Sri Lanka - cyber savvy economics

Lionel Wijesiri

Knowledge economy is one of most debated topics today, particularly its potential of defining future global economic powerhouses. In 1996, Organization for Economic Cooperation and Development (OECD) defined Knowledge-Based Economy (KBE) as being “directly based on the production, distribution and use of knowledge and information”, it was readily adopted and later expanded to also cover the “production, distribution, and use of knowledge is the main driver of growth, wealth creation and employment across all industries”.

There are two forces that are playing a key role in defining the knowledge economy, namely the intense need of knowledge in enhancing economic activities and the increasing globalization of economic affairs. The intense need of knowledge is driven by the combined forces of information technology revolution and the increased pace of technological change.

Globalization, on the other hand, is driven by national and international deregulation and assisted by IT-related communication revolution.

But it is not just education; it is also about systems, processes, regulations, discipline, trade, innovation, information technology, etc.

Knowledge Economic Index

To evaluate a country’s status in this new knowledge economy, the World Bank has created a tool that it calls Knowledge Assessment Methodology (KAM) from which a Knowledge Economic Index (KEI) is created.

Higher the KEI, higher is the per capita income of that country and vice versa.

According to 2012 statistics, highest KEI is reported from Sweden at 9.43 on a scale of 1 to 10, and the lowest KEI is of Myanmar at 0.96 at rank 145, Pakistan is ranked 117th with a KEI score of 2.45, with India at 110th position and KEI of 3.06 and Sri Lanka at 87th place and has KEI of 3.63. Sri Lanka is well ahead of India and Pakistan.

The four pillars

The World Bank Institute has defined the knowledge economy as consisting of four pillars, which if strengthened, can result in growth and development.

1. The business environment: An economic and institutional regime that provides incentives for the efficient creation, dissemination, and use of existing knowledge. For example, tariff and non-tariff barriers, regulatory quality, and the rule of law.

2. Dynamic information infrastructure: Institutional set-up which can facilitate the effective communication, dissemination, and processing of information. (telephones per 1,000 persons, computer per 1,000 persons, and Internet users per 10,000 persons)

3. Human resources: An educated and skilled population that can create and use knowledge. (adult literacy rate (percent age 15 and above), secondary enrolment, and tertiary enrolment)

4. Efficient innovation system: This includes of firms, research centres, universities, consultants, and other organizations that can tap into the growing stock of global knowledge and assimilate and adapt it to local needs, as well as to create relevant new knowledge. (R and D, patent applications, and scientific and technical journal articles)

Some modern also add culture as another 'pillar'. The culture of a country, which is not replicable and transferable, is the competitive factor that makes a knowledge economy unique.

Contemporary history reveals that some developing countries have failed to be developed as knowledge economies even as much investment is made towards developing other recommended areas.

What this means is that more attention has to be paid to the needs and expectations of the workers in the knowledge-based economies, such as in the provision of arts and cultural attractions, and other aspects that help improve overall quality of life.

Demand for education

As a fast-developing economy, Sri Lanka too, in the recent past, has begun to make the inevitable approach towards creating a knowledge economy.

We can witness a revolution that is characterized by the transformation of various aspects of our society which do not only include technology changes, but one that involves institutional and cultural impact as well.

The government has already taken steps to raise the standards of the six universities in Sri Lanka to international level. The Ministry of Higher Education has invited foreign universities to establish campuses to provide diversified higher education programmes. Ministry information revealed that 10 branch campuses of 10 international universities are expected to be established in Sri Lanka within the next year.

According to the Chairman –University Grants Commission, Prof. Gamini Samaranayake, the biggest challenge facing our university education is ensuring equal opportunity in access and equity in the quality of education. Quoting statistics, he adds, “Annually, well over 250,000 students sit for the Advanced Level Examination and half of them are qualified for university education.

However, only 22,000 are able to enter university education in the country.

Of them, 9,000 enroll in vocational training through 12 Advanced Technological Institutes, 20,000 enroll at the Open University, 8,000, access overseas education, and 20,000 register as external candidates while 9,000 are studying for a foreign degree via cross border institutes. Nearly, 60,000 students are looking for alternative higher education locally”.

He further adds that the ever increasing demand for higher education in the country is an impetus for growth and advancement.

It is therefore abundantly clear that the creation and measurement of a knowledge economy moves beyond the realm of human capital and includes what is known as structural and relational capital.

National Knowledge Commission

Having maintained steady economic growth over the years, the government has clearly understood that it is time to make Sri Lanka a knowledge economy. It is not a pipe dream but a reality, both actionable and achievable.

It is in this context the writer feels we can learn a lesson from India and take the first step in this direction by establishing an Indian model of a ‘National Knowledge Commission’. In June 2005, Prime Minister of India, Dr. Manmohan Singh, constituted National Knowledge Commission (NKC) which was a high-level advisory body to him, with the objective of transforming India into a knowledge economy. In its endeavour to transform the knowledge landscape of the country, the National Knowledge Commission has submitted around 300 recommendations on 27 focus areas during its three and a half year term.

The Terms of Reference of the NKC were:

(1) Build excellence in the educational system to meet the knowledge challenges of the 21st century and increase India’s competitive advantage in fields of knowledge.

(2) Promote creation of knowledge in Science and technology laboratories.

(3) Improve the management of institutions engaged in Intellectual Property Rights.

(4) Promote knowledge applications in Agriculture and Industry.

(5) Promote the use of knowledge capabilities in making government an effective, transparent and accountable service provider to the citizen and promote widespread sharing of knowledge to maximize public benefit. The organizational structure of the NKC was flat. The Secretariat was headed by an Executive Director and consisted of nine research associates. It also had four advisors who advised the commission on different issues.

Many of the recommendations of the NKC have already been implemented by different ministries of the Indian government. Some of the major developed areas were higher education, vocational education, entrepreneurship, school education. The NKC consulted a wide range of stakeholders and experts on each area before submitting the recommendations to the Prime Minister. Each area had a working group which was headed by a prominent person in that field. After submitting the recommendations, an extensive coordination also takes place with the Planning Commission of India and relevant ministries of the government.

Priorities

Creation of knowledge economy principally depends on strengthening the education system, promoting domestic research and innovation in laboratories as well as at the grass roots level, and tapping foreign sources of knowledge through more open trading regimes, foreign investment and technology licensing.

Application of knowledge should primarily target the sectors of health, agriculture, government and industry.

This involves diverse priorities like using traditional knowledge in agriculture, encouraging innovation in industry and agriculture, and building a strong e-governance framework for public services; dissemination of knowledge focuses on ensuring universal elementary education, especially for traditionally disadvantaged groups, creating a culture of lifelong learning especially for skilled workers, taking steps to boost literacy levels; and using Information and Communication Technology (ICT) to enhance standards in education and widely disseminate easily accessible knowledge that is useful to the public. All these activities are essential.

The task ahead is at many levels - from primary schools to higher education and research institutions of national excellence. At all levels, there is a need to improve both access and excellence. There are, of course, fiscal and administrative challenges to be tackled and there are intellectual and leadership issues to be addressed. We must address them boldly.

A properly instituted Knowledge Commission can come forward with creative ideas to promote the know1edge base of our economy and to exploit the vast latent potential that lies. We must leverage it to make Sri Lanka truly the Knowledge Engine of Asia.