Wednesday 9 September 2020

How can governments support a knowledge economy?

Governments know all about supporting traditional economies. So why are they so poor at supporting the knowledge economy?

Image from wikimedia commons
by 401(K) 2012, CC licence

A "knowledge economy" is a focus for many many governments in the developed world. A knowledge economy is one "where distinctive know-how is vital to competitive services and products", and where knowledge is the resource from which economic value is delivered.  Governments like the idea of a knowledge economy, because it delivers high value without the need for natural resources like oil, farm land, minerals or tourism, and relies instead on intellectual assets.

So why do governments have such a difficult time understanding how to support the knowledge economy?

I think partly it is because they do not understand knowledge and how it drives value, they do not understand Knowledge Management (the public sector is behind the curve in adopting KM, and most governments see it either as a synonym for library science, or an issue solvable through the use of technology alone), and they have not yet looked long and hard about how other economies are supported, in order to take those lessons and apply them to the knowledge economy.

The UK Government, for example, sees the knowledge economy as intrinsically tied to higher education. They measure the economy partly by measuring high-tech industries and university places, and support it partly by funding higher education and partly through what they call "Knowledge Transfer" but which really is the encouragement of commercialisation of University research.

However to be successful, the knowledge economy requires knowledge management, just as the farming economy needs land management, and the fisheries economy needs fisheries management, and the forestry economy needs forestry management.

Where an economy is based upon a resource, the government should play a key role in ensuring that resource is well managed, in order to generate value for the economy.

Knowledge management ensures management of the critical knowledge resource, by ensuring that knowledge is efficiently and effectively created, discussed, developed, codified (where needed), retained, applied and continuously improved. Knowledge management is the difference between hoping an economy will arise if we have enough higher education, and giving companies the awareness and tools to ensure that an economy arises and is sustainable.

So how does a government currently support a resource-based economy such as agriculture, forestry, fisheries and tourism, and how can that be translated to the Knowledge economy?

  1. The government educates. In every resource-based economy (with the current exception of the knowledge economy) the government plays a key role in educating the key players in how to manage the key resource on behalf of the economy as a whole. Whether this is managing land, managing fish stocks, managing forests or hotels or seaside towns, the government understands that good management is key to a healthy economy, and so provides awareness, training and skills development. This is not yet the case with the knowledge economy, as the government does not yet seem to fully grasp good knowledge management and how it protects the knowledge resource.

  3. The government sets standards. In every economy (with the current exception of the knowledge economy) the government sets standards - marketing standards and labelling requirements for fisheries, standards for agricultural produce and organic farming, star ratings for hotels and "standards for responsible tourism". Now we have a set of standards - ISO 30401:2018; the ISO management systems standard for KM - and the government can and should be promoting this as a requisite for all knowledge-based industries. This move alone would go a long way towards building the knowledge economy. 

  4. The government offers tax breaks and incentives. For example, agricultural fuel ("red diesel") is free from tax. Governments can financially incentive the tourism sector through low-interest loans, or provide free advertising, and can provide grants for forestry management programs. They do not yet provide incentives for KM development. They could do this if they chose - they could provide tax breaks for investment in KM technology (so long as this doesn't lead people to think that technology is all you need), could provide grants for the development of KM strategies. or could subsidise the development of KM skills.

  6. The government provides specialist advisors.  Fisheries management advisors, regional tourism advisors, "Farming Advice Service" accredited advisors and so on. Where are the Knowledge Management advisors? There aren't any, because governments generally do not yet understand knowledge management, and do not yet understand the key message, highlighted above and repeated here - Where an economy is based upon a resource (in this case, knowledge), the government should play a key role in ensuring that resource is well managed, in order to generate value for the economy.

The first government that realises this, and that takes the 4 actions listed above. will be the next winner in the Knowledge Economy race.

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