The impact of ICT and human capital on achieving knowledge-based economy: applications in Malaysia's economy

Abstract

The knowledge-based economy (K-economy) is not confined to information and communication technology (ICT) alone. Before the evolution of the ICT, it was knowledge that was embodied in human beings, namely 'human capital' and technology that was embodied in the capital investment undertaken by the Asian economies that brought about the so-called Asian miracle. Using ICT in the activities of Malaysia's economy contributes significantly to its productivity growth, in general, and total factor productivity (TFP) growth of the economy, in particular. The results of this study showed that the contribution of the ICT and human capital used in the economy were the highest among the input terms. The impact of ICT and human capital in TFP contributions is significant. But the growth rate of TFP is lower compared with the growth rate of the ICT and human capital. As a result, the achievement of the K-economy is not like that of the ICT and human capital development.