1. Knowledge Economy: Implications for Education and Learning Carl Dahlman World Bank
Presentation at
Upgrading Korean Education in the Age of the
Knowledge Economy: Context and Issues
October
Seoul, Korea

2. Structure of Presentation
1. The Knowledge Revolution
2. Knowledge Economy: Definition and Framework
Key Issues for the Economic Incentive and Institutional Regime
Key Issues for ICT Infrastructure
5. Key Issues in the Innovation System
6. Key Issues for Education
7. Summary and Conclusions
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3. The Knowledge Revolution - 1
Ability to create, access and use knowledge is becoming fundamental determinant of global competitiveness
Seven key elements of “Knowledge Revolution”
Increased codification of knowledge and development of new technologies
Closer links with science base/increased rate of innovation/shorter product life cycles
Increased importance of education & up-skilling of labor force, and life-long learning
Investment in Intangibles (R&D,education, software) greater than Investments in Fixed Capital in OECD
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4. The Knowledge Revolution - 2
Greater value added now comes from investment in intangibles such as branding, marketing, distribution, information management
Innovation and productivity increase more important in competitiveness & GDP growth
Increased Globalization and Competition
Trade/GDP from 38% in 1990 to 52% in 1999
Value added by TNCs 27% of global GDP
Bottom Line: Constant Change and Competition Implies Need for Constant Restructuring and Upgrading
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5. The Knowledge Economy
There are many definitions of the “Knowledge Economy”, many emphasizing just information technology and high technology
We take a broader definition:
“An economy that creates, acquires, adapts, and uses knowledge effectively for its economic and social development.”
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6. 2: Framework for Using K4D
Four Key Functional Areas
Economic incentive and institutional regime that provides incentives for the efficient use of existing and new knowledge and the flourishing of entrepreneurship
Educated, creative and skilled people
Dynamic information infrastructure
Effective national innovation system
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7. A Benchmarking Methodology
KAM: 69 structural/qualitative variables to benchmark performance on 4 pillars
Variables normalized from 0 (worst) to 10 (best) for 100 countries
www1.worldbank.org/gdln/kam.htm
Basic scorecard for 14 variables at two points in time, 1995 and 2000
Aggregate knowledge economy index (KE)
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8. Korea: Basic KE Scorecard

9. Strong Correlation: GDP/Capita & KEI
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10. Korea in the Global Context

11. Key Elements of Economic Incentive & Institutional Regime
Competitive environment as stimulus for improved performance
Financial system that mobilizes and allocates capital to its most productive uses
Flexible labor markets including support for up-skilling
Appropriate legal and regulatory system and strong rule of law that support entrepreneurship
Effective safety nets to facilitate adjustment to constant restructuring
Effective, transparent and accountable government
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12. Economic and Institutional Regime Scorecard

13. Scorecard: Governance
Source: World Bank Institute K4D Program.

14. Key Issues for the EIIR in Korea
Soundness, Regulation and Efficiency of Banking System and Stock Market
Flexibility of Labor Market
Corruption and Transparency of Decision-Making Process
Corporate Governance and Accountability
Property Rights
Enforcement of Intellectual Property Rights
Industrial Structure: Chaebols vs SMEs
Support for High Value Service Industries

15. Key Issues in the Information Infrastructure
Communications infrastructure (from radio to internet)
Telecom issues (competition, pricing, regulation)
Digital Divide (access, content, language)
Use
E-govt, E-business, E-education, E-health
Legal and regulatory regime for E-economy
Software
Skills to use
©© Knowledge for Development, WBI

16. ICT Scorecard

17. Key Issues for ICT Digital divide.
Development of database and networking.
Development of skills to utilize the new information infrastructure.
Development of software and applications

18. Key Issues in National Innovation System
Tapping into Global Knowledge
Trade, foreign investment, tech transfer,
Technical journals, travel, internet, conferences
Creating and adapting knowledge
Pubic vs private R&D; Basic vs applied R&D
From specialized research institutions to production
Disseminating Knowledge
Growth of more efficient enterprises
Suppliers of equipment, technical services and info
Extension services: agriculture, industry, services
Using knowledge
Depends on education, skills, complementary inputs
Depends on economic and institutional regime
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19. Innovation System Scorecard

20. Global R&D Effort in Comparative Perspective
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21. Key Issues for the Innovation System in Korea
Korea is high spender on R&D and most of it is by the private sector, but
Output not commensurate with input. Need to:
Streamline role of government R&D Institute
Improve interaction between Universities,GRI and Private firms
Improve efficiency of private R&D output
Participate more effectively in global knowledge
Need to improve knowledge management in firms
Improve regard for value of knowledge and encourage creativity

22. Key Issues in Human Resources
Access to different levels of education
Gender balance
Quality of educational content (core technical & social skills, relevance, creativity)
Balance among different levels of education
Financing & public and private roles
Life-long learning opportunities
Role of the Ministry of Education and its relations with labor, market, and economy
©© Knowledge for Development, WBI

23. Education and Human Resources Scorecard

24. Implications of KE for Education ad Training Systems
Stock challenge: rapid creation and diffusion of knowledge means even adults constantly have to learn, therefore need
Multiple mechanisms for continuous training beyond formal education system
To exploit potential of information and communications technologies to expand training opportunities
Effective system for skills assessment and certification
Flow challenge: education system must teach students how to learn through their lifetime regardless of when they leave it: implies need for
Better teaching and learning pedagogies for core skills
Broader interdisciplinary approaches
Financing mechanisms to expand access and improve quality
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25. Tertiary Enrollment Rates
Finland US
Korea
Ireland
Argentina
Singapore
Japan
Hong Kong
Chile
Brazil
Add Brazil, Chile, Argentina and Mexico
Mexico
Malaysia
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26. Higher Education Enrollment Ratio (1997)

27. Educational Attainment in OECD: Adult Population
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28. Korea: Educational Attainment

29. Key Issues for Education In Korea
Korea has high assets in educational investment and attainment
But
Too academic, not practical or creative
Over-regulated: quotas, testing, content
Poor links to the labor market
Adult learning opportunities limited
Gender inequity in higher education and jobs
Korea’s main challenge is not so much in terms of access, but more in terms of quality, content and structure

30. 6. Summary and Conclusions
The knowledge revolution and the knowledge economy are a challenge to all countries
Korea has made large strides towards becoming a knowledge economy.
Korea has made rapid advances in the economic incentive and institutional regime, and ICTs.
Korea’s biggest challenges are in the innovation and education, in spite of already high investments in these areas
Improving the quality of education and strengthening retraining and lifelong learning are at the very center of what Korea has to do to improve its prospects
©© Knowledge for Development, WBI

31. Knowledge makes the Difference between Poverty and Wealth...
Thousands of constant 1995 US dollars
Rep. of Korea
Difference attributed to knowledge
Difference due to physical and human capital
How important is knowledge?
Forty years ago, Ghana and the Republic of Korea had about the same income per capita. By 1990, Korea’s income was six times higher than Ghana’s. While part of the difference is due to more investment and more workers, half of the difference is attributed to Korea’s greater success in organizing and using knowledge.
Ghana