eGov monitor lays the foundations of the Knowledge Economy Series by presenting a high level overview of the opportunities and the challenges faced by UK and the European Union.
The European Commission President, José Manuel Barroso, while launching the renewed Lisbon Strategy in February 2005 of “growth and jobs” stated:
“…Our goal is to combine economic dynamism with sustainable growth, building a society with more opportunity for all.”
The “Knowledge Economy” is driven by high technology and is global in dimension. This new economy has provided limitless opportunities to continuously improve efficiency and create wealth across national and continental boundaries. On a public policy level, it has provided policy makers with the opportunities to forgo the false choices of return on investment or improving the quality of life of the workforce. The “Knowledge Economy” provides opportunities to do both and assist all parts of the society.
On a public policy level, it has provided policy makers with the opportunities to forgo the false choices of return on investment or improving the quality of life of the workforce.
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However, this new economy poses serious challenges to both UK and the European Union. While it is agreed by economists from all quarters, that the global economy including outsourcing has a net benefit impact on developed economies, it is a harder concept to accept for displaced workers who have recently lost jobs to India or China.
In an ideal world, the displaced workers would be hired into higher paying more skilled jobs and overall competitiveness of UK would increase substantially. This can be achieved, as suggested by the Kok report of 2004[1], through proactive government involvement in setting and implementing strategies to ensure appropriate investment is made in developing knowledge, skills, innovation, higher education, in urban regeneration and in help for small businesses.
The UK has been at the forefront of developing the “Knowledge Economy” since 2000. The Government has recently launched its Digital Strategy[2] – a road map to ensure a sustainable information society in UK. However, there are serious challenges that we need to address and soon if we seek to capitalise on the opportunities of the Knowledge Economy.
The time is now
Whatever the barriers to change, this change must happen now. It requires developing effective social and economic policies to support growth and jobs.
As the Prime Minister has recently said in his speech to the European Parliament that social Europe and economic Europe cannot operate in distinct boxes and it is important for the political leadership to set policies that support the social and economic agenda of Europe.
The Prime Minister, as EU President has also called for action and urged EU members to “…implement the Lisbon Agenda. On jobs, labour market pariticpation, school leavers, lifelong learning, we are making progress that nowhere matches the precise targets we set out at Lisbon. The Agenda told us what to do. Let us do it”
Higher Education Funding and Research
During the 1990’s under the Clinton Administration, the US economy fuelled by technological innovation experienced unprecedented growth and all parts of American society benefited from it. One of the key ingredients of this success was the substantial research that was carried out in all sectors especially in the country’s higher education institutions. Critically, this is where Europe lags behind.
One of the key ingredients of this success was the substantial research that was carried out in all sectors especially in the country’s higher education institutions.
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It is not that we do not have superb scientists and researchers, but rather our Universities do not enjoy the sustained levels funding that higher education institutions in the US typically have. An alarming statistic is that the top 150 universities in the US have more endowment funds than any European University, which in turn makes it far easier for the US to attract the best researchers from around the globe. Many of these researchers are from Europe and most of them don’t return to Europe and contribute towards our success.
What is more interesting is the fact that on a number international measures US school children lag significantly behind their counterparts in Asia and Europe, but when it comes to higher education, the US is the envy of the world. It is an accepted fact that only two or three universities in Europe fall within the top 20 Universities in the World – the remainder are all American.
The British Government and the EU in general need to address this issue quickly as we are not only competing with the US, but as well as with countries such as India and China, who are catching up quickly. In reality, the Asian countries produce far more technology graduates than any other part of the world including the US.
Digital and Social Divide
In UK, we still have a significant part of the adult population who do not have the necessary ICT skills, our productivity growth faces challenges from developing countries such as India and China, and unless we manage this transformation to knowledge economy effectively there is a threat of a large part of our society being left behind. This has a potential of creating social divisions that would significantly harm the cohesion of our society.
In the next part of this series, eGov monitor will present the thoughts and perspectives from the Director of the Prime Minister’s Strategy Unit on UK’s opportunities and challenges in the Knowledge Economy
Related Links
[1] “Facing the Challenge: The Lisbon strategy for growth and employment” http://europa.eu.int/growthandjobs/pdf/kok_report_en.pdf (512KB - PDF)
[2] “Connecting the UK: The digital strategy” http://www.dti.gov.uk/industries/telecoms/pdf/digital_strategy.pdf (1.17MB - PDF)
