THE KNOWLEDGE-BASED ECONOMY

The knowledge-based economy is one where the generation and utilization of knowledge contribute to a significant part in economic growth and wealth creation. While traditional factors of production, that is labour, capital, raw materials and entrepreneurship, remain important, knowledge will be the key factor driving growth, creating new value and providing the basis to remain competitive. While information technology (IT) will be the fundamental enabling tool, the nucleus of the knowledge-based economy will be human capital - essentially the capacity to create, innovate, generate and exploit new ideas as well as apply technology and exercise superior entrepreneurial skills. Existing industries will become more knowledge-intensive, while new knowledge-based and enabling industries will emerge. Accordingly, the economy will be characterized by knowledge-based activities and high-technology industries accounting for a significant share of employment, Gross Domestic Product (GDP) and exports. Besides being a factor of production, knowledge will become a commodity to be traded. The knowledge-based economy provides a means to maintain sustainable rapid economic growth and competitiveness in the medium and long term. In this context, Malaysia will develop the enabling tools and nurture industries that have the potential to become knowledge-intensive. The private sector will continue to be the engine of growth in the knowledge-based economy, while the public sector will provide the enabling and supporting environment. The social and equity objectives will remain a crucial element in this new stage of economic development with the added responsibility of narrowing the knowledge gap among various income groups, between urban and rural communities and across regions.