analytical methods not previously used in empirical examination of central banks. Analysis has uncovered the presence of high mobility in economic variables that is unexplained by changes in CBI. The chapter addresses the question of mobility by making use of mobility measures and linear regression in an attempt to identify the source of this mobility. The results from the regression are significant to the theory of central bank independence as they imply that consolidation of inflation rates are not reciprocated with consolidation of economic growth, as conventional theory would suggest.

Abstract

Higher education institutions (HEIs) in India were caught completely unawares by the Covid-19 pandemic and necessitated lockdown. Despite almost two decades of experimentation with online and distance learning by top-tier and private institutions, the vast majority were unprepared and looked for standalone solutions for different components of teaching and learning. Valuable lessons have been learned based on which a more comprehensive solution must be sought for the post-Covid-19 environment. The lockdown has provided the much-needed impetus to reshape higher education in India. Calls for the adoption of blended learning (BL) have been made on prior occasions; this chapter renews that call and stresses its urgency. It is imperative that educational institutions amplify the momentum gained during the lockdown and transition to a BL model supported by the adoption and use of learning management systems (LMSs). Government should support this initiative by providing a centralized LMS. Corporations must “adopt an HEI,” channeling their unused corporate social responsibility funds to support information and communication technology needs at educational institutions. All stakeholders must work together to transform the country to a digitally empowered society and knowledge economy as envisioned in the National Education Policy 2020.

Abstract

The ability to produce knowledge is the key currency in the current and future global economy. Today, technology is one of the important sources of economic growth. The impact of introduction of technology is observed in every field and one such field is knowledge economy. This paper explores the potential consequences of technological transition in the knowledge economy brought about by the introduction of virtual system backed by Internet and software innovations, so to speak in terms of skill augmentation, wage inequality, and so forth, to highlight the overall impact on welfare. In this framework, this paper develops a model on small open economy with three sectors (modern export sector, import competing sector, and skill-generating sector) and three factors of production namely, skilled labor (the output of S), unskilled labor, and capital. It is found that the impact of technological transition on each sector is ambiguous but the direction of welfare change is unambiguous. In this study, our objective is to find out the possible impacts of such disruptive technology on the higher education sector of India and also to locate the development dynamics of such an outcome along with a feasible roadmap for overcoming the trade-off between future economic growths of a sound knowledge economy with social justice.

Abstract

The knowledge economy (KE) which provide for an alternative to production-based economy and brick and mortar economy has a tremendous opportunity. KE has emerged due to the advent of skill concentration in nation states. However, the traditional production economy provides individual arbitrage opportunity which acts as a sideline for growth of the economy. In the modern economy, the higher the ability to create an edge for price for the knowledge, the greater will be the ability of the nation state to create and arbitrage process. Any economy which is driven by an innovative education system, appreciates, and adopts knowledge is the one which becomes successful in the knowledge process and a developed KE. Information technology forms a major component of knowledge process but is not the entire gamete of knowledge. Hence, it should not be confused that KEs are information industry driven alone. This paper tries to develop a model to check whether KE has the ability to support arbitrage process. Here the probability rate of growth in GDP is taken as the key element for the purpose of solving the theoretical proposition. The result shows that there are positive probabilities of the KE in providing arbitrage premium for individual which can fire the growth of the economy.

Abstract

The ups and downs of the stock markets are consistently in the news. All things considered, there's no end to reporting the trajectory of volatility. Wide value changes in stock prices are a daily event in any stock market as speculators respond to monetary, business, and political situations. The main question is − did the Indian stock market develop a speculative bubble during the time of the US subprime crisis? Also, in terms of knowledge gained for an investor or a policy maker, we ask the following question: As to what extent are speculative bubbles predictable during a financial crisis? Knowledge gained by investors is also a part and parcel of an applied knowledge economy in a broader dimension.

