Developing Knowledge Economy: A Shortcut to Modernization

The term “Knowledge Economy” has appeared in Vietnam for the past few years and the type of economy has derived from developed industrial countries for the past few decades. There are many terms related to knowledge economy that have been being using: knowledge-based economy, high-technology economy, network economy, digital economy…

According to the definition from the Organization for Economic Co-operation and Development – OECD: “the economy in which knowledge is produced, distributed and used as a driving force for economic growth, wealth creation, and job opportunities for other economies is called knowledge economy.” However, the definition just mentions merely the decisive role of knowledge and technology to human’s economic growth, not all the social sides of the economy. It will surely be an inevitable factor of human history in the future.

KNOWLEDGE ECONOMY: AN INEVITABLE FACTOR

From the economic angle and in the history progress of production force, the content of knowledge (grey matter) and the intellectual level have increasingly counted for the development of human societies, which can be divided to 3 historical periods:

The period of agricultural economy

The agricultural economy appeared over 10,000 years ago, developing from medieval manual labor, feudal grand manual working site, the Renaissance to the modern world. Production instruments were simple ones, and the major energy was mainly muscle energy of human, animals’ traction, and other primitive energies. Knowledge was in use at low level, which led to the slow development of science – technology.

The period of industrial economy

The period of industrial economy appeared in the period of the first and second world industrial revolutions (from the end of the 19th century to the mid 20th century). Manual production was changed to mechanical and electro-mechanical production. Science – technology of human was strongly developed, and become the driving force for human’s social economy. There appeared industrial countries. Capitalism was at its height. However, the grand industry was mainly based on natural resources and raised challenges from resources, environment, markets, and social inequality to the human. Among which, impacts on the world ecological system due to climate changes and resource depletion have been urgent issues of our green world.

The human science – technology does need further development to solve all these issues.

The period of knowledge economy

The knowledge economy is built on the base of capital and natural resource of the industrial economy, but mainly based of human knowledge and modern science – technology, creating more wealth; heightening intellectual level; and stabilizing the eco-logical system. The world science – technology revolution and the birth of computer in the mid 20th century started the period. The developing of high technology (micro – electronics, laptops, multi-functioned cell phones, optical-electronics, laser beam, nanotechnology, gene, stem cells…), the birth of satellite communication, and the use of global communication highway, optical cable, digital television, robots, and super-speed computers for business management… are features of the period. Natural science knowledge and social science knowledge creates a now whole, ensuring a stable recreation of human life. Therefore, the foundation of knowledge economy is historically inevitable despite the fact that it has been unequally developing in areas or it has been developing with various forms.

The comparisons of the three kinds of economy

A SHORTCUT TO THE COUNTRY’S INDUSTRIALIZATION AND MODERNIZATION

Lessons from countries that shares the same characteristics

Finland was once a purely agricultural-forestry under-developed country in Northern Europe. In 1950, residents in the country accounted for 90% of the population, now there is only 6% and contribution ratio from agricultural-forestry business to the country’s GDP is 3%. The area of forests, lakes, and ponds accounts for 80% of the total area and its advantage was paper and pulp manufacturing. From 1980, Finland has developed high-tech and service businesses. And it now becomes one of the leading countries in the world in information technology. Nokia Corporation is holding half of the world’s market share of cell phones, with the export accounts for 15% GDP. Annual R&D (Research & Development) investment is 10% of the profit, which is twice higher than in other European countries. Finland is a typical country that has a rapid change from the agricultural economy to the knowledge economy.

Korea was once an under-developed country in the Asia. It was occupied before and in the time of WWII (1940-1945) by the Japanese. And then it was suffered from the vicious war the East and the West. The war ended in 1953 and left a war-torn country, which needed to be completely re-constructed.

In 1970, agricultural population accounted for 70% of the population, which is 6% at the present. With its advantages of cheap labor force, which is also skilled and hard-working, and financial and modernly technical supports by the U.S at the beginning, the country has developed heavy industry, high-tech industry, and general services and with the typical feature of the speed of localization in industrial additive products, Korea has had a great development from a country with nothing at its start to a leading country in ship-building in 1993 with 110,000 professional workers, 58 world-class ship building factories that are able to build vessels of over 300,000DWT of all kinds. In 2008, its ship-building industry reached a profit of USD 43.1 billion.

Besides, since 1990, Korea has had a development strategy for knowledge economy and intelligent society. Its communication super highway connects 14 million of families, all schools in the countries and global networks.

