George Ivaniashvili_promoting the Principles of Knowledg

8/4/2019 George Ivaniashvili_promoting the Principles of Knowledg

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PROMOTING THE PRINCIPLES OF KNOWLEDGE ECONOMY IN

GEORGIAN UNIVERSITIES

George Ivaniashvili

International Centre for Social Research and Policy Analysis

THE GLOBAL CHALLENGES

In the era of globalization, rising competitiveness and technological progress, the role of universitiesgains more importance across a wide range of issues involving knowledge economy and nationalcompetitiveness, which requires benchmarked competitive adaptation on national, organizational andindividual level. The European Union declared 2009 the Year of Innovation, which presented complex

challenges and referred to tackling the higher education and science system in a more effective way.

In this context, the elaboration of economic strategy based on knowledge economy, innovations and newtechnologies has become crucial for ensuring the sustainable economic development and security ofGeorgia. That would enable the country to develop its priority sectors, make use of its comparativeadvantages and improve national competiteveness.

The system of Knowledge Economy has been successfully implemented in OECD countries and morerecently is becoming the focus of increased attention from developing nations. This system is a powerfulconceptual framework, which requires increasing financial support for R&D, improving cooperationbetween universities and the private sector as well as developing the economic and legal framework tobetter facilitate the creation of new knowledge and technological development. The European Union,Organization for Economic Cooperation and Development (OECD) and the World Bank have stressed the

significance of education, research and development (R&D) as crucial factors for development.

Produced by technological progress, the universities need to redefine their roles, functions, andstrategies. Educational systems in general need to become much more relevant so as to be in perfectharmony with their local, national, and global competitive environments.

Attention has been concentrated on inter-correlation among science, higher education institutions andbusiness, and their involvement in promoting sustainable development of human resources and humancapital, in order to increase innovative potential in university activities through assisting in development ofcurricular resources, research and teaching methodologies.

Industries compete on innovation to increase and sustain the competitiveness and universities are seenas a key source of innovative capacity. In this respect the focus of economic policy has shifted from

macroeconomic stabilization and market opening to upgrading the microeconomic business environmentof which universities have crucial importance. The process of economic policy is opening up beyondgovernment to include companies, universities, and research institutions that all have information and theability to act on barriers to innovation and productivity.

The Lisbon European Council rightly recognized that Europes future economic development woulddepend on its ability to create and grow high value, innovative and research-based sectors capable ofcompeting with the best in the world. The evidence is overwhelming that the higher research anddevelopment expenditure, the higher subsequent productivity growth.


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THE KNOWLEDGE ECONOMY INDEX AND EUROPEAN NEIGHBOURHOODPOLICY PRIORITIES

The principles of knowledge economy reflected in EU-Georgia Neighborhood Policy Action Plan, have notbeen yet translated into concrete policy changes in the sphere of higher education and science, which isrequired to tackle the specific aspects of this model in a more effective way. Among the priorities includedin this Action Plan, is development of sound education, research and innovation policies in Georgia,which will help the country achieve and maintain sustainable economic growth. In Particular:

Develop a Research and Innovation policy directly relevant to the sustainable and equitableeconomic development policy objectives of Georgia;

Further reform efforts in the field of education to promote human resources development; Foster co-operation with the aim of reforming higher education sector in the context of the

Bologna Process;

Reinforce participation of Georgian scientists/students/academics in international and exchangeprogrammes;

Encourage life-long and life-wide learning opportunities as well as further the reform efforts in thefield of education, science and training to promote sustainable development of human resourcesand human capital;

Reform science management system through appropriate regulatory framework financing modeland governance based on scientific excellence, capacity-building and joint initiatives.

Numerous reports provided by the international organizations indicate an alarming inefficiency ofGeorgian universities and scientific research institutes. According to the latest results provided in GlobalCompetitiveness Report 2010-2011 (Global Competitiveness Index, http://gcr.weforum.org/gcr2010/),Georgia ranks 93

rdamong 139 countries. A deterioration of the political and regulatory environment in

Georgia prompted the fall of the country's ranking, which is three spots behind the previous ranking 2009-2010, and close behind the African states such as Gambia, Rwanda, Botswana and Namibia.

The same applies to the Knowledge Assessment Methodology (KAM) Index 2009(http://info.worldbank.org/etools/kam2/KAM_page5.asp), which is the World Banks benchmarking toolcreated in the framework of the Knowledge for Development Program.

It has been found that the successful transition to the Knowledge Economy typically involves elementssuch as long-term investments in education, developing innovation capability, modernizing theinformation infrastructure, and having an economic environment that is conducive to market transactions.These elements have been termed by the World Bank as the pillars of the Knowledge Economy andtogether they constitute the Knowledge Economy framework.

