The knowledge economy refers to the use of knowledge to produce economic benefits. The phrase was popularised (if not invented) by Peter Drucker as the heading to chapter 12 in his book The Age of Discontinuity (1969, Heinemann, London).
The concept came to prominence in New Zealand in the 1990s to refer to the manner in which various high-technology businesses, especially computer software, telecommunications and virtual services, as well as educational and research institutions, could contribute to a country's economy. However, this concept has grown and expanded beyond the definition developed by Drucker.
As depicted in the diagrams below the concept does not focus on IT developments or innovation only but a whole range of matters related to: information, information flows , information management , knowledge, knowledge flows, knowledge production, knowledge management, knowledge flows, knowledge transfer, knowledge sharing, knowledge translation (innovation) access, knowledge institutions/ industries, knowledge services, knowledge trades , Research and Development, Education, knowledge supplies and demand and knowledge society.
The interpretation will change depending on the area of focus and issues to be addressed. For any country to begin with matters of knowledge economy there is a need for conceptual operationalisation for different sectors. A need for countrywide participation and involvement, massive creation of awareness of the concept and how it applies to different sectors and impact people at national and individual levels.
An important point to make is that knowledge economy does not refer to science knowledge only but all forms of knowledge as long as such knowledge and or activities lead to economic growth and job creation.
Addressing the 1st and 2nd Economy in the Country
Attention to identified skills and the establishment of the proposed centre will address some economic challenges in the country. Both the 1st and 2nd economy of the country will benefit in a number of ways similarly and differently.
The centre will be a resource to both public and private sectors. Some private institutions and public organisations have been informed about the development of such a centre in South Africa. Most of the institutions approached have indicated a need for such an institution in South Africa. These institutions see the benefit particularly in managing their knowledge properly into products and assets.
Addressing the second economy will depend on the definition that is provided. In this proposal second economy is about: creating jobs for rural communities, is to tap into the knowledge of rural people, empower people to utilize their knowledge in solving their problems, to use rural knowledge in developing innovative ways that improve lives of the people in those areas, empower these people to access and utilise external knowledge in an integrated way, gathering laymen’s ideas that have a potential for innovation, processing these into real products for economic development and assist them in collecting, managing and utilising information and knowledge in decision–making.
Collecting indigenous knowledge is one area that is neglected except for herbal medicinal knowledge. It is a known fact that indigenous knowledge goes beyond indigenous herbs. The functions of the centre as highlighted in the concept document will improve knowledge management and creation leading to new economic developments including that of disadvantaged communities.