In this chapter, the authors use a speculative bubble tracker, based on a Wiener stochastic process, to check for the existence of speculative bubbles during the 2008–2009 US subprime crisis. The data used in the study are daily SENSEX values (i.e., combination of stock prices of 30 well-established, most actively traded stocks of financially sound companies listed in the Bombay Stock Exchange) for the period between December 2007 and December 2009. Using such forms of daily data, the authors trace out the price movements using a Brownian motion equation and hence, try to correlate the stock price fluctuations with fluctuations in the crisis index (as put together by the authors) in the Indian context. Interestingly, for India, such a speculative bubble was prevalent during the time period considered pertaining to the 2008 US subprime crisis.

Summing up, the implication in terms of knowledge gained is particularly of interest for the portfolio managers who are engaged in devising diversification strategies for their portfolios.

Abstract

The advent of information technology and the consequent access to Internet has led to significant changes in marketing practice where e-marketing has been the natural outcome of these technological changes and marketing innovations. For modernization and digital formation in India, marketing perception has been changing continually (“All business growth can only happen if business learners faster than the rate at which its customer changes” – William Charnock and Jonny Langden). E-marketing is currently the better element of the marketing mix. It has substantial benefits to the customer, marketers, and in society. Conscious customers have been increasing their purchase through e-marketing as it has a lot of benefits. It has opened a huge business opportunity for marketers. E-marketing is now tapping new markets. This paper is aimed at investigating the changing consumer perception and environment of e-marketing in rural India for consumer durables based on a primary survey. The primary data are collected from 200 households selected randomly in Howrah and Hooghly districts of South Bengal. We have used the chi-square tests to study the role of several demographic factors on e-marketing behavior. We have observed that demographic factors such as gender, family income, and education have an impact on e-marketing. This study also identifies the problems faced by rural customers with reference to payment, goods checking, language, etc., and the problems faced by marketers. In conclusion, appropriate suggestions have been made in this regard.

Abstract

In the postglobalized world, information and communication technology (ICT) has been considered a key driver of human development. The world is reshaping from resource-based economy to knowledge-based economy after rapid growth of ICT. ICT can be considered as an umbrella that incorporates any communication device such as radio, television, cell phones, computer and network hardware, satellite systems etc., and also various services and appliance with them such as video conferencing and distance learning (Akarowhe, 2017). ICT is a technological system that is able to meet the gap of formal communication system and ultimately affects the level of standard of living. Human development can be defined as a process of enlarging people's freedoms and opportunities and improving their well-being. Whereas, human development index (HDI) is a statistical tool used to measure a country's human development based on the health of people, their level of education attainment, and level of income. The present chapter tries to find out the impact of ICT on human development for selected high HDI and medium HDI countries during the period 2001–2018. Applying panel data technique result shows that ICT has a positive and significant impact on human development.

Abstract

The presence of economic power of BRICS nations could be felt from the late of nineteenth and beginning of twentieth century and during this period inflow of FDI also began to go up and spread across all the sectors. FDI has not only looked to capture the huge market of these economies, but while doing so, it has helped these nations in their economics progress. Our main contribution in this paper consists of analyzing both short-run and long-run interactions between status of knowledge and FDI in the form of inflow of FDI and proportion of GDP used for R&D activities accounting for possible development of knowledge in BRICS nations. For this purpose, our work is based on a sample of these five nations during the period 2006–2017. By the help of panel data analysis and having performed all the necessary tests, we have introduced both dynamic OLS and fully modified OLS to get the efficient long-run impact of FDI on knowledge. Our empirical results support long-run and short-run causality running from FDI to knowledge in all BRICS nations. Our policy recommendation includes encouragement of more FDI in development of knowledge-related activities as well as increase in proportion of GDP spent on R&D in BRICS nations.

