Knowledge economy
Also called: Knowledge-based economy · Topic: Human Capital: Education, Health and Demographic Dividend · NCERT: Class 11, Ch 4 "Human Capital Formation in India"
Meaning
A knowledge economy is one where growth depends mainly on knowledge, ideas and information technology (IT), not mainly on land, raw materials or physical labour. Its main asset is human capital, meaning the skills and knowledge built into people through education, health and training. India's software industry and NEP 2020's aim of building skilled people point towards such an economy. The benefit of IT depends on the country's existing level of development. Without literacy, electricity and internet connections, IT can widen the digital divide, which is the gap between people who can use digital tools and people who cannot.
Example
India's software industry earns income by selling skills and code, not goods made in factories. NEP 2020 warns that automation (big data, machine learning and AI) will take over many unskilled jobs. It says demand will rise for maths, computer science and data science.
Don't confuse with
- E-governance: this is the government delivering its services through IT, such as Digital India (2015). It is one tool used inside a knowledge economy, not the economy itself.