THE FOUR PILLARS OF KNOWLEDGE ECONOMY

Knowledge economy means the part knowledge and technology has to play in the economic
growth of a country. The above mentioned pillars are apt in using knowledge as a tool for
economic growth. These pillars encompasses various factors that are considered for the
development of an economy.
Knowledge available today is very vast and abundant. The 4 pillers are best suited in
maximum understanding ,measurement ,describing and processing of knowledge. Even
though it is impossible to cover the entire knowledge available ,these pillars are the most
helpful in the journey to such a mission.
Over the past years its seen that the economies of developed countries have gained the edge
over others by the usage of technology derived from knowledge and information and its
processing .The innovation has enabled these countries to achieve it .
The four pillars of Knowledge economy are
Education & Training
Knowledge has to be created, shared and used with the people who are skilled and educated .
A good educational system is inevitable in the growth of a nation.The human resource
development is required for developing skills required for team work ,individual excellence
and to cope up with various challenges in work and business.An efficient education system
helps in effective transfer of knowledge not only from person to person institutions and from
company to company in business. This sharing and transfer of knowledge can help in
reducing the investment for research and development.

Information Infrastructure
There is a need for good information infrastructure like radio, internet and other electronic
devices that are helpful in the communicating ,broadcasting and processing information.
Information,communication and technology(ICT) play a vital role in developing a countrys
economy. Creation of knowledge does not happen while using ICT where as it helps in the
access,usage and transfer of knowledge in a fast and efficient manner by the individuals,firms
and other organizations.ICT use is extremely important for the developing economies which
are in a transition phase from traditional economy to the knowledge economy.The
application and development of ICT calls for the need of more educated people .

Economic Incentive & Institutional Regime
For the free flow of knowledge there is a need for a regulatory and economic environment
and it should support Information and Communication Technology (ICT) that promotes
entrepreneurship.

The prevailing government machinery has to work effectively in order to attract investment
both from inside and outside the country. The investors look to invest in countries with good
political stability ,effective government functioning,proper legal structure etc.This indicates
the quality of the government in that country.A competitive business environment is created
by better tax laws ,financial plans and good intellectual property rights. All these are
required for creating new knowledge.This pillar will enable in encouraging more people to
take up entrepreneurial activity and hence contribute to the economic growth.

Innovation Systems
For meeting the rising demand for knowledge and its processing there is a growing demand
for Research centers, educational institutions, new enterprises etc. The knowledge has to be
transformed into a form that can be applicable as practical solutions for the various problems
the world faces.
Private and public sector have to contribute towards innovation and the government should
provide the necessary support for this. Research and development calls for high investment
for which various sources have to be found.

It can be found that the 4 pillars are interlinked and cannot have an existence of their own.
Innovations require R&D which in turn needs educated people.ICT needs support of educated
people for its functioning.The economic and institutional regime has to support ICT and
R&D and should promote entrepreneurial activity thereby bringing economic development.
The economic and institutional regime forms the base and rest 3 pillars are erected on it.
A minimum human capital is required before an economy forays into making an innovation
center.Necessary information is required for ICT and innovation systems to work.

The 4 pillars are appropriate and they are supported by their indicators.
Pillar Indicator
Economic and institutional regime Tariff and non-tariff barriers
Quality of regulation
Rule of law
Intellectual property protection

Education and skill of population

Literacy rate of adults
Total secondary enrollment rate
Total tertiary enrollment rate

Information infrastructure Telephones per 1,000 people
Computers per 1,000 people
Internet connection and users per 1000
people

Innovation system Cooperation between universities and
private sector
R&D expenditure
Patents registered

The appropriateness of knowledge economy can be traced from the success of countries like
Finland Ireland and South Korea that practices knowledge economy which is rooted on the 4
pillars.
Korea
World war II was over and Koreas GDP was similar as Africa and Asia.Korean war
deteriorated the condition even more.Their asset was high primary school enrollment and
equitable wealth distribution in 1953.By 2006 their GDP grew and equalled mid level
economies of European Union.Large family owned businesses created a platform for the
industry and developed sophisticated production lines in heavy industries.Government
support were granted to the industries.
Korea developed R&D in government institutes,adapted imported technology and later did
internal research.Indusry funded the R&D and in the last decade, it funded 80 percent of total
R&D expense which represent 3 % of GDP.
Heavy investment was done in education,leading to high literacy even in the 1950s.
Professional education received the attention gradually as industry grew.
Although asian financial crisis bocked the Korean economy in 1997 the government took
steps for revival which included incentive to support R&D,promoting new businesses and
building a dynamic information infrastructure.