Abstract

The present century is an age of knowledge-based economy. Higher education is in the process of transformation and thereby challenging the traditional system of education in India. The present paper reviews the current conditions of ICT use by the students in higher education in India. The major objectives of the study are (1) assessment of the use of computer and Internet by the students of higher education in India and (2) to find the determinants of use of ICT by the students in India. The study uses the NSSO 71st Round Unit Level Data on Social Consumption: Education Survey (71st Round, 2014). The present paper is based on 6,035 students from all the regions in India out of which 3,127 students were from the rural area and 2,908 from the urban area. The findings from logit analysis suggest that the determinants of ICT use by the students in higher education in India are regional disparities, gender, education levels of households, type of courses pursued by the students, type of institutions, access to computer and Internet facility, consumption levels of households, and students' residence type.

Abstract

This chapter is intended to investigate the ramifications of foreign trade regime on the technological front in relation with the impact of between trade liberalization on the process of skill formation in dual economy setting and thereby, the wage dynamics facing the skilled and unskilled labor. The ideation toward this end is owed to the seminal literature concerning the connection between free trade and economic dualism, general and the implication of such nexus on skilling process, in particular. Hence, based on the above dispensation, it may be possible to analyze the consequence of free trade on knowledge economy (wherein, the knowledge essentially purports to technical skill, proficiency in various aspects of work and perhaps, to some extent, the case of innovation) and additionally, what it impinges on welfare and economic development for less developed countries. The theoretical underpinning of the baseline model is based basically on the dualistic structure of the economy with regional specifications of the factors. In this framework, it has been examined that under the condition liberal trade policy in a less developed country, featured by reduced tariff, how it makes up for the formation of knowledge capital in the presence of technology-intensive export sector employed skilled and, in such process, if wage inequality gets exacerbated or otherwise. This is further drawn to investigating the implicit change in the propensity of rural–urban migration of unskilled labor, consequent upon the escalation openness to foreign trade; in what holds out significantly as regards the persistence of economic dualism, in general and balanced growth phenomenon between urban and rural sectors, in particular.

Abstract

Economy consists of several economic activities like production, consumption, distribution etc. Nowadays, a new concept of knowledge economy has been introduced. A knowledge economy is an economy in which the production of goods and services is based primarily upon knowledge-intensive activities. At this phase, development has two aspects – quantitative and qualitative aspects. In qualitative aspects, concept of human development index (HDI) is included. HDI has been constructed on the basis of education index (EI), health index, and standard of living index. This education implies research and development. New growth theories emphasize the potential for human capital and increase knowledge to provide new sources of economic growth and high levels of productivity. Knowledge is a familiarity, awareness, or understanding of someone or something, such as facts, information, descriptions, or skills, which is acquired through experience or education by perceiving, discovering, or learning.

In this paper, the HDI and EI of the South Asian Association for Regional Cooperation (SAARC) countries, in particular India, are taken into consideration. To study the knowledge economy as well as human capital, Intellectual Property Rights (IPRs) is used. On the other hand, for analyzing the development of any sector of the economy, the role of FDI is important. Whether the role of FDI is still there in transition to knowledge economy or not, relationship between FDI confidence index and EI is taken into consideration. Data are used from the United Nations Conference on Trade and Development (UNCTAD), the United Nations Development Programme (UNDP), World Investment Report, AT Kearney etc.

Abstract

The objective of this work is to determine the relationship between human capital and artisanal innovation. Nowadays, in Tonalá Jalisco, artisanal pieces are produced in an innovative way, either by using ceramic or any variant of the mud technique, but a substantial part of the business is what makes innovative business thinking possible. The Intellectus Model, created by Eduardo Bueno in 2011, is used as a reference, distinguishing intellectual capital in three types of capital. But for the purpose of this study, we have only analyzed the relationship of human capital with respect to artisanal innovation. The study was conducted in 2018 on 73 craft economic units. Using the Pearson chi-square technique and applying the Statistical Package for the Social Sciences (SPSS) program, the qualitative relationship between innovation and human capital was analyzed. The result shows a positive relationship between human capital and innovation.

