8 Main Benefits of The Knowledge-Economy


You need to know the benefits of the knowledge economy to motivate you to switch to this type of economy and benefit from it.

The benefits of the knowledge economy are:

  1. Minimizes the impact of geographic location.
  2. Finding a new production method.
  3. Finding new marketing methods.
  4. Reaching a very high degree of customer satisfaction, which the consumer did not know before.
  5. Reducing the cost of exporting, and in some cases eliminating it.
  6. Providing new job opportunities.
  7. Opening up a wide area for creativity and innovation.
  8. Focus more on human capital development

These are the most important benefits of the knowledge economy.

We will explain them in more detail in the rest of the article.

But, let us first define the knowledge economy and the traditional economy. 

The knowledge economy is an economy whose products are highly dependent on knowledge and intelligence. As an example, the mobile phone’s materials do not exceed 10% of its total cost, and the remaining 90% is cognitive value.

The traditional economy is an economy whose products largely depend on raw materials. This type of economy does not require accurate and high cognitive skills. In most cases, this economy depends on the raw materials available in the region or the country’s geographical location.

The following paragraphs will explain the benefits of the knowledge economy in detail.

The first benefit: The knowledge economy minimizes the impact of geographic location

In this section, the benefits of the knowledge economy can be divided into two main parts, the countries’ benefits, and the individuals’ benefits. 

Countries’ benefits:

Many countries have difficult geographic and ecological locations with few natural resources. 

Lack of resources affects the economic level due to the absence of sufficient resources to move the wheel of the economy. 

Japan is one of the most prominent examples of this type of country.

From the point of view of traditional economics: Japan sits on a volcanic, rocky island with few natural resources. 

Its geographical location is also not vital, as it does not control the trade routes.

However, Japan’s dependence on the knowledge economy reduced the impact of its geographical location.

So, Japan became one of the largest industrial countries in the world. It is famous for its delicate industries that require high cognitive skills.

The world ranks Japan as among the most innovative and leading countries globally. 

Manufacturing in Japan mainly focuses on high-tech precision goods, such as optical devices, hybrid vehicles, and robots.

Japan is the world’s largest creditor country and generally has a large annual trade surplus and a large net international investment surplus. 

In 2010, Japan owned 13.7% of financial assets ( the second-largest country in the world), including an estimated 140.6 trillion dollars.

Individuals’ benefits :

The knowledge economy has made it possible for people to work remotely, regardless of geographical location. 

So, there is a company in the United States with employees in India, and so on.

Also, the knowledge economy has enabled well-qualified people to obtain higher incomes than their local economy affords them.

The second benefit: Finding a new production method

The knowledge era created new production models and techniques different from traditional economies. 

As an example:

  1. In the knowledge economy, machines have become very smart, so that unskilled workers can produce high-quality products that compete with international quality.
  2. Some factories have become highly dependent on robots to accomplish most tasks. So they can accelerate production without affecting the quality.
  3. Remote work has become one of the essential features of the knowledge economy. One of the most important benefits of the knowledge economy is the provision of a good infrastructure of communications and the Internet, which facilitates the process of remote work for most jobs.

The third benefit: Finding new marketing methods

One of the most important benefits of the knowledge economy is spreading various communication technologies, like the Internet and numerous applications.

Marketing has used the facilities available in the knowledge economy very efficiently, which has allowed it to achieve impressive results.

For example, advertising has become more accurate in targeting customers than the traditional economy. As a result, it significantly reduces the cost of the marketing process. 

It is now possible to retarget customers interested in products more efficiently than before.

Global reports showed that the volume of digital advertising spending globally in 2019 was about $333.3 billion.

The fourth benefit:  Reaching a very high degree of customer satisfaction

The main business objective is to obtain high customer satisfaction by satisfying customers’ needs.

So, measuring customer satisfaction is one of the essential goals that help in product development and modification.

The knowledge economy enables customers to send their reviews about the product quickly through the Internet.

Companies and customers can easily inquire about user reviews, enabling companies to modify their products to achieve greater customer satisfaction.

The fifth benefit: Reduce export cost

Reducing export costs impacts the product price significantly. As a result, the product gained more competitive advantage in the market.

For example, software products are among the essential outcomes of the knowledge economy. The cost of exporting these products is almost zero because it is easily transmitted over the Internet worldwide.

The sixth benefit: Creating new job opportunities

The benefit of the knowledge economy is creating new job opportunities. These opportunities have two forms:

  1. Providing new job opportunities that did not exist before. The nature of these jobs: Jobs with particular knowledge and technical skills.
  2. Also, in the presence of intelligent machines, the production process became more accessible, allowing a large segment of workers with reasonable skills to obtain these jobs. 

The benefits of the knowledge economy are creating new opportunities and restructuring traditional ones.

The seventh benefit: Opening up a wide area for creativity and innovation.

The knowledge economy provides various models and methods of production and marketing processes.

Combining these different methods and models opens up a broad scope for creativity and innovation.

For example, software applications are essential products in the knowledge economy. These products provide a broad scope for creativity even at the individual level.

So, we often notice the emergence of new applications from individuals or small companies that compete and outperform the applications in the market.

The eighth benefit: Focus on human capital development

One of the most important benefits of the knowledge economy is making countries and governments focus on developing the skills of citizens due to their importance in this type of economy.

The focus on training and gaining various knowledge and skills has become an essential feature of the knowledge economy.

In traditional economies, interest in raw materials and energy sources is the first goal, and the human element came in second. But in the knowledge economy, this is completely reversed.

Conclusion

The benefits of the knowledge economy are:

  1. Minimizes the impact of geographic location.
  2. Finding a new production method. Reduce cost, increase production quality and efficiency.
  3. Finding new marketing methods. The companies will be able to target customers with high efficiency.
  4. Reaching a very high degree of customer satisfaction. And ease to measure customer satisfaction.
  5. Reducing the cost of exporting, and in some cases eliminating it.
  6. Providing new job opportunities. and restructuring of traditional jobs.
  7. Opening up a wide area for creativity and innovation. And increasing competition opportunities even for individuals and small businesses.
  8. Focus more on human capital development. And focus on training and knowledge acquisition.

Source: New World Economy

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