Knowledge-based economy (KBE) frameworks and empirical investigation of KBE input-output indicators for ASEAN

Knowledge-based economy (KBE) frameworks and empirical investigation of KBE input-output indicators for ASEAN

The purpose of this paper is to build a policy focused knowledge-based economy (KBE) framework based on the
OECD KBE definition in order to identify the KBE factors in the Association of South East Asian Nations
(ASEAN) region. The paper utilises the Beta coefficient technique which allows us to rank the most important
KBE input factors to KBE output factors. After identifying KBE input-output factors, following the Australian
Bureau of Statistics KBE framework assumptions, standardized beta coefficients are used to assess how many
standard deviations a dependent variable will change, per standard deviation increase in the predictor variable.
Standardization of the coefficient is usually done to answer the question of which of the independent variables
have greater effects on the dependent variable in a multiple regression analysis, when the variables are measured
in different units. Data are mostly collected from secondary sources such as the World Bank’s World
Development Indicators and the International Institute for Management Development’s World Competitive
Yearbook. The results show Singapore is the best performer in knowledge acquisition, production and
distribution and the Philippines is the best performer in knowledge utilization. Indonesia, on the other hand,
shows weak performance in almost all the KBE dimensions. The lessons from the success of Singapore and the
Philippines for weak performance countries in KBE are to improve the efficiency of FDI inflows, to optimise the
use of research and development expenditure, to increase the secondary school enrolment ratio and finally to
increase the interaction between academia and industry, which facilitates the creation and commercial use of
knowledge. This paper provides empirical evidence to rank the important KBE input factors that gives
governments some insight on where to focus investment in order to become a successful KBE.

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