Increasingly the traditional factors of production – land, labour and capital – have become less important when compared with technology; the economists have termed this as the ‘expansion of the production frontier’. The source of technology is in science, that is rooted in knowledge. It is easy to visualise that tomorrow’s industries will be knowledge industries. The emphasis will not be on physical or tangible assets, but on intangible knowledge assets. The value of intellectual capital of an industry will determine its rank and competitiveness. In such industries, there will be a major shift from people, who handled information and did routine and unthinking work, to those who will use knowledge at every stage. For knowledge workers, information and knowledge will be both the raw material of their labour as well as product.
World’s major growth industries – such as microelectronics, biotechnology, designer-made materials, and telecommunications – are already brainpower industries. These knowledge industries stimulate other industries, in turn, to become knowledge based.
For a cash starved but intellectual capital rich country like India, emergence of knowledge industry is a good news. But harnessing the full potential of knowledge industry requires an aggressive and visionary policy framework, creative planning, daring and risk taking. It needs to be recognised that the knowledge industries such as software development, pharmaceutical industry, biotechnology, engineering services etc. operate in a high competitive environment with great demand on the speed of response in dynamic market conditions. A high operational efficiency and functional flexibility is crucial for such industries. The Government policies, therefore, have to be conducive to provide these. For example, it is important to recognise that knowledge work in knowledge intensive industry cannot be governed by using the laws meant for physical labour. India has a great potential to emerge as a real leader in knowledge capital provided its harnesses its great intellectual capital with a public policy framework.