The country can be taken as a typical country which has taken a shortcut from the agricultural-industrial economy to the knowledge economy by making a good use of intellectual labor and achievements from the modern science-technology, and together with opportunities and the change of the multi-polar world.

Building skilled human resources to shorten the industrialization and modernization

Since the 9th Conference (2001), The Vietnam Communist Party has had policies to gradually develop knowledge economy. The 10th Conference of National Delegates (2006), it stated “Boosting the industrialization and modernization by connecting them with developing the knowledge economy” and in the 11th Conference (2011) the policy was concretized with the task of urgently trained skilled human resources for the industrialization and the modernization. Therefore, the policy to develop the knowledge economy is consistent throughout the transitional period to the socialism.

There have been basic seeds that allow the step-by-step implement that brings the country to the knowledge economy, closely connected to recent achievements: the gradual increase of GDP in the situation of global crises, the wide use of Internet and cell phones, the development of information and satellite communication, the use of optical cable, applications of new technology in industrial production, the use of Computer Aided Design – CAM in mechanical manufacturing and Computer Aided Design – CAD in product designs; In the sea port sector, with the use of Container Management System-CMS, Terminal Operation Package-TOPX and DGPS to update containers’ information, the development of logistics has made ours keep pace with other ports in the region and those worldwide.

In general comparison with South East Asian countries, the number of knowledge workers of ours is too small in number, 5% in 2000 compared to 9-20% of Malaysia’s and Thailand’s. However, according to World Bank, Vietnam, among developing countries, has great potential in approaching knowledge economy.

The evaluation makes us more confident, but at the same time, makes us consider about the co-relations between Vietnam and neighboring countries. Statistics show that Vietnam has over 9.000 professors, vice professors and over 30.000 PhD, but there are only around 900 articles in international journals. This is a fairly small number compared to the standard that each professor should have at least one article a year if their science projects have not yet been taken into account.

The United Nations Educational, Scientific, and Cultural Organizations –UNESCO and WB ranked Vietnam 106/145 in Knowledge Economy Index-KEI. The low rank indicates the obvious weakness in education and science research.

In the modern world, “education and training” is a nursery for logistics seeds to grow and “social studies” is a rich soil to develop knowledge economy. The way to the industrialization and modernization can be shortened if Vietnam can make its “education and training” effective and make “social studies” well-implemented.

Developing Knowledge Economy: A Shortcut to Modernization

The term “Knowledge Economy” has appeared in Vietnam for the past few years and the type of economy has derived from developed industrial countries for the past few decades. There are many terms related to knowledge economy that have been being using: knowledge-based economy, high-technology economy, network economy, digital economy…

According to the definition from the Organization for Economic Co-operation and Development – OECD: “the economy in which knowledge is produced, distributed and used as a driving force for economic growth, wealth creation, and job opportunities for other economies is called knowledge economy.” However, the definition just mentions merely the decisive role of knowledge and technology to human’s economic growth, not all the social sides of the economy. It will surely be an inevitable factor of human history in the future.

KNOWLEDGE ECONOMY: AN INEVITABLE FACTOR

From the economic angle and in the history progress of production force, the content of knowledge (grey matter) and the intellectual level have increasingly counted for the development of human societies, which can be divided to 3 historical periods:

The period of agricultural economy

The agricultural economy appeared over 10,000 years ago, developing from medieval manual labor, feudal grand manual working site, the Renaissance to the modern world. Production instruments were simple ones, and the major energy was mainly muscle energy of human, animals’ traction, and other primitive energies. Knowledge was in use at low level, which led to the slow development of science – technology.

The period of industrial economy

The period of industrial economy appeared in the period of the first and second world industrial revolutions (from the end of the 19th century to the mid 20th century). Manual production was changed to mechanical and electro-mechanical production. Science – technology of human was strongly developed, and become the driving force for human’s social economy. There appeared industrial countries. Capitalism was at its height. However, the grand industry was mainly based on natural resources and raised challenges from resources, environment, markets, and social inequality to the human. Among which, impacts on the world ecological system due to climate changes and resource depletion have been urgent issues of our green world.

The human science – technology does need further development to solve all these issues.

The period of knowledge economy

The knowledge economy is built on the base of capital and natural resource of the industrial economy, but mainly based of human knowledge and modern science – technology, creating more wealth; heightening intellectual level; and stabilizing the eco-logical system. The world science – technology revolution and the birth of computer in the mid 20th century started the period. The developing of high technology (micro – electronics, laptops, multi-functioned cell phones, optical-electronics, laser beam, nanotechnology, gene, stem cells…), the birth of satellite communication, and the use of global communication highway, optical cable, digital television, robots, and super-speed computers for business management… are features of the period. Natural science knowledge and social science knowledge creates a now whole, ensuring a stable recreation of human life. Therefore, the foundation of knowledge economy is historically inevitable despite the fact that it has been unequally developing in areas or it has been developing with various forms.

