Over the centuries, the role of universities has changed a number of times. With the transformation from the Industrial Age to the Knowledge Worker Age, the universities - well-springs of talents and fountainheads of new ideas, knowledge and innovation - need to play a new role, going beyond the traditional functions of teaching and research. Universities in many parts of the world including Asia are increasingly becoming key actors in innovation systems, and are making a significant contribution to regional and national development through promotion of new knowledge-intensive enterprises and businesses. In addition, such innovations enable the universities to generate a considerable income, reducing their heavy reliance on public coffers for financial support. This, in turn, affords them a greater administrative and financial autonomy.

Though some universities or faculties in our country are responding to this change gradually, the response of the higher education sector as a whole is woefully inadequate. In a knowledge economy, our universities can become wealth creators and drive economic development, ushering in new era of prosperity in our country. . At a workshop organised by the Committee of Vice-Chancellor and Directors (CVCD) of Sri Lanka recently, Mr. Lalith Weerathunga, Secretary to His Excellency the President, called upon the Sri Lankan universities to play a pro-active role in transforming Sri Lanka to a knowledge economy in keeping with the vision of the government. This paper is a "self-criticism" and attempts to sensitize the key stakeholders of higher education to this urgent need and to initiate a dialogue on the role of universities in a knowledge economy with the final objective of fast-tracking the transformation of Sri Lanka to a knowledge economy by 2017 in keeping with the vision of the government.

Different eras of civilisation  continuum

Man has gone through four ages of civilisation, namely the Hunter and Gatherer Age, the Agricultural Age, the Industrial Age and the present Information Age or Knowledge Worker Age. With the change-over from one era to another, he needed a new set of skills and tools. For instance the tools used in the hunter and gatherer era, namely bow and arrow, sticks, stones etc. could not be used in the agricultural era, and they became irrelevant. The same was applicable to the skills. Thus with the change over from the hunter and gatherer era to the agricultural era, farmer had to acquire a new set of tools ( mamoty, crowbar etc.) and a new set of skills and also new knowledge in keeping with the needs of farming. Therefore he had to go through a new learning process, mainly through trial and error with a new mind-set – a new way of thinking. This holds good right along the civilisation continuum. Thus the set of tools and skills and the mind-set used in the industrial era have become irrelevant in the knowledge worker era. As Stephen R. Covey puts it, the knowledge worker age requires a completely new set of tools and skills, and a new mind-set.

It is also important to note that with the transformation from one age to another, there has been a phenomenal increase in productivity, sometimes by a factor of fifty. For instance, the productivity of industrial worker has been about 50 times more than that of a traditional farmer. With industrialization, there has been attendant downsizing of the farmer population in the industrial world by about 90%. This is amply evident from the fact that only about 3% of the people in the USA, through industrialized farms, produce most of the food for the entire country and much of the world. This phenomenon is applicable equally or more when the industrial age is transformed to the knowledge worker age. Thus in time to come, there could be significant downsizing of the industrial age workforce, resulting in serious unemployment issues. Stephen R. Covey believes that much of the job losses observed in many developed economies are due to the dramatic shift towards a knowledge economy rather than to the government policies and free trade agreements.

The Knowledge economy and its characteristics

In the agricultural age, the main assets and primary drivers of economic growth were land and labour, while in the industrial age, they were machines, and capital. By contrast, the knowledge economy relies primarily on the use of ideas rather than physical abilities, and on the application of technology rather than the transformation of raw materials or the exploitation of cheap labour. The development of the knowledge economy is a continuum. Thus different countries, and different sectors in the same country, can be at different levels on that continuum. In a fully knowledge-based economy, all sectors such as health, agriculture, industries, fisheries, environment etc. are knowledge-intensive, responsive to new ideas and technological change, innovative, and employ highly skilled personnel engaged in an on-going learning process.

The rise of the knowledge economy has been driven by two powerful forces, firstly, globalization with the advent of ICT, and secondly, major advances in natural sciences such as biotechnology, new materials, nanotechnology, new fuels etc. These are unleashing a new wave of innovation and creating opportunities for knowledge-intensive entrepreneurial business to gain competitive advantage. The knowledge economy provides efficient ways to produce goods and services and deliver them more efficiently, and at lower costs, to a greater number of people. Today eighty per cent of value added to products and services comes from knowledge work. Therefore in a knowledge worker economy, wealth creation has migrated from money and things to people.

Thus efficient utilization of existing knowledge can create comprehensive wealth for nations and also can improve the quality of life in the form of better health, education, infrastructure, technology and other social indicators. Ability to create and maintain the knowledge infrastructure, develop knowledge workers and enhance their productivity through creation, transfer, transmission and deployment of knowledge will, therefore, be the key factor in deciding the prosperity of the knowledge economy and knowledge society. Whether a nation has arrived at the stage of the knowledge society is judged by the way the country effectively deals with knowledge creation and knowledge deployment in all sectors of its economy.

In the industrial age, about 80% of the product cost was due to material, and knowledge accounted for only about 20%. In the knowledge worker age where the intellectual capital is supreme, the picture is the other way round with knowledge accounting for about 80% while material only for about 20%. It has been estimated that some 70% of the workers in the developed world are now primarily working on information and knowledge. Even in factories much formerly physical work has now been automated with workers handling information. Therefore the knowledge economy is concentrated on intangibles rather than tangibles. Thus in terms of inputs, the primary assets of firms are intangibles such as technology and brands rather than land, machines, inventories and financial assets. Similarly as regards the output, services are predominant over goods. For instance financial services and education have become the two largest and fastest growing industries in the world, both of which are knowledge-intensive. Information and knowledge products such as online information services, consultancy, and sales of intellectual property have also become very common in the knowledge economy. This is evident by the fact that US license revenues from patents have increased from $ 3 billion in 1980 to over $ 100 billion per annum now.

Unlike the industrial economy, the knowledge economy is networked worldwide with new communication media such as cellular phones, internet, direct satellite communication etc. This unprecedented interconnectivity offers great opportunities as well as formidable challenges and fierce competition in the knowledge age. The growing role of ‘virtuals’ (electronic) is another salient characteristic feature of a knowledge economy, dissolving the boundaries between the real and imaginary worlds. Digitalization and networking has transformed real organizations to virtual ones that lack formal structures or authority. Virtual (electronic) money, virtual community, virtual transaction, virtual library and virtual vacation are some examples. During the industrial age, the life cycle of a product - from the introduction stage to the growth stage - was long, involving several years. However, in a knowledge economy, this cycle has become very short as rapid market penetration occurs due to speedy diffusion of innovations through ICT. Another interesting feature of this economy is the reusability of information and knowledge that defies the normal economic rules of scarcity. You can sell the same piece of information and knowledge many times over unlike a physical product.