The globalization of world economy that began in the middle of the twentieth century led to a series of structural transformations and reforms in world’s economic systems, changing the role of the major factors involved in the process of production. To start with, this essay will elaborate and more descriptively analyse the significant aspect of the human factor, which in a market economy is represented by intellectual capital.
Have you ever wondered what the relationship between intellectual capital and economy is? In technological society the relationship between economy and education became tighter than it was during the ancient times. The argument is that, in an era of a high-speed trade of commodities, services, ideas and information, the competitive dominance of the economy largely is dependent on domestic human capital. The modern person he or she a student, a worker, a person with his knowledge intellect, experience, and professionalism determines the economic and social development of the society. Today’s leading companies’ view, a market’s competitive advantage as depending not so much on ‘things’ such as technical equipment and inventory, but on the timely availability of relevant information and competent personnel who can manage and regulate business activities not only in the normal conditions but also in the most difficult times of crisis. Practically figure 1 shows intellectual capital’s value and influence to company’s value added. IC (intellectual capital) is a mix of 3 types of capital: human capital, organisational capital and customer capital. All those types of capital are intangible, invincible, it is difficult to measure it and it is hard to find its true value.
Fig. 1. Intellectual capital’s influence over company’s value added
Ideas and knowledge have always been a great force in developing an economy. Such bright minds enabled the countries to use its recourses wisely. It took decades and international trade over the distances of more than 3000 km which was already occurring more than 2000 years ago. The world today refers to the generations of ideas that have contributed to economic development, since then the intellectual capital is the sum of the knowledge of all employees in the enterprise. Intellectual capital is the education, information, experience and intellectual property – everything that allows a value creation. It is very difficult to quantify and effectively use this intellectual power, only when you turned it on effectively, it will work for your advantage.
Creation of the intellectual capital during the economic development of the country is directly related to the delivery of high quality education. This process should start in the family followed by the school, in higher educational institutions and finally, in the enterprises. In my opinion the higher educational institutions of that country and are the key factor in this chain. Higher education is the catalyst in this process and to him should be made the highest demands of quality and responsibility. The immediate mission and purpose of the universities and institutes, the attributes they should install are: is not only to form professional experts, but also competent managers capable to think creatively, to seek for out of ordinary, unconventional solutions to problems, be sociable and are able to work in a team, capable to realize their abilities and skills not only locally, but also in a global society. These can be best achieved by further integration of our educational system in the European and world education system, assimilating the best practises from the Western European educational systems.
Ideas play a great role in the world’s economic activity than at any other time in history. It is very obvious that the natural resources no longer control how fast the country grows and develops.
The very good example of economic boom by investing to education can be shown on the model of Japan. The economy of Japan after the WWII was in crisis, the lack of the natural recourses as well with uneducated population and very bad international relations was making it even worse. Japan found the solution by investing all the aid (money) that it received from the U.S.A. to its education as they understood that only educated people will help to find the natural recourses and as well to improve the relations with other countries. Japanese investment to education had a very positive effect on the boom of their GDP value added industry and services. Among all the East Asian countries Japan became
One action for the government is to encourage the establishment of close contacts between educational institutions in different countries, the exchange of students and teachers and their participation in joint projects and various civil actions. This process of increasing the intellectual capital continues in the work place ‘ by training, work experience, projects, seminars, as well as making presentations at conferences and exhibitions.
Intellectual Capital must be managed at all levels in the today’s knowledge-based economy of the 21st. First of all this problem has to be solved effectively at the level of the individual. Secondly forward looking companies need to empower the individuals to take their ideas forward. Finally government has to provide a framework in which intellectual capital can flourish. This opportunity creates the wealth and is being carried out by harvesting the appropriate intellectual capital in the economy.