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Overview
Trend towards knowledge based economy
The ability to create, distribute and exploit knowledge is increasingly central to competitive advantage, wealth creation and better standards of living. Some of the internationalization indicators on the knowledge-based economy are new. Investment in knowledge, particularly in higher education, R&D and software, is rising, as is investment in ICT. Moreover, the composition of investment is changing, particularly in R&D where a growing proportion is funded by business. Knowledge flows within and across APEC economies are increasing as well, as shown by growing co-operation in science and innovation, greater international mobility of high-skilled workers and continued globalisation of trade and investment. Information and communications technologies are also spreading quickly and support more rapid knowledge creation and diffusion.
High-technology sectors contribute to more rapid growth both in manufacturing and services sector. The overall efficiency of capital and labour has also increased in some APEC economies and indicators of patenting confirm the swift pace of innovation.
While the overall trends are clear, large differences among APEC economies remain. The United States appear to be in the lead in the transition to a knowledge-based economy, as high investment in knowledge, rapid innovation and the pace of diffusion of ICT indicate. However, the transition to a knowledge-based economy requires progress in many areas, and even countries that are ahead in many of them lag in others.
Investment in knowledge
- Investment in knowledge, defined as public and private spending on higher education, expenditure on research and development (R&D) and investment in software, estimated to be about 5% of APEC-wide GDP. By this measure, the United States, Korea, Hong Kong and Singapore are leading knowledge-based economies in APEC region.
- ICT hardware and software have been the most dynamic area for investment. Investment in software account for 30 to 50% of the contribution of ICT to overall investment growth.
- Education and skills, which underpin the growth of a skilled workforce, account for the bulk of investment in knowledge. In 1999, 65% of the population aged 25-64 had completed upper secondary schooling. The share is more than 20 percentage points higher in the United States and Japan.
- In 1999, about 50 million workers in APEC region are estimated to be in highly skilled S&T-related occupations
- Expenditure on R&D has increased considerably over the past two decades. It has grown by almost 5% a year and has accelerated since the mid-1990s. In 1999, APEC economies allocated over USD 400 billion to R&D. Since the mid-1990s, R&D intensity has increased continuously in Japan and the United States.
- Despite a recent slowdown, venture capital remains a major source of funding for new technology-based firms. Between 1995 and 1999, it amounted to 0.21% of GDP in the United States and 0.16% of GDP in Canada. Almost half of venture capital investment is for ICT, representing more than 67% in the United. Biotechnology is also of growing importance.
Asia's status as both a consumer and developer of high-technology products has been enhanced by the technological development taking place in the newly industrialized Asian economies, emerging and transitioning economies.
Significance of electronics industry in globalization
Industrial R&D has been shifting between manufacturing and non-manufacturing, particularly the service sectors in the last few years, with the latter given priority in the latest years. The electronics industry and the automotive industry have been leaders in the globalization process. According to the United Nations' World Investment Report 1995, the electronics industry was the most globalized industry in terms of foreign assets with very substantial parts of the assets of the leading MNC/TNCs located outside the home economy. The total sales by the foreign affiliates of the 23 largest electronics MNC/TNCs accounted for 80% of the estimated total world sales in electronics. The total value of foreign sales is, in fact, highest in the electronics industry. This shows the importance for economies which wish to develop their electronics industries but lack the necessary base of large locally owned companies to tap into the supply chains of the leading MNC/TNCs, which dominate the world electronics industry.
Electronics has emerged as perhaps the most dynamic, most extensive and most unifying commercial force in the Asia-Pacific region. The Asian nations are determined to excel in these industries and to extract from their command of microelectronic technologies the greatest possible benefits for their economies. China, Chinese Taipei, Hong Kong, Malaysia, Korea, Thailand and Singapore all have substantial electronics and IT&T systems industries, with higher output values than Australia, and much greater exports.
The electronics industry and the automotive industry have been leaders in the globalization process. Electronics has emerged as perhaps the most dynamic, extensive and unifying commercial force in the Asia-Pacific region. The total sales by the foreign affiliates of the 23 largest electronics MNCs accounted for 80% of the estimated total world sales in electronics.
The collected information confirms that the following areas are given more priority than the others in the R&D sector: Energy, drugs & medicine, biotechnology, new materials, transportation equipment, computers and electrical machinery, microelectronics, information technology, industrial automation, telecommunications and other communication, aerospace, environmental science
Information Technology, Internet, Electronic commerce are today's driving forces for internationalization creating a global village. Hence this section is dedicated to Digital Revolution. Revolution has taken place in various fields and has been applied to various aspects of our daily life like speech recognition, transport etc. Digital revolution is a vast area of study and technological developments have taken place in more fields than we can handle in this section. Hence we have limited our studies to some of the technologies in few selected economies. These are discussed here in brief with links to the appropriate economies for more details.
Developments in the following technologies are discussed in individual economy sections
- Document Management
- Global Positioning Systems
- Fiber Optics
- Speech recognition
- Storage Devices
- Internet Telephony
- Diagnostic Imaging
- Numerical Control
- Medical Informatics