The Knowledge Based Economy

Introduction

The term ‘knowledge economy/knowledge based economy’ was formulated in the 1960s to describe a shift from traditional economies which majorly focused on land, labour and capital as factors of production to ones which are based on information and innovation (Intellectual Assets). An innovation could either be in a product or a process i.e. the creation of new products/services or the adoption of new ways of creating existing products/services. As such, technical advances with respect to how products are manufactured or changes in approaches on how products and services are created, advertised and sold to the public could suffice as innovations.

According to World Bank, a knowledge based economy is primarily supported by four core pillars namely, an adequate:

1. “Economic Incentive and Institutional Regime (EIR)”- this substantially entails the availability of sufficient incentives to encourage entrepreneurship, investments and innovations (such as an effective intellectual property regime)
2. “Innovation and Technological Adoption” System- this relates to having a functional and vibrant innovation system comprising of competent firms, consultants, academies, research centres, and other similar organizations capable of harnessing the increasing availability of global knowledge, by adapting them to indigenous needs, and inventing new technological solutions.
3. “Education and Training” Structure- this entails the availability of adequate education systems and skilled man-power capable of creating, applying and sharing knowledge. And
4. Information and Communications Technologies (ICT) Infrastructure and access- this requires the availability of effective communication channels for the processing and dissemination of information ^1.

Intellectual Property and Knowledge Economy

In a knowledge based economy, information, innovation and a credible reputation are considered the most valuable assets of any company and are usually very expensive achieve. As a result, one of the most important issues considered by investors seeking to invest in the Research and Development (R&D) sector is the extent to which their investments could be recuperated and profits be gained, should the R&D venture result in an innovation. Investors will therefore be unwilling to invest in researches which even when successful, are unlikely to be profitable. As a result, establishing a reliable management structure for adequate protection and enforcement of the rights conferred upon by these innovations on the rights holders are fundamentally important and indispensable to the growth of a knowledge based economy. Management of Intellectual Assets basically relates to the way(s) in which these assets are protected or exploited by their owners and/or the investors (the rights holders). Intellectual Property Laws addresses this problem by conferring enforceable Intellectual Property rights (IP Rights- such as trademarks, patents and copyrights) on the innovators and/or investors (as the case may be) with respect to the innovations.

IP rights (IPRs) are basically exclusive rights conferred by the State on the rights holders to the commercial exploitation of a trademark, design, invention, literary and artistic work or any other innovation. These IPRs are used as leverage by the rights holders to enter negotiations with third parties who intend to use or exploit the innovation. These negotiations are usually in form of licenses permitting the use of the invention in exchange for valid considerations. As a result of these IPRs, investors and/or right holders are capable of exercising ownership on the inventions and enforcing their rights should there be a breach.

The relevance of IP rights, both to the rights holders and consumers, has been clearly understood with coming of the internet. The advent of the internet like never before brought globalization of economies and easy accessibility and replicability of data and information. Companies are now faced with various threats -from fraudsters; cyber squatters; counterfeiters and/or competitors trying to freeride on their investments, goodwill and/or inventions – which attack their reputation, creating potential dangers to consumers (e.g. counterfeit medicines) and liabilities on them. As such, companies are now committing significant resources for the protection of their intellectual assets.

The Future of Intellectual Property Rights (Conclusion)

Previously, exploitation of natural resources and adequate man power were the primary engines of economic growth. However, the world is going digital and so are the economies. Information is now widely believed to be the future source of prosperity significantly representing raw materials which are transformed using human intelligence and technology, into innovations that lead to economic growth.

However, for a knowledge-based economy to succeed the creation of inventions as well as effective management and enforcement of IP rights must be all present, working side by side. As pointed out in preceding paragraphs, any economy reliant on innovations will not thrive if there are no reliable incentives for potential inventors and investors. IP laws and rights create a reliable legal structure for the investment and commercialisation of IP and accordingly is an indispensable tool in this economy.

Up until fairly recently, IP laws, especially in Africa was a specialised and dehydrated sector of law, made up of a small group of legal experts and hardly ever contentious. However, in recent times and with the development of an economy based on data and innovations (IP) this status quo has changed significantly.

We are now faced with a new reality where Intellectual Property are created, encountered and used daily. Furthermore, the continuous advancement in the use of social networking platforms and Internet presents an emerging IP market and new challenges for IP regimes.

1. Knowledge Economy Index (KEI) 2012 Rankings