More specifically, the four pillars of the Knowledge Economy (KE) framework are:

An economic incentive and institutional regime that provides good economic policies andinstitutions that permit efficient mobilization and allocation of resources and stimulate creativity

and incentives for the efficient creation, dissemination, and use of existing knowledge. Educated and skilled human resources who can continuously upgrade and adapt their skills to

efficiently create and use knowledge. An effective innovation system of firms, research centers, universities, consultants, and other

organizations that can keep up with the knowledge revolution and tap into the growing stock ofglobal knowledge and assimilate and adapt it to local needs.

A modern and adequate information infrastructure that can facilitate the effective communication,dissemination, and processing of information and knowledge.

The Knowledge Economy framework thus asserts that investments in the four knowledge economy pillarsare necessary for sustained creation, adoption, adaptation and use of knowledge in domestic economicproduction, which will consequently result in higher value added goods and services. This would tend to


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increase the probability of economic success, and hence economic development, in the current highlycompetitive and globalized world economy.

The transition to becoming a knowledge economy requires long-term strategies that focus on developingthe four KE pillars. Initially this means that countries need to understand their strengths and weaknesses,and then act upon them to develop appropriate policies and investments to give direction to theirambitions and mechanisms to enable the policy makers and leaders to monitor progress against the setof goals.

To facilitate this transition process, the World Bank Institutes Knowledge for Development (K4D) Programhas developed the Knowledge Assessment Methodology (KAM - www.worldbank.org/kam), which is anInternet-based tool that provides a basic assessment of countries and regions readiness for theknowledge economy. The KAM is a diagnostic and benchmarking tool that is designed to help countriesunderstand their strengths and weaknesses by comparing themselves with neighbors, competitors, orother countries that they may wish to emulate based on the four KE pillars. The KAM is therefore usefulfor identifying problems and opportunities that a country may face, and where it may need to focus policyattention or future investments, with respect to making the transition to the knowledge economy. Theunique strength of the KAM lies in its cross-sectoral approach that allows a holistic view of the widespectrum of factors relevant to the knowledge economy.

On the basis on the KAM indexes, we have made a comparative analysis of Georgias position relative toits neighbouring post-Soviet states. The results are summarized in the Table 1.

Table 1. KAM 2009 Comparative Analysis

Variable

Georgia(Group: AllCountries)

Armenia(Group: AllCountries)

Russian Federation(Group: All Countries)

actual normalized actual normalized actual normalized

Annual GDP Growth (%), 2003-2007 9.60 9.24 13.20 9.86 7.00 7.79

Human Development Index, 2005 0.75 4.27 0.78 5.03 0.80 5.87

Tariff & Nontariff Barriers, 2009 80.60 5.59 86.40 9.23 60.80 0.84

Regulatory Quality, 2007 0.21 5.75 0.24 5.89 -0.44 2.95

Rule of Law, 2007 -0.44 4.73 -0.51 4.32 -0.97 1.51

Royalty Payments and receipts(US$/pop.) 2007 3.53 3.95 n/a n/a 22.61 6.22

S&E Journal Articles / Mil. People, 2005 32.33 5.56 59.61 6.81 100.76 7.36

Patents Granted by USPTO / Mil. People, avg 2003-2007

0.72 6.16 0.46 5.68 1.26 7.05

Adult Literacy Rate (% age 15 and above), 2007 99.00 7.33 99.48 7.81 99.52 7.88

Gross Secondary Enrollment rate, 2007 90.17 6.04 89.54 5.90 84.01 4.72

Gross Tertiary Enrollment rate, 2007 37.26 6.01 34.20 5.36 74.72 8.99

Total Telephones per 1000 People, 2007 720.00 4.38 310.00 2.47 1.460.00 7.74

Computers per 1000 People, 2007 50.00 3.87 100.00 5.56 130.00 6.06

Internet Users per 1000 People, 2007 80.00 3.08 60.00 2.53 210.00 5.34

Source: The World Bank Report 2008


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DRIVING FORCES OF KNOWLEDGE ECONOMY: INNOVATION SYSTEM

A system of innovation can be defined as the system of interacting government institutions, private firms

and universities, aiming at the production of science and technology within national borders. The smoothoperation of innovation systems depends on the fluidity of knowledge flows among enterprises,universities and research institutions. Both tacit knowledge, or know-how exchanged through informalchannels, and codified knowledge, or information codified in publications, patents and other sources, areimportant. The mechanisms for knowledge flows include joint industry research, public/private sectorpartnerships, technology diffusion and producing innovative products.

