The Role of Higher Education in a Knowledge Economy

Abstract

Governments all over the world are striving towards high-skilled and high value economies. Traditional factors of production are no longer considered to be the only contributors to economic development and growth. According to recent theories of development, knowledge has become an important factor for achieving economic development. In order to achieve these goals, a well-educated and highly skilled workforce is necessary. A knowledge economy has increased the demand for a highly educated workforce, especially a workforce with university degree. According to the Lisbon 2020 agenda—the EU development strategy—the EU is striving towards developing a knowledge economy, a sustainable economy based on employment, innovation and education. As Bosnia and Hercegovina (B&H) in the process of European integration, the country should reconsider its economic policies. However, a shift in the economic policy in this country is necessary, not only due to reasons mentioned, but also due to the fact that the current economic situation requires new policies and approaches. Endogenous growth models suggest that a country develops along its own growth path including knowledge or human capital in the model. The development of a knowledge economy in B&H might be the solution to its economic and social problems as well. In order to compare countries and knowledge economy development, the World Bank developed a framework and identified key knowledge economy pillars: education and training, research and innovation, economic incentives and institutional regime, ICT and infrastructure. Education, especially higher education, is important for knowledge economy development. Higher education institutions are import for the creation, dissemination, knowledge transfer, and spillover of knowledge to the industry.