The comparisons of the three kinds of economy

A SHORTCUT TO THE COUNTRY’S INDUSTRIALIZATION AND MODERNIZATION

Lessons from countries that shares the same characteristics

Finland was once a purely agricultural-forestry under-developed country in Northern Europe. In 1950, residents in the country accounted for 90% of the population, now there is only 6% and contribution ratio from agricultural-forestry business to the country’s GDP is 3%. The area of forests, lakes, and ponds accounts for 80% of the total area and its advantage was paper and pulp manufacturing. From 1980, Finland has developed high-tech and service businesses. And it now becomes one of the leading countries in the world in information technology. Nokia Corporation is holding half of the world’s market share of cell phones, with the export accounts for 15% GDP. Annual R&D (Research & Development) investment is 10% of the profit, which is twice higher than in other European countries. Finland is a typical country that has a rapid change from the agricultural economy to the knowledge economy.

Korea was once an under-developed country in the Asia. It was occupied before and in the time of WWII (1940-1945) by the Japanese. And then it was suffered from the vicious war the East and the West. The war ended in 1953 and left a war-torn country, which needed to be completely re-constructed.

In 1970, agricultural population accounted for 70% of the population, which is 6% at the present. With its advantages of cheap labor force, which is also skilled and hard-working, and financial and modernly technical supports by the U.S at the beginning, the country has developed heavy industry, high-tech industry, and general services and with the typical feature of the speed of localization in industrial additive products, Korea has had a great development from a country with nothing at its start to a leading country in ship-building in 1993 with 110,000 professional workers, 58 world-class ship building factories that are able to build vessels of over 300,000DWT of all kinds. In 2008, its ship-building industry reached a profit of USD 43.1 billion.

Besides, since 1990, Korea has had a development strategy for knowledge economy and intelligent society. Its communication super highway connects 14 million of families, all schools in the countries and global networks.

The country can be taken as a typical country which has taken a shortcut from the agricultural-industrial economy to the knowledge economy by making a good use of intellectual labor and achievements from the modern science-technology, and together with opportunities and the change of the multi-polar world.

Building skilled human resources to shorten the industrialization and modernization

Since the 9th Conference (2001), The Vietnam Communist Party has had policies to gradually develop knowledge economy. The 10th Conference of National Delegates (2006), it stated “Boosting the industrialization and modernization by connecting them with developing the knowledge economy” and in the 11th Conference (2011) the policy was concretized with the task of urgently trained skilled human resources for the industrialization and the modernization. Therefore, the policy to develop the knowledge economy is consistent throughout the transitional period to the socialism.

There have been basic seeds that allow the step-by-step implement that brings the country to the knowledge economy, closely connected to recent achievements: the gradual increase of GDP in the situation of global crises, the wide use of Internet and cell phones, the development of information and satellite communication, the use of optical cable, applications of new technology in industrial production, the use of Computer Aided Design – CAM in mechanical manufacturing and Computer Aided Design – CAD in product designs; In the sea port sector, with the use of Container Management System-CMS, Terminal Operation Package-TOPX and DGPS to update containers’ information, the development of logistics has made ours keep pace with other ports in the region and those worldwide.

In general comparison with South East Asian countries, the number of knowledge workers of ours is too small in number, 5% in 2000 compared to 9-20% of Malaysia’s and Thailand’s. However, according to World Bank, Vietnam, among developing countries, has great potential in approaching knowledge economy.

The evaluation makes us more confident, but at the same time, makes us consider about the co-relations between Vietnam and neighboring countries. Statistics show that Vietnam has over 9.000 professors, vice professors and over 30.000 PhD, but there are only around 900 articles in international journals. This is a fairly small number compared to the standard that each professor should have at least one article a year if their science projects have not yet been taken into account.

The United Nations Educational, Scientific, and Cultural Organizations –UNESCO and WB ranked Vietnam 106/145 in Knowledge Economy Index-KEI. The low rank indicates the obvious weakness in education and science research.

In the modern world, “education and training” is a nursery for logistics seeds to grow and “social studies” is a rich soil to develop knowledge economy. The way to the industrialization and modernization can be shortened if Vietnam can make its “education and training” effective and make “social studies” well-implemented.