Knowledge-based economy and economic growth: empirical analysis of BRICST countries

Abstract

Rapid developments in information and communication Technologies (ICT) and intense pressure of globalization have changed trade relations and economic performance in global economy. Particularly the invention of many ICT tools and services, growing demand to technology products, rise of knowledge-based sectors have addressed the role of intangible factors such as education, knowledge, information, innovation and R&D as new source of economic growth. However, with the onset of global financial crisis, many countries have experienced recessions or less growth than before. Lasting uncertainty in macroeconomic stability and concern about the future performance of global market lead governments to realize knowledge-based economy (KBE) as a major solution to problems of the existing economy. Emerging countries are also perceived as the global leaders of KBE due to their better and faster performance in adopting new technologies and increasing their accumulation of knowledge than the advanced countries. The aim of this study is to analyze major determinants of KBE which are based on World Bank Knowledge Assessment Framework, on economic performance indicators such as GDP, GDP per capita and economic growth rate in Brazil, Russia, China, India, South Africa and Turkey (BRICST) over the period from 2000 to 2010 by using Panel Data Model. The empirical evidence reveal that ICT infrastructure and secondary education are found to be important infrastructure channels that affect GDP per capita positively in the BRICST countries. In addition, the number of R&D personnel as an indicator for innovation potential has positive influence on the GDP per capita. Accumulation of educated people in R&D can affect country’s ability to innovate, benefit from ICT and enhance economic performance. Therefore, expansion of ICT infrastructure together with educated R&D personnel have become the major factors that affect economic performance in the BRICST countries.