The effects of knowledge on growth

[Deutscher Titel: Die Wirkung von Wissen auf Wachstum]

Salih Osman
The Impact of Knowledge Creation and Sharing on Long-Term Growth: Country Cross-Section Comparison between OECD, Non-OECD and Arab Countries, 1990-2005
The International Journal of Knowledge, Culture and Change Management, Volume 7, Issue 12, pp.65-84.

Abstract: This paper attempts to identify and test the theoretical foundations of the relationship between knowledge creation and sharing and long-term per capita GDP growth rate. It aimed to examine the relationship between knowledge creation and sharing and economic growth within the framework of both the endogenous economic growth theory, as well as, the evolutionary economic growth theory. Under both theoretical models, technology and knowledge is created within the economic system via the research and development effort in both private and public sectors, given, a certain level of human capital, an efficient institutional framework, and a general policy aimed at the promotion of innovations and entrepreneurship. In order to quantify the effect of knowledge accumulation and sharing on economic growth, the paper has constructed two indices; one for measuring the level of knowledge creation, and the other for measuring knowledge sharing; calculations are based on a number of knowledge-based economy indicators. The indices were then used to estimate and compare the effect of knowledge creation and sharing on long-term per capita GDP growth rate across three groups of 87 economies. The three groups of economies include: (a) the Organization for Economic Co-operation and Development (OECD) 30 countries group- mainly industrialized developed economies; 44 Non-OECD developing countries, and 13 Arab countries; including all the Gulf Co-operation Council (GCC) oil-exporting economies. The comparison of the empirical findings across the three groups of countries supported both the endogenous and the evolutionary theories argument with regard to the positive impact and positive spill over effect of knowledge on growth. The paper’s findings were unique in distinguishing between the relatively low rate of return on investment (ROI) in knowledge in the OECD group, referred to in this paper as “knowledge creation leaders”, and relatively higher rate of knowledge creation ROI in the developing countries referred to as “knowledge creation followers”. The difference in ROI rate is caused by the positive spillover effect of knowledge transfer from developed industrialized countries to the developing countries. Finally, the paper proposes a list of policy recommendations for allocation of resources to promote research and development (R&D) activities; develop information communication technologies (ICT) infrastructure; and creation of a credible legal and institutional framework conducive for knowledge creation and sharing, particularly in developing countries. The empirical findings extended the knowledge creation and sharing indices to include the selected list of Arab Countries, particularly the GCC countries in comparison to the most developed economies of the world in the OECD group.

Keywords: Knowledge Creation, Knowledge Sharing, Per Capita GDP Growth Rate, Indices, OECD, GCC, Arab Countries, Knowledge-Based Economy

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