The following framework extends the traditional linear chain model to the dynamic innovation process andclusters the most important innovation factors into the following six dimensions:

1. Innovation input factors such as enterprise strategy, knowledge, capital, human resources, patents,scientific publications.2. Innovation process (implementation) factors such as design, production, organizational culture andbarriers to commercialization.3. Public policy environment factors such as R&D policy, taxes, intellectual property, standards andmarket access.4. Innovation infrastructure conditions such as quality of research in universities, federal labs, and skilledhuman resources.5. Consumer value/outputs such as cost reduction, profits, revenues and convenience.6. National outcomes such as growth, employment, competitiveness and trade.

The nations innovation infrastructure includes the following:

Scientific and research institutions that serve as a major source of knowledge and includeuniversities and research institutes, laboratories, non-profit think-tanks, R&D consortia, technologytransfer centers and technological centers of excellence. Capital providers and markets that finance innovation and the acquisition of new products and

services. Venture capital and government research programs play a particularly important role insupporting technology-based entrepreneurs, start-ups and small business firms. Equity/stock marketsprovide an important incentive for innovation, reward innovators and determine the value of enterprises. Education institutions comprising secondary schools, colleges and universities, along with privatesector training organizations, should provide the pool of leading-edge scientists, engineers, managersand the technical workforce. The skills, mobility and flexibility of the workforce are an important innovationinput to both producers and customers of innovation. Information infrastructureprovides enterprises with the important tools and communication platformsnecessary for innovation. Global collaboration and open innovation systems rely on advances incomputing, software applications and information networks. Regional innovation clustersare geographic concentrations of interconnected businesses, suppliers,and associated institutions in a particular field that share a common knowledge base, labor pools,markets or distribution channels.

The Global Innovation Scoreboard report (GIS) compares the innovation performance of the EU25 tothat of the other major R&D performing countries in the world: Argentina, Australia, Brazil, Canada,China, Hong Kong, India, Israel, Japan, New Zealand, Republic of Korea, Mexico, Russian Federation,Singapore, South Africa and the US.

The choice of which countries to include was made based on their global R&D expenditure share in 2002.Georgias, as non-EIS countrys share had to be at least 0.1% in order to be included. the detailinformation is provided in Table 2.


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Table 2. Global R&D spending 2002 R&D expenditures (thousand 2000 US $)

United States 26655154 36.69% Ukraine 41536 0.06%

EU25 16595544 22.85% Luxembourg 33527 0.05%

Japan 14829645 20.41% Thailand 32167 0.04%

Germany 4777706 6.58% Slovenia 31001 0.04%

France 3056595 4.21% Iceland 26618 0.04%

United Kingdom 2802347 3.86% Croatia 22647 0.03%

China 1540417 2.12% Egypt, Arab Rep. 19216 0.03%

Korea, Rep. 1439710 1.98% Pakistan 17138 0.02%

Canada 1433170 1.97% Romania 15456 0.02%

Italy 1218205 1.68% Tunisia 13056 0.02%

Sweden 1032620 1.42% Slovak Republic 12654 0.02%

Netherlands 707220 0.97% Colombia 8638 0.01%

Switzerland 632105 0.87% Lithuania 8628 0.01%

Brazil 625919 0.86% Belarus 7793 0.01%

Spain 609127 0.84% Kuwait 7123 0.01%

Australia 599692 0.83% Bulgaria 6741 0.01%

Israel 580228 0.80% Costa Rica 6176 0.01%

Belgium 517285 0.71% Peru 5741 0.01%

Finland 428217 0.59% Uganda 5067 0.01%

Austria 426419 0.59% Uruguay 4776 0.01%

Denmark 409286 0.56% Estonia 4646 0.01%

India 386570 0.53% Panama 4464 0.01%

Russian

Federation

356553 0.49% Nepal 3830 0.01%

Norway 290499 0.40% Latvia 3770 0.01%

Mexico 228914 0.32% Cyprus 2967 0.00%


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Singapore 198692 0.27% Bolivia 2414 0.00%

Turkey 132131 0.18% Madagascar 2322 0.00%

Ireland 114103 0.16% Azerbaijan 1932 0.00%

Hong Kong, China 102365 0.14% Georgia 969 0.00%

Portugal 100925 0.14% Macedonia, FYR 895 0.00%

Poland 100102 0.14% Trinidad and Tobago 851 0.00%

Argentina 94134 0.13% Paraguay 746 0.00%

South Africa 90872 0.13% Armenia 599 0.00%

Greece 75783 0.10% Honduras 316 0.00%

Czech Republic 71020 0.10% Kyrgyz Republic 286 0.00%

Malaysia 65253 0.09% Mongolia 282 0.00%

New Zealand 62661 0.09% Seychelles 65 0.00%

Venezuela, RB 54457 0.07% St. Vincent and the

Grenadines

52 0.00%

Hungary 51392 0.07% Cape Verde 26 0.00%

Chile 42090 0.06% Serbia andMontenegro

11 0.00%

Source: Global Innovation Scoreboard


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CONCLUSIONS AND RECOMMENDATIONS

According to the results presented in this paper current situation in the sphere of higher education and

science system in Georgia is not desirable due political instability, economic crisis, social disparity,intellectual erosion, clientelism, rent-seeking behavior, nepotism, cronyism. Transformation requires newideological thinking, national modernization, effective leadership, sound public policy and management oforganizational change.

