Table of contents for Building knowledge economies : advanced strategies for development.

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Contents
General Introduction	1
Part I ¿ Global Trends and Policy Principles	2
1	Towards Knowledge Economies- Global Trends and Issues	7
1.1	A Brief Historical Retrospective	7
1.2	Knowledge as the Foundation of Development	10
1.3	How Knowledge Reshapes Economies	15
1.4	Challenges and Opportunities	20
2	The Knowledge Economy: Analytical Framework and Benchmarking Elements	29
2.1	A Four Pillar Framework	29
2.2	Measuring and Benchmarking Knowledge-Based Economies	35
2.3	The Knowledge Economy and Economic Performance	40
3	The Knowledge Economy Process: How to Build It	43
3.1	Drawing the Lessons of Success	43
3.2	Adopting Conducive General Attitudes	50
3.3	Adapting Policy Actions to Development Levels	53
3.4	Managing Reform Processes	57
3.5	Exploiting Entry Points: Driving Sectors and Cities	60
3.6	Dealing with Countries¿ Specificities	63
3.7	A New Mindset for Government Action	65
4	Improving the Economic and Institutional Regime	67
4.1	General Considerations	67
4.2	Obstacles to Business Development	68
4.3	Regulations	70
4.4	Finance	72
4.5	Trade and FDI	74
4.6	Clusters and Related Measures	77
4.7	Locally Focused Reforms	78
5	Fostering Innovation	81
5.1	General Considerations	81
5.2	Innovation Policy Institutions and Instruments	83
5.3	Stimulating and Supporting Innovators	86
5.4	Research and Technology Infrastructure	88
5.5	Basic Technology Diffusion Programs	91
5.6	Export Sector Policies	93
5.7	Intellectual Property Rights Issues	94
6	Strengthening ICT Infrastructure	97
6.1	Introduction	97
6.2	Priorities and Actions for Low and Medium Income Countries	101
6.3	Enabling Environment	103
6.4	Access	107
6.5	Usage	109
6.6	ICT Skills Development	112
6.7	Evolving ICT agendas	114
7	Upgrading Education	115
7.1	Introduction	115
7.2	Basic Education	117
7.3	Higher Education 	122
7.4	Lifelong Learning	125
7.5	Governance of Education Systems	127
7.6	International Mobility of Human Resources	130
8	Conclusion: Moving Ahead to a Knowledge Economy	133
8.1	Putting KE at the Heart of Development Strategies	133
8.2	Implementing Voluntarist and Pragmatic Policies Adapted to Country Specificities	134
8.3	Acting on the KE pillars both ambitiously and efficiently	135
8.4	Making the State and institutions responsive to KE needs and opportunities	136
8.5	Epilogue: Better Knowledge and Understanding of Society for Promoting KEs		137
Part II ¿ Country Studies	139
Introduction	141
9	Trends in Low and Medium Income Countries: an Overview	143
1.1	Emerging Giants	143
1.2	Middle Income countries	147
1.3	Low-Income Countries	150
10	China	155
2.1	Past Trends	155
2.2	Challenges Ahead	160
11	India	167
3.1	Past Trends	167
3.2	Challenges ahead	171
12	Middle Income Countries: Active Reformers	179
4.1	Common trends and issues	179
4.2	Developing economies	181
4.3	Transition Economies of Central Europe	189
4.4	Cluster Building and Broad Reforms	193
13	Middle Income Countries: Untapped Potential Economies	195
5.1	Diversity of Untapped Potential Economies	196
5.2	Major Reforms: Long Term Policy Agendas	200
5.3	Stimulating Change: Short Term Agenda	204
14	Low Income Countries: A Focus on Africa	207
6.1	Trends in KE pillars	207
6.2	Local Dynamics at Work in Africa	215
6.3	African Regional Partnerships and Global Linkages	224
15	Final Remarks ¿ Part II	228
Annexes	230
Annex I ¿ The Knowledge Assessment Methodology (KAM)	232
Annex II ¿ Knowledge Economy and Economic Growth: Econometric Calculations	240
