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Strategic Plans for Foundation of APEC Cyber Education Network: Introducing a concept of Knowledge Economy

Jakupec, Viktor

Jakupec, Viktor 2000. "Strategic Plans for Foundation of APEC Cyber Education Network: Introducing a concept of Knowledge Economy", presented APEC International Roundtable Nov. 30~Dec.1, 2000

Reproduced with permission.


This paper argues that APEC member countries must adjust, indeed change, their higher education policies and infrastructures in order to protect their interests and enhance the benefits through globalisation and the increasingly open trading environment. Within the context of globalisation, APEC higher education policies must include Cyber Education Networks between the member countries and as such need to be seen as part of sound overall economic development strategy. Thus transparent signals about the direction of knowledge economy, regulatory policies, strategic planning and transition periods for implementation of a Cyber Network are required to steer the process. Both governments and the private sector need to invest into Cyber Education Network in order to develop and advance their economic position through knowledge economy.

As far as knowledge economy is concerned APEC member countries are at crossroads, balancing the challenges of globalisation and the demands of its national interests for increased services such as higher education. The focus appears to be still on the concept of Economies of Scale with its cult of efficiency.  In the face of globalisation, the development of Cyber Education infrastructures and services is becoming crucial if APEC member countries wish to meet the challenges and opportunities of economic growth based on knowledge economy. This paper argues for a concept of Economies of Scope through which Strategic Plans for Formulation of APEC Cyber Education Network in an environment of Knowledge Economy can be achieved.


Developed and developing countries are increasingly becoming dependent for their economic well being on their abilities to shift from industrial economy to knowledge economy (OECD, 2000). The concept of knowledge economy emerges from the acceptance that economic development and growth can be better achieved if knowledge and technology are utilised to the fullest extent (Drucker, 1993).

Knowledge Economy can be defined as a phenomenon where knowledge is becoming increasingly important for the economic success of government, society, industry and individuals, impacting on learning and skills development, innovation, and provision of goods and services (Johnston and Blumentritt, 1998). This is characterised by

(i)              Substantive increase in the codification of knowledge that together with networks and digitalisation of information leads to commodification of knowledge. (Codified knowledge is the formal and universal knowledge emerging from research).

(ii)            Increased codification of knowledge, shifting the balance of stock of knowledge, producing a shortage of tacit knowledge and skills. (Tacit knowledge is a .tool to handle codified knowledge・).

(iii)           Codification of existing knowledge that enhances: (a) changes in an organisation and creation and dissemination of new knowledge, and (b) a nexus between diverse areas of knowledge and skills, thus reducing knowledge destruction, and increasing the acceleration of turnover of existing stock of knowledge.

(iv)          An increased provision of an impetus for the dissemination of information rather than re-invention of knowledge and information through Computer and Information Technology (CIT) leading to potential minimisation of capital for a given quantity of knowledge.

(v)            An increased relative amount of agglomeration of stock of knowledge is used for economic growth, yet the accumulated knowledge is not necessarily used entirely for consumption.

(vi)          The importance of economic, political and cultural distribution power in the capacity to transfer knowledge and technology within and across networks becomes paramount.

(vii)         Learning becoming (a) an important factor for individuals and organisations and (b) an activity which is attained by undertaking cognitive and other activities, by using information and knowledge and by interacting with others.

(viii)       Learning organisations, which are becoming increasingly networked.

(ix)           Creativity, problem solving, initiative, flexibility and an ability to change are seen increasingly as important skills.

(Fransman, 1994; Nonaka and Takeuchