knowledge-based economy – a key process for sustainable development

Knowledge-based Economy a Key Process for Sustainable DevelopmentProf. Edvins Karnitis Republic of LatviaParis, February 19-22, 2002

Key indicators of the national economy Progress of Latvia in global ranking (UNDP)

GDP growth rate, 2001 (estimated)7.4%Consumer price index, 20012.5%Budget deficit as % of GDP, 20011.8%Central government external debt as % of GDP, end 20008.0%Foreign direct investments as % of GDP, 20005.7%

Chart1

92988595

921008195

83957895

74897495

63695695

50623370

Human development index

Gross domestic product

Gross enrolment ratio

Life expectancy at birth

Position in global ranks

Sheet1

HDI rangs

199119921993199419951996199719981999

Latvija304855929283746350

Lietuva287181767971625247

Igaunija294368717766544644

Polija495156585248444438

ehija273837393938363433

Ungrija315046484747474336

Rumnija729874797471686458

Bulgrija486562696765636057

Krievija345257677272716255

Baltkrievija404261626864605753

Att min536357646455454648

IKP rangs

199119921993199419951996199719981999

Latvija4754629810095896962

Lietuva638296849188846060

Igaunija434883798276695350

Polija797166726966625449

ehija564643424140393739

Ungrija555051535354554241

Rumnija8910478827880817064

Bulgrija767670787581867973

Krievija485265747778795955

Baltkrievija495171757977756358

Apmcmo procents

19921993199419951996199719981999

Latvija6872676769717582

Lietuva6772707072757780

Igaunija7078727276818686

Att. valstis7679807984899091

Vid. att. valstis5962646663646567

Pasaule5860606262636465

Dzves ilgums

199119921993199419951996199719981999

Latvija7169.16967.96868.268.468.770.1

Lietuva72.670.470.370.170.270.169.970.271.8

Igaunija71.269.369.269.269.26968.76970.3

Att valstis74.172.973.874.673.575.2777777.3

Vid att valstis6866.86767.167.567.166.666.966.8

Pasaule65.662.86363.263.665.166.766.966.7

Atsevis komponentes valsts HDI (procentos)

veice32.433.833.8

Norvija31.734.933.4

Japna33.533.533

Latvija31.739.229.1

Igaunija31.238.530.3

Lietuva32.438.629

Katara30.832.936.3

Zimbabve18.148.233.7

Tadikistna35.944.419.7

Maroka39.327.533.2

199119921993199419951996199719981999

Latvija304855929283746350

Lietuva287181767971625247

Igaunija294368717766544644

199119921993199419951996199719981999

HDI304855929283746350

GDP4754629810095896962

GER7259858178745633

LAB538186959595959570

199419951996199719981999

Human development index929283746350

Gross domestic product9810095896962

Gross enrolment ratio858178745633

Life expectancy at birth959595959570

Sheet1

00000000000

00000000000

00000000000

00000000000

00000000000

00000000000

00000000000

00000000000

00000000000

Latvija

Lietuva

Igaunija

Polija

ehija

Ungrija

Rumnija

Bulgrija

Krievija

Baltkrievija

Att min

Vieta HDI rang

Sheet2

0000000000

0000000000

0000000000

0000000000

0000000000

0000000000

0000000000

0000000000

0000000000

Latvija

Lietuva

Igaunija

Polija

ehija

Ungrija

Rumnija

Bulgrija

Krievija

Baltkrievija

Vieta IKP rang

Sheet3

000000

000000

000000

000000

000000

000000

000000

000000

Latvija

Lietuva

Igaunija

Att. valstis

Vid. att. valstis

Pasaule

Apmcmo daudzums (procenti)

000000

000000

000000

000000

000000

000000

000000

000000

000000

Latvija

Lietuva

Igaunija

Att valstis

Vid att valstis

Pasaule

Dzves ilgums (gadi)

000

000

000

000

000

000

000

000

000

000

Idz

Iizgl

IIKP

Procenti

000

000

000

000

000

000

000

000

000

Latvija

Lietuva

Igaunija











DevelopmentStrengthslocation in active regionliberal market economyhighly skilled labour forceinterest of the society in educationstrong banking sectorOpportunitiesintegration in European societyknowledge-based productsdevelopment of infrastructureemergence of a middle-class in the societyWeaknessesmodest economic potentiala lack of raw materialsgrey economy, bureaucracyeducational system not oriented towards industry needsThreatsinsufficient growth ratesmall capacity of the countrya lack of investmentsenlargement of EU does not occurStagnation

From vision to actionLong term development of national economyNational program InformaticseLatviaInnovationE-businessE-governanceE-documentsID-cardsIndustryLibrariesSchoolsEducation & researchE-procurement

Emergence of a knowledge-based developmentKnowledge management the Modus operandi on a national scaleA man as an owner of knowledge becomes the key factor for economic growthUnified development trends of the national economy, governance, education, social policy and other sectors Reindustrialisation of traditional branches Development of knowledge-intensive branches:high knowledge base of specialists, capacity of the education systemdemand for products and international market niche that could be conquered high added value of goods and servicessmall consumption of energy resources and raw materials