Annex III ¿ Cultures and Economic Systems - Some Insights	246
Boxes
Part I
Box 11 Theories of Growth: Integrating Knowledge in Economic Models	12
Box 12 Why Growth Performances Differ - Total Factor Productivity	13
Box 13 The Green Revolution in India	14
Box 21 Knowledge Pillars and Growth ¿ Empirical Evidence	31
Box 22 Benchmarking Methodologies: WEF and UNIDO	37
Box 31 Vietnam¿s Development and KE Elements	53
Box 32 Key Bodies for KE Reforms in Finland	59
Box 33 Korea¿s Transition to a Knowledge Economy: Bottom-Up Initiative and Government Action	59
Box 34 Dubai¿s Transition to a Knowledge Economy	62
Box 41 Improving Governance in Low-Income Countries	68
Box 42 Obstacles to Firm Growth in Developing Countries: What are the Binding Constraints?	69
Box 43 Deregulation in Mexico	72
Box 44 Creating a Venture Capital Industry: The Network of Overseas Chinese	74
Box 45 What the 1990s Have to Say About Trade Reforms	74
Box 46 Ireland¿s National Linkage Program (1987-1992)	76
Box 47 Possible Public Policies encouraging Cluster Development	77
Box 48 China¿s Special Economic Zones	78
Box 51 Brand Agriculture: How to Innovate Successfully in Rural Areas	83
Box 52 Finland¿s Innovation Policy¿Institutional Features	85
Box 53 Innovation Policy Schemes ¿ Relevant OECD Country Experience	87
Box 54 The Council of Scientific Industrial Research in India: From Self-Sufficient Technological Development to Competitive Market-Driven R&D	89
Box 55 The Malaria Research and Training Center of Bamako University (Mali)	90
Box 56 Basic Technology and Capacity-Building Needs in Rwanda	92
Box 57 The Fundación Chile Model	94
Box 58 Open Source as an IPR Regime Friendly to Developing Economies	95
Box 61 e-Sri-Lanka and a Holistic Approach to ICT	99
Box 62 Radio and TV Broadcasting: Using ¿older¿ ICT	99
Box 63 Rwanda: ICT Vision and Leadership	104
Box 64 Overcoming Capacity Constraints for Telecommunications Reform in Mauritania	105
Box 65 The impact of effective regulation in Morocco	106
Box 66 The Chilean Telecommunications Development Fund	109
Box 67 Using ICT to Improve Delivery of Services to Rural Populations in India	110
Box 68 Brazil and the Internet	111
Box 69 Estonia: Applying the ¿e¿ to All Aspects of Life and Work	111
Box 610 Developing the IT skills of Poor Women in Kerala	112
Box 71 Education for All ¿ The Fast Track Initiative	117
Box 72: Higher Enrolments and Better Learning Outcomes in Ghana	118
Box 73 Multilingual Education in Africa	118
Box 74: Colombia¿s Telesecunderia: Reaching the Rural Poor	120
Box 75 The Jordan Education Initiative: New Methods for Improved Teaching	121
Box 76 Mozambique¿s Tertiary Education Reforms	123
Box 77: Millennium University of the Monterrey Institute of Technology in Mexico	123
Box 78: Computer-based Functional Literacy (CBFL) Program	126
Box 79 Use of Educational TV for Education in India, Brazil and Mexico	126
Box 710 School Management and Student Performance: Results from PISA	128
Box 711 Initiatives to Encourage Highly Skilled Migrants to Return Home ¿ Example of Chinese Taipei	130
Box 712 The Global Scot Network	131
Part II
Box 11 Bangladesh: Reforms and Industrial Development	152
Box 21 Lifelong Learning in China: Enhancing Competitiveness	165
Box 31 Infrastructure in China and India: Contrasted Achievements	174
Box 32 Bangalore's Innovation System	177
Box 41 Tunisia: Developing Technopoles	186
Box 42 Malaysia¿s Multimedia Super Corridor and Expansion Project	187
Box 51 Monterrey, Mexico	197
Box 52 Argentina - the Mendoza Wine Industry	197
Box 53 Mendoza¿s ¿New Industrial Policy¿	204
Box 61 Botswana: Example of Good Governance, Prudent Economic Policy, and Sustained Growth	209
Box 62 Knowledge and Technology Acquisition in African Clusters	216
Box 63 Research/Innovation Activities in Francophone Africa -- Illustrative Examples	220
Box 64 Fighting AIDS in Uganda	222
Box 65 Strengthening Policymaking in Africa: The Role of Policy Institutes and Think Tanks	224
Box A3 1 Differences between Eastern and Western Cognitions	247
Box A32 The Island Factor as a Booster of Growth	249
Figures
Part I
Figure 11 Time, Substance, Life, Energy: An Evolution Through Time	9
Figure 12 World Growth in Key ICTs 1991-2004	9
Figure 13 ¿ South Korea and Ghana in a 50-year Perspective	10
Figure 14 Trade by Technology	16
Figure 15 Growing Contribution of Services (Share of Services in Total Employment, 1990-2003, in %)	17
Figure 16 Rise in Human Capital (% of Population with Tertiary-Level Education, 2002)	17
Figure 17 Changes in Job Tasks and Skill Demands in the USA, 1960 to 1998	18
Figure 18 Investment in Knowledge as a Share of GDP (2002)	18
Figure 19 Contribution of Intellectual Assets to Market Value for the United States	19
Figure 110 The New Competitive Arena	20
Figure 111 Uneven Innovation Performance Underlies Uneven MFP and Economic Growth	21
Figure 112 Mobile Telephone Subscribers per 100 Inhabitants	23
Figure 113 Average Annual Growth of Internet Users per Capita	24
Figure 114 Typical Division of Labor in Global Production Networks	25
Figure 21 The Economic Dividend of Good Public Governance	31
Figure 22 The Four Pillars of the Knowledge Economy	32
Figure 23 Human Capital and FDI Performance	33
Figure 24 Knowledge-Based Competitiveness and Growth	33
Figure 25 Ideal Virtuous National Innovation System	34
Figure 26 The KAM Basic Scorecard for China and India	37
Figure 27 Knowledge Economy Index - 1995 and Most Recent	39
Figure 28 The Knowledge Economy and Current Economic Performance	40
Figure 29 KEI and Future Economic Growth	41
Figure 31 Korea - Enrolments in Education over Time	45
Figure 32 The Stages of Industrial and Economic Development in Finland	50
Figure 33 Time Sequencing of Reforms to Create a Virtuous Cycle	60
Figure 41 How Do Firms in Developing Countries Rate Various Investment Climate Constraints?	69
Figure 42 More Competitive Pressure Leads to More Innovation	70
Figure 43 Poor Countries Regulate Business the Most	71
Figure 44 Different Cluster Actors	77
Figure 51 Structure of Industrial Technology	82
Figure 52 Innovation Environment in Finland: Resources and Funding	85
Figure 61 Prerequisites for Capturing ICT-induced Benefits	98
Figure 71 Trends in Secondary Enrollment from 1995 to Most Recent Year	119
Figure 72 Some Countries Achieve Both High Performance Standards and Equitable Distribution of Learning Outcomes	129
Part II
Figure 11 Selected Countries GDP in a Two Millennium Perspective	143
Figure 12 India: Real GDP Per Worker, Alternative Projections, 1995-2020	146
Figure 13 China: Real GDP Per Worker, Alternative Projections, 1995-2020	146
Figure 14 Transition Economies¿ KE Trajectories	147
Figure 15 The Knowledge Economy Index for Selected Middle Income Countries	149
Figure 16 Global View: Low-Income Countries and the Knowledge Economy Index	153
Figure 21 Rapid Growth of China¿s ICT Applications (millions)	158
Figure 22 China¿s Governance Indicators	162
Figure 31 R&D in India by Performing Sector (in%)	169
Figure 32 Growth of Patenting in India	170
Figure 33 Stylized Structure of the Indian Economy	172
Figure 34 India's and China's inward FDI flows	173