Abstract

Improving food security at the household level is very crucial in India as here many people are suffering from persistent hunger and malnutrition. In India, mounting pressure of population, adverse threats of climate change, fragmented land holding, high input cost etc. are very important which prevent to ensure food security. In India, there is malnutrition in all age groups, especially among children. Problem of low birth weight due to undernutrition of mother during pregnancy and underweight of children is very common in the country. The purchasing power of certain section of the society is so low that they cannot access food at the market price. They need the safety net of food subsidy. In India, food problem in the normative sense still continues to exist as millions of poor suffer from persistent hunger and malnutrition. This is the task to which food security system must address itself in future. There are some important factors which can increase yield growth and domestic supply of food substantially. Among these factors education and knowledge regarding improving farm efficiency, provision of an improved agricultural technology to the farmers, delivery of modern farm inputs, technical know-how, institutional credit to the farmers, and crop diversification are very essential to build a huge stock of food grains in India. Educated and trained people can acquire new skills and technologies required for growing agricultural output to meet the domestic demand.

Abstract

As we have entered into the twenty-first century, the economy has undergone a great transformation. The economy has literally become weightless. In the weightless economy, the emphasis has shifted from machines, materials, and other physical resources to information and knowledge. Information and knowledge are the thermonuclear competitive weapons nowadays. More and more economic activity has become invisible and intangible. The focal point in the new economy has shifted from exploration of physical objects to exploration of knowledge-based resources and their efficient and effective management. In the last decade of the twentieth century, almost unnoticed revolution in the corporate world took place: the transition from industrial capitalism, where business was based on tangible physical assets, to a new economy, where the production of goods and services and value creation in general depends and relies on invisible intangible assets. The primary objective of the present study is to build a theoretical construct in the field of evolution of knowledge asset with a view to exploration of the concept of knowledge asset and the need for its management in modern-day life. It further aims to investigate through an empirical study the qualitative disclosure of knowledge assets in terms of selected attributes for the Indian Pharmaceutical and IT Industries based on their annual reports. Content Analysis technique has been used to analyze the degree of disclosure of knowledge assets in terms of attributes.

Abstract

In the era of globalization, we have large market. Here, each one has to offer something for its survival or sustenance. Now, to capture the market of any product, the customer's satisfaction is essential. Government supported higher education institutions or the knowledge providing sectors day by day facing challenges both from nation's private institutions and global academic institutions. Students satisfaction obtained from the outcome or services provided by the institution is essential for its sustenance. Given that education is an experienced good, its efficacy can be measured by evaluating its effect on users, that is, students. Under these circumstances, it becomes very important to measure the level of satisfaction from the angle of the students of higher education institutions specially financed by government. An attempt has been taken in this chapter to measure students' satisfaction in master's level students of the University of North Bengal. This study is completely based on primary data collected from the structured questionnaire. Logistic regression model is used in this study as methodology.

Abstract

India and the Republic of Korea are two prominent democracies in Asia. Both countries had to fight for their long-desired freedom. India's growing friendly relationship with the Republic of Korea has been marked by mutual understanding and bilateral trading cooperation. India–Republic of Korea relations have made great strides in recent years and have become truly multidimensional, spurred by a significant convergence of interests, mutual goodwill, and high-level knowledge exchanges. This study intends to critically discuss how soft power has been applied in New Delhi–Seoul relations and how soft power has been a very effective tool to maintain unity among the Indian diaspora and the Korean community. Soft power has been beneficial for India in propagating India's films, culture, medicines, yoga, heritage, etc., through which India is generating revenue. The blending of liberal economic policy and knowledge-based soft power diplomacy has immensely helped in making reciprocal bilateral relations. South Korea's open market policies found resonance with India's economic liberalization and “Look East Policy” as well as “Act East Policy.” Similarly, India has opened up its economy through the adoption of “new economic policy.” With the trade liberalization, India had started vibrant trading relations with South Korea. The significant investment of Korean companies in India has made a strong base of economic relations. Both countries have developed their knowledge exchange programs in many ways.

