EDA Journal Vol 12. No.1 Autumn 2019 | Page 14

ECONOMIC DEVELOPMENT QUARTERLY CAN KNOWLEDGE DRIVE YOUR LOCAL ECONOMY? BY PAUL TERO ABSTRACT This article examines how you can leverage the knowledge economy to improve outcomes for your local economy. Building on the understanding of what the knowledge economy is through theory and examples, the conditions and process for successfully creating a “local knowledge economy cluster” are discussed. DEFINING THE KNOWLEDGE ECONOMY Fig 1: Factors of the Knowledge Economy. (Source: Author) Concerning the knowledge economy, consider this: an increase in the number of patents in your local economy will lead to a proportional increase in your economic growth. As will an improvement in the quality of education (all levels), the number of scholarly articles published by those that work in your area, and, unsurprisingly, the level of royalty payments that are collected by organisations that are situated locally. Distribution: the second factor, the distribution of knowledge, is about letting others know about what is known. Yes, it is through formal university lectures and in the TAFE classroom, but distribution of knowledge also occurs in the context of business networking activities and through social media platforms. Also consider the effect of knowledge on employment. For every skilled job in the tradable sector, another 2.5 jobs are created in the non- tradable sector. And for every high-skilled job in high-tech manufacturing, another 4.9 jobs are created in the non-tradable sector. Application: thirdly, the application of knowledge. This is where people use knowledge to develop innovations. Whether these innovations be new products or improved business processes, the important outcome is that something new has been developed because of what has been learnt. So, what is the knowledge economy? In essence, the knowledge economy is the production, distribution and application of knowledge. And with knowledge becoming ever more critical to business and economic success it is important to understand these three factors. Another way of putting all this about the knowledge economy is this; There is a relationship between your community’s “knowledge-base” and its capacity to generate and utilise economically beneficial innovation. That the growth of your local economy is linked to a continual improvement to the stock of knowledge held by your citizens. As one economist put it: “long-run growth is driven primarily by the accumulation of knowledge by forward-looking, profit-maximizing agents”. Production: the production of knowledge is just that. It’s the creation of new understandings about any aspect the world in which we live and the ways we do things. Not only is it about the quintessential scientific discovery in say medicine, but it’s also about insights from the soft sciences like economics and psychology. Let’s pause to consider one implication of these last two paragraphs. Do the conditions exist in your local economy for people in general, and those in VOL.12 NO.1 2019 | 14