Figure 41 ¿Active Reformers¿: FDI as a Percent of GDP	179
Figure 42 ¿Active Reformers¿: WEF Growth Competitiveness Index Rankings	180
Figure 43 Chile's Basic Scorecard - 1995 and most recent	181
Figure 44 PISA Results	184
Figure 45 Tunisia Basic Scorecard - 1995 and most recent	185
Figure 46 Malaysia Basic Scorecard - 1995 and most recent	188
Figure 47 Knowledge Economy Index - Selected Transition Countries	189
Figure 48 Funding for Public Research Lags in Eastern European Countries	191
Figure 49 Internet Access Costs and Diffusion - 2003	192
Figure 51 The Soviet Innovation System ¿ Hierarchical Design and Sector Separation	198
Figure 52 Knowledge Index ¿ ¿Untapped Potential¿ Economies	199
Figure 53 Knowledge Economy Index ¿ ¿Untapped Potential¿ Economies	200
Figure 61 Benchmarking the Economic Incentive Regime, Selected African Countries and the World, 1995 and Most Recent Period	208
Figure 62 Adult Literacy Rate in Selected African Countries	211
Figure 63 Primary Gross Enrolment Ratio in Selected African Countries	211
Figure 64 Secondary Gross Enrolment Ratio in Selected African Countries	212
Figure 65 Tertiary Gross Enrolment Ratio in Selected African Countries	212
Figure 66 Telephones (Mainlines and Mobile Phones) in Selected African Countries	213
Figure 67 Personal Computers in Selected African Countries	214
Figure 68 Internet Hosts in Selected African Countries	214
Figure A31 The Culture Tree	246
Tables
Part I
Table 11 Knowledge and Natural Resource Rents	11
Table 21 : KAM Basic Scorecard variables	36
Table 31 Development Stages of the Korean Economy	46
Table 32 KE Government Action at Four Different Development Stages	56
Table 33 A New Mindset for Government Action	66
Table 41 Regulatory Frameworks: Simple Solutions and Where They Have Worked	71
Table 51 Policy Frameworks Appropriate to Enterprise Innovation Capability	86
Table 61 ICT Priorities for Action for Low Income Countries	101
Table 62 ICT Priorities for action for Medium-income countries	102
Table 63 Telephone and Internet Access in Low and Middle-Income Countries	108
Table 71 New Competencies for the Knowledge Economy	115
Table 72: Priorities for Education Policies: An Overview	116
Table 73 Enrolment and financing of vocational training	122
Table 74 Higher Education Policy Requirements for the Knowledge Economy	124
Table 75 Traditional and New Role of Education Governance in the Knowledge Economy	127
Table 76 Building a KE Advantage in Vocational Education through Decentralization	129
Part II
Table 21 Share of GDP by Firm Ownership (1998-2003) - in percent	156
Table 22 China¿s Major Policy Reforms	156
Table 23 Growth of Tertiary Education in China (1997-2002)	157
Table 24 A Comparison of S&T Workforce (2003-04)	159
Table 25 R&D spending breakdown (%)	160
Table 26 Education Levels of the Labor Forces by Region (%, 2004)	165
Table 31 Educational Attainment of the Total Population Aged 15 and Older, India and China, 1980¿2000	168
Table 32 Comparative Innovation Performance: India and China	176
Table 41 Innovation Performances for Selected Transition Countries	191
Table 61 Overview of Nine Enterprise Clusters in Africa	215
Table 71 Knowledge-based economies in developing countries: the potential and binding constraints	228
Table A32 East-West Contrasts in Economic Systems	247
Table A33 Western Profiles and Economic Systems	248

Library of Congress Subject Headings for this publication:

Information technology -- Economic aspects.
Technological innovations -- Economic aspects.
Knowledge management.