Prepared by: Rachel Lim Ying Pei

Introduction

Knowledge-based economy is the new ascending economy observed in the contemporary world. Knowledge-related activities are now recognized as the driver of productivity, economic growth, wealth creation and sustain employability across all trades of businesses. The modern economics have gradually transferred from material consuming economy to information and knowledge based economy that would promote the economic development in the present day.

Knowledge-based economics are founded on increasing specialization, research, innovation and learning. The change towards the knowledge-based economy is happening on a global scale and had influence the existing competition between countries based on material resources are substituted by competition founded on intangible resources related to Human Resources, knowledge and new technologies. Knowledge-based economies require some critical requisites to become real and efficient economies. These are the four pillars: Education and training, innovation, information infrastructure, institutional regime.

Globalization has been a crucial factor for knowledge-based economies. The opening up of global markets and the internalization of trade in knowledge sectors have exposed the economies to an international competition level. The creation of global labor markets for highly skilled employees, the provision of investment capital and access to latest technology, information, ideas and knowledge flows from around the world have accelerated the transition to a knowledge-based economy.