Abstract

International trade is a long-standing issue for the development of any country. In the traditional theory of trade exports or trade pattern arises because of supply side differences between countries such as technological or factor endowment differences. Such theories predict inter-industry trade but not intra-industry trade (IIT). But in contrary, the simultaneous export and import of products of the same sector was led after the industrialization of developed countries from the 1960s onwards, which was described as “IIT” by [Balassa, B. (1986). Oxford Economic Papers, 38, 220–233]. In this study, India's bilateral IIT with major Asian trading partners was analyzed and the trends in IIT level for horizontal and vertical IIT were observed separately, along with gravity model for the year 2009–2018. This study examined the geographic component in knowledge flows, which could be found at the international level and whether or not an exchange of knowledge is related to foreign trade, particularly IIT. To measure the IIT level for investigating trade patterns between India and member countries of major Asian trading partners, IIT index will be used, known as Grubel-Lloyd index.

Abstract

“Digital India” was launched by the Government of India in July 2015, with a vision of transforming India into a digitally empowered society and knowledge economy. India's momentum toward digitalization took a swift pace after the demonetization of currency notes of 500 and 1,000 rupees. The government stressed the use of digitalized payments through apps that use UPI (Unified Payment Interface) and Core Banking System to move the banking sector toward a more digitalized system. The Nordic countries, on the other hand, had a developed digitalized system from the late 1990s and in the present context, they are in paramount positions in terms of global digitalized economies. In recent times Nordic countries like Norway, Sweden, Denmark, and Finland have performed overwhelmingly in terms of Digital Economy and Social Index (DESI). The Internet penetration in India and the use of mobile phones in the country is compared with the Nordic countries, trying to present the comparative advantage in those countries.

Abstract

Knowledge capital formation through investment in education has been at the center of the recent economic planning and management. Increase in labor productivity and technological innovation is the outcome of Research and Development (R&D) which is a part of the higher education system of a country. Therefore, to achieve long-run sustainable growth, an economy should dynamize its higher education framework along with strengthening the primary and secondary education to reflect the changing realities. The study examines the interplay between the percentage of educational expenditure in total expenditure and per capita net state domestic product (NSDP) of eight selected metro city states of India during the period 2005–2006 to 2015–2016. The result shows strong positive impact of educational expenditure on per capita NSDP. Therefore, the study suggests to increase the percentage share of educational expenditure in total expenditure.

Abstract

In an economic sense, urbanization is a process of transformation of rural economy to modern economy. It is measured by the increase in urban population to total population. In India, urbanization is increasing over the last 100 years. In 1911, urbanization in India was 10.29% which reached to 31.16% in 2011. In 2018, the urban population of India was 460.78 million or 34% of the total population. In the present world, economic growth of an economy is highly dependent on the growth of Information and Communication technology (ICT). The Indian Information Technology (IT) industry also has created an important place in the global IT market. The objective of this chapter is to search for a relationship between urbanization and development of the ICT sector in India. Secondary time series data of urbanization of India have been analyzed for census years from 1951 to 2011. The data on ICT have been taken for the period 2014–2015. The data have been collected from Internet and Mobile Association of India, Telecom Regulatory Authority of India, Cellular Operations Association of India, and District Information System of Education. For analyzing the development of ICT sector in India the variables taken are e-infrastructure, telephone density per 100 persons, mobile subscribers per 100 persons, mobile subscribers with Internet, schools with computers, and e-participation. Hypothetically, growth of urbanization is expected to develop the ICT sector. From the analysis it comes out that apart from some exceptions, the relatively economically developed and urbanized states of India are found to have a developed ICT sector. Whereas in relatively less urbanized states the development of ICT sectors are not up to the mark.

Index

Pages 261-266
Content available
Cover of Comparative Advantage in the Knowledge Economy
DOI
10.1108/9781800710405
Publication date
2021-06-08
Editor
ISBN
978-1-80071-041-2
eISBN
978-1-80071-040-5