An Inter-acting Model of Knowledge Flow and Industrial Structure Evolution
Xunlian Si 1 Xinfa Liu 2 Jinxian Chen 3
Abstract: The completeness and effectiveness of the knowledge flow play a role for the correct direction and great validity of industrial structure evolution (ISE). ISE works on the basis of the direction of knowledge flow and it will cause some problems for the investment-orientated and government-orientated evolution if otherwise directed and vice versa. The analysis of the inter-acting model of knowledge flow and industrial structure evolution reveals that the establishment of this model can push not only the production of the intellectual production but also the evolution of industrial structure in the course of economic development.
Key Words: knowledge transferring industrial structure economic growth inter-acting model
The 21st century has brought the world into a stage of competition for intellectual assessment and this competition is fulfilled in a complete new game form. Intellectual competition has led to the development of globalization and regionalization of economy, subsequently challenges to the industrial economy and economic development for the related country and region. In this paper, the author discusses the roles of intellectual assessment for a country’s ISE and economic development, the core element of economic development and the identification of the ISE. He also makes a proposal of intellectual-orientated and industrial- orientated evolution model.
1.The role of knowledge for the ISE and economic development
As is known, production factors play an important role in the economic development, such as the role of land and labor in agriculture, machinery and capital in industry. But knowledge plays a critical part nowadays in the economic development since we have come to a knowledge economy. This is referred to as factor-shifting theory. That is to say, economic development is determined by the shifting of core production factor from one to another and if this shift completed, the economy will come to an advanced stage.
The foremost research of the role of technology in economic development can be found in Xiong Bite’s (Chinese transl.) works on innovation, while the role of knowledge in economic development has become increasingly important with the development of web economy, and it becomes known that knowledge becomes the core factor of production and the economic development heavily depends on the acquisition, transferring and application of knowledge. And knowledge is the only inexaustable factor, which can be productive through innovation and becomes shared resources. In the innovation-oriented society, knowledge innovation will surely gain priority over such factors as land, labor, capital and technology and it can exert direct influence on the industry. The growth of economy will depend on the investment on knowledge. Knowledge will have a great influence on the economic growth and economic value. Most companies have already had a database of business process, company culture, technical know-hows, customer service, MIS and behavior code. (Carla O’Dell, 2000, USA)
In terms of the relationship between industry and economic development, industry stems from division of labor, which is made on the basis of differences between the individual performances the division of labor. But this difference was originated from the acquisition of knowledge, in this sense, knowledge is actually the foundation of existence and development of industry. A great deal of knowledge has been accumulated in the course of history and the modern facility provides sufficient possibilities for further training and education. Given together, they all lay a good foundation for the enterprises to produce new and original products and subsequently form some new industry in history. That’s the knowledge-flow-cycle in history.
2.The inter-acting evolution model of knowledge flow and industrial structure
2.1 The model of knowledge flow
Knowledge is defined as “active mixture of acquired experience, value, information with the purpose of providing a framework for the evaluation and acquisition of new knowledge and information. It comes from the talented people, is first applied in his work and in an institution, knowledge is not only found in files but also used in their routine management, processing, and behavior code.”(Larry Prusak, 1999) Knowledge is the flow of knowledge between institution an individuals. It is a large scale flow circuit among the knowledge producer (universities, institutions, R&D department of the enterprises), the social organizations and the individuals. (Fig. 1) The move of knowledge inside the organization makes up the internal flow (see the rectangle in the figure). The move of knowledge between the organization and the counterparts outside the organization is referred to as the external flow.


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