Potential of the IT cluster Industrial clusters competition & cooperation (information systems, composite materials, forestry, engineering)Synergy effect to increase competitiveness of the Latvias economy: knowledge sharing and professional training for cluster participants resource sharing policy and procedures, common technologies reduction of various costs joint R&D activities common customers and/or distribution channels, joint marketing activities forming the critical mass to enter foreign markets

No. of companies in the IT cluster, end 200115No. of programmers in the IT cluster, end 20011000Contribution to GDP per employee of software industry as % of average in the economy695%

R&D and innovation Internationally acknowledged potential of Latvian fundamental and applied research Innovation -- strengthening links between the enterprises and universities Improvement of key interfaces in the innovation system (education, research, entrepreneurship, legislation, financing) Encouragement of the creation and growth of innovative enterprises, development of technological/business centres Increase of the number of issued patents (biosynthesis, biotechnology, pharmaceuticals, magnetohydrodinamics and plasma technologies, etc.)

5th FP projects success rate, 1999-200127.5%5th FP programme Innovation & SMEs projects success rate, 1999-200152%5th FP financing from EC funds as % of Latvias contribution fee, 1999-2001187%

Business in Internet environment Ebusiness integration of all types of commercial activities into the Internet environment to increase competitiveness in the global scale:establishing internationally harmonized ground rules building trust among participants maximizing benefits for all individuals Spread of various teleworking principles Electronic financial transactions and servicesRemote public services, both for individuals and businesses Electronic documents and identification cards as tools for remote contacts and transaction services

Regional developmentWeakness: unbalanced development:economic, social, cultural differencesextra supported areas according to specific criteria borderland outskirts effect and cross border cooperationa monocentric state

Diversification of economy -- condition for territorial development, competitiveness of regions, growth of welfare level: development of knowledge hubs: technological/business/industrial centre + university/college + library/information centre cities as the focal points of knowledge economy; knowledge, information, social and culture centres for ambient rural areasvirtual enterprises and teleworking the base for diversification of economy in rural areas

General participation: to enable everybody and every company in every regionto promote formation, development, spread and introduction the basic principles and processes of the information society and knowledge-based economy to create opportunities for every citizen and business to participate fully in the processes of information society and knowledge-based economy to promote the increase of welfares level and thus to encourage civil harmony in the country, the economic and social cohesion

Cheaper, faster and secure connection to ICT infrastructure qualitative connection to telecommunications and data transmission networks installation of public Internet terminals in libraries, schools, municipalities establishing the regulation of Internet domain and services, liability of service providers multisectoral regulatory body Public Utilities Commission Development of infrastructure (per 100 inhabitants), end 2001

Internet users10.2TV sets89.1Cable TV subscriptions24.5Satellite TV10.1

Telephone main lines30.6Digital lines as % of main lines68.6%Mobile telephones25.4Personal computers10.9Internet hosts2.7

Education and general information literacy Accomplishments: the highest adult literacy rate in the world 99.8% of age 15 and above, 1999 accelerated informatization of learning processes in schools, end 2001: designed electronic textbooks 80 000 A4 pages 68% of total number of teachers has been trained in IT usage number of primary and secondary level students per PC -- 21.7 obtaining the European Computer Driving Licence Weakness: insufficient contribution of universities toward the resolution of national priorities; tertiary enrolment in technical and life sciences -- 16.5% of gross tertiary enrolment, 2000/2001 insufficient training the highest-skilled specialists (masters and doctors degrees)

Transnational information systemsRegional libraryLibraries of state significancePublic and private sector information systemsRural librarySchool libraryAvailability of information

No. of public libraries per million population, end 2000432Libraries with Internet connection as % of total No. of libraries, end 200115%No. of licensed radio broadcasting programmes, end 200137No. of licensed TV broadcasting programmes, end 200129No. of licensed cable TV broadcasters, end 200137Daily newspapers per capita, 200076

Public information processing and servicesAccomplishment:Development of mega-system integration of public sector information systems: quality of data interoperability of all national information systems, data exchange complex processing data from various components united and user-friendly access to information integration into the Transeuropean corporate telematic networks

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Higher social and societal welfare level as a final target of co-ordinated policy for economic and social development of the country and society Investments in education -- important factor in increasing the quality of human capital The significance of culture; maintenance, development, functional perfection of national language Conjunction of social programs with national economic possibilities, increased responsibility of every individual for himself/herselfKnowledge economy and social factors

Gini index, 20000.34Salaries of the employed in software industry as % of average salaries177%Tertiary graduated working age people as % of total working age, end 200119.4%Tertiary graduated unemployment as % of total unemployed, end 20017.2%

Cabinet of MinistersIS National CouncilMin. of TransportDep. of InformaticsCoord. Board InformaticsMin. of EducationMin. of InteriorMin. of FinanceMin. of JusticeMin. of CultureMin. of EconomyLibrariesProcurementeLatviaID cardsE-businessE-governmentE-documentsSchoolsInnovationNational progr. Informatics

E-regions and E-cities

Information society: informatization or innovation Innovation: advanced processes qualitative changes opportunities maximum benefitInformatization: traditional processes quantitative changes awareness prompt benefitFinal modelTransition model

knowledge-based economy – a key process for sustainable development

Documents

key process

key indicators

vid att valstis6866

knowledgebased economy

consumer price index

ntral government external

foreign direct investments

budget deficit