As the discussions with focus groups have clarified, one of the most disappointing aspects of existingsituation in Georgia is that the importance of modern values and national priorities are not properly andcomprehensively understood, which is one of the main constraints to promote sustainable change. Thevast majority of universities are not accountable to their stakeholders and particularly students, whichprevents the latter from becoming competitive in highly demanding and diversified job markets.

Majority of interviewed professors could not demonstrate clear understanding about the ENP prioritiesreflected in EU-Georgia Neighbourhood Policy Action Plan. Nor they have shown positive results in termsof Knowledge Economy, Knowledge Management, National Competitiveness, Triple Hex Model, NationalInnovation System.

Based on survey analysis, apart from knowledge deficit, many Georgian professors lack moderncurricular resources, scientific background and international recognition. In most cases they are recruitedbased on personal preferences rather then on qualifications and needs.

Georgia needs to dramatically improve its attractiveness to researchers, as too many young scientistscontinue to leave the country on graduating, notably for the US or Europe. Georgian government shouldcall for making the country more attractive for its best brains; promoting new technologies andinnovations. Further developing a system of mutual validation of national quality assurance andaccreditation processes would be an important step in the right direction. Obstacles relate to socialsecurity entitlements and the recognition of qualifications. In order to increase attractiveness, there arealso financial questions requiring attention. Government needs to urgently address the problem of funding

for universities. If Georgia wants to attract more of the best researchers, the question of improving theirresearch environment and remuneration needs to be addressed now. Creative interaction betweenuniversities, scientists and researchers on the one hand and industry and commerce on the other, whichdrives technology transfer and innovation, is necessarily rooted in the close cooperation of universitiesand companies.

If Georgia is to compete in the global knowledge economy, it must also invest more in its most preciousasset its people. The productivity and competitiveness of Georgias economy are directly dependenton a well educated, skilled and adaptable human resources that is able to embrace change. Yet atpresent, far from enough is being done in Georgia to equip people with the tools they need to adapt to anevolving labour market, and this applies to high- and low-skilled positions and to both manufacturing andservices. Nor is anything like enough being done to eliminate brain-drain process.

To equip Georgia with the highly educated, creative and mobile workforce it needs, higher education andtraining systems must be improved so that enough young people are graduating with the appropriateskills to obtain jobs in dynamic, high-value and niche sectors. Universities must devise ambitious policiesto raise educational levels, to make lifelong learning schemes available to all and all must beencouraged to take part in them.

Thus universities and research institutions need a clear strategy to find their appropriate new role incountry competitiveness so far as their traditional roles continue to be critical for economic prosperity.Georgias innovative performance rests on a concerted effort to raise the level of education of the overallpopulation. The public policy goal of lifelong education should be a major force in creating skilled humanresources able to make the transition from an agrarian to an industrial society.


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Table 3. SWOT Analysis of Georgian Universities in Terms of Promoting the Knowledge Economy

Internal Factors

Rank Strengths Points0-7

1 Historical background 7

2 Intellectual potential 73 Cluster growth potential 6

4 Legal regulations 4

5 Training opportunities 4

6 Creativity potential 3

7 Networking potential 2

Weaknesses

1 Inefficient management system 7

2 Weak scientific background 73 Low funding 7

4 Resistance to change 7

5 Weak connection between industry and universities 6

6 Unskilled human resources 6

7 Lack of knowledge on new developing standards 6

8 Technological disparity 6

9 Lack of innovation policy 4

10 Nepotism, cronyism and rent seeking behaviour 4

2

External Factors

Rank Opportunities Points

0-71 ENP Policy 7

2 High demand on education 7

3 International exchange programs 6

4 Improving technology transfer 5

5 Transnational partnerships 5

6 Western orientation 4

Threats

1 Inefficient reform in science management system 7

2 Inappropriate funding schemes 7

3 Weak connection between industry and universities 7

4 Brain-drain 6

5 Ineffective public policy 6

6 Political instability

7 Economic crisis

8 Higher level of social stratification 5

9 Quality of life 5

10 Lack of entrepreneurship culture 5

11 Degree of social cohesiveness 4

12 Poor technical infrastructure 3

13 Poor institutional infrastructure 2

14 Legal regulations and policy 1


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George Ivaniashvili_promoting the Principles of Knowledg