Knowledge-based Economy – a Key Process for Sustainable Development

1. Knowledge-based Economy – a Key Process for Sustainable Development Prof. Edvins Karnitis Republic of Latvia Paris, February 19-22, 2002

2. Key indicators of the national economy Progress of Latvia in global ranking (UNDP)

3. Development • Strengths • location in active region • liberal market economy • highly skilled labour force • interest of the society in education • strong banking sector • Opportunities • integration in European society • knowledge-based products • development of infrastructure • emergence of a middle-class in the society • Threats • insufficient growth rate • small capacity of the country • a lack of investments • enlargement of EU does not occur • Weaknesses • modest economic potential • a lack of raw materials • grey economy, bureaucracy • educational system not oriented towards industry needs Stagnation

4. From vision to action Long term development of national economy National program Informatics Education & research Industry eLatvia Schools Innovation E-governance E-business Libraries E-procurement E-documents ID-cards

5. Emergence of a knowledge-based development • Knowledge management – the Modus operandi on a national scale • A man as an owner of knowledge becomes the key factor for economic growth • Unified development trends of the national economy, governance, education, social policy and other sectors • Reindustrialisation of traditional branches • Development of knowledge-intensive branches: • high knowledge base of specialists, capacity of the education system • demand for products and international market niche that could be conquered • high added value of goods and services • small consumption of energy resources and raw materials

6. Industrial clusters – competition & cooperation (information systems, composite materials, forestry, engineering) • Synergy effectto increase competitiveness of the Latvia’s economy: • knowledge sharing and professional training for cluster participants • resource sharing policy and procedures, common technologies • reduction of various costs • joint R&D activities • common customers and/or distribution channels, joint marketing activities • forming the critical mass to enter foreign markets Potential of the IT cluster

7. R&D and innovation Internationally acknowledged potential of Latvian fundamental and appliedresearch Innovation -- strengthening links between the enterprises and universities Improvement of key interfaces in the innovation system (education, research, entrepreneurship, legislation, financing) Encouragement of the creation and growth of innovative enterprises, development of technological/business centres Increase of the number of issued patents (biosynthesis, biotechnology, pharmaceuticals, magnetohydrodinamicsand plasma technologies, etc.)

8. Business in Internet environment • E–business – integration of all types of commercial activities into the Internet environment to increase competitiveness in the global scale: • establishing internationally harmonized ground rules • building trust among participants • maximizing benefits for all individuals • Spread of various teleworking principles • Electronic financial transactions and services • Remote public services, both for individuals and businesses • Electronic documents and identification cards as tools for remote contacts and transaction services

9. Regional development Weakness: unbalanced development: • economic, social, cultural differences • extra supported areas according to specific criteria • borderland – outskirts effect and cross border cooperation • a monocentric state Diversification of economy -- condition for territorialdevelopment, competitiveness of regions, growth of welfare level: • development of knowledge hubs: technological/business/industrial centre + university/college + library/information centre • cities as the focal points of knowledge economy; knowledge, information, social and culture centres for ambient rural areas • virtual enterprises and teleworking – the base for diversification of economy in rural areas

10. General participation: to enable everybody and every company in every region • to promote formation, development, spread and introduction the basic principles and processes of the information society and knowledge-based economy • to create opportunities for every citizen and business to participate fully in the processes of information society and knowledge-basedeconomy • to promote the increase of welfare’s level and thus to encourage civil harmony in the country, the economic and social cohesion

11. Cheaper, faster and secure connection to ICT infrastructure • qualitative connection to telecommunications and data transmission networks • installation of public Internetterminals in libraries, schools, municipalities • establishing the regulation of Internet domain and services, liability of service providers • multisectoral regulatory body – Public Utilities Commission Development of infrastructure (per 100 inhabitants), end 2001

12. Education and general information literacy • Accomplishments: • the highest adult literacy rate in the world– 99.8% of age 15 and above, 1999 • accelerated informatization of learning processes in schools, end 2001: • designed electronic textbooks – 80 000 A4 pages • 68% of total number of teachers has been trained in IT usage • number of primary and secondary level students per PC -- 21.7 • obtaining theEuropean Computer Driving Licence • Weakness: • insufficient contribution of universities toward the resolution of national priorities; tertiary enrolment in technical and life sciences -- 16.5% of gross tertiary enrolment, 2000/2001 • insufficient training the highest-skilled specialists (master’s and doctor’s degrees)

13. Availability of information Transnational information systems Public and private sector information systems Libraries of state significance Regional library Rural library School library

14. Public information processing and services Accomplishment: Development of mega-system – integration of public sector information systems: • quality of data • interoperability of all national information systems, data exchange • complex processing data from various components • united and user-friendly access to information • integration into the Transeuropean corporatetelematic networks

15. Knowledge economy and social factors Higher social and societal welfare level as a final target of co-ordinated policy for economic and social development of the country and society Investments in education -- important factor in increasing the quality of human capital The significance of culture; maintenance, development, functional perfection of national language Conjunction of social programs with national economic possibilities, increased responsibility of every individual for himself/herself

16. Cabinet of Ministers IS National Council Coord. Board Informatics Min. of Transport Dep. of Informatics National progr. Informatics eLatvia Min. of Economy Innovation E-business Min. of Education Schools Libraries Min. of Culture Min. of Finance Procurement Min. of Interior ID cards Min. of Justice E-government E-documents

17. E-regions and E-cities

18. Information society: informatization or innovation • Informatization: • traditional processes • quantitative changes • awareness • prompt benefit • Innovation: • advanced processes • qualitative changes • opportunities • maximum benefit Transition model Final model