Overview of Knowledge Economy in Malaysia

Overview of Knowledge Economy in Malaysia

The knowledge economy is a term that refers either to an economy of knowledge focused on the production and management of knowledge in the frame of economic constraints, or to a knowledge-based economy. In additional, it refers to the use of knowledge technologies such as knowledge engineering and knowledge management to produce economic benefits as well as job creation. The essential difference is that in a knowledge economy, knowledge is a product, while in a knowledge-based economy, knowledge is a tool. They both are strongly interdisciplinary, involving economists, computer scientists, engineers, mathematicians, chemists and physicists, as well as cognitivists, psychologists and sociologists. Various observers describe today's global economy as one in transition to a "knowledge economy," as an extension of an "information society." (Peter Drucker) The idea of the knowledge driven economy is not just a description of high tech industries. It describes a set of new sources of competitive advantage which can apply to all sectors, all companies and all regions, from agriculture and retailing to software and biotechnology. (Charles Leadbeater, 1999)The knowledge society is a larger concept that just an increased commitment to R&D. It covers every aspect of the contemporary economy where knowledge is at the heart of value added – from high tech manufacturing and ICTs through knowledge intensive services to the overtly creative industries such as media and architecture. (Kok, 2004)

The private sector will continue to be the engine of growth in the knowledge based Economy. The private sector including the SMEs will have to swiftly redefine their production processes by applying appropriate and cost-efficient technology. They must also take a global view as markets will become virtual and borderless. Traditional modes of sourcing inputs and marketing products will have to be complemented by the greater use of e-trading and e-business tools. In addition, the private sector will need to create new value by developing capacity to undertake R&D, product development and innovation, as well as package, market and distribute their products efficiently and speedily. They must identify niche areas in which they have potential and build their competency to world-class standards. To succeed and stay ahead, the private sector will have to adopt best practices and benchmark themselves at a higher level than the best firms in their respective industries. Entrepreneurial and managerial skills must be sharpened to handle new challenges. Efforts must also be taken to develop a sufficient number of high quality technoprenuers to drive firms. In addition, the private sector must be more willing to take risk and venture into new areas and opportunities that will be generated by the knowledge-based economy. In order to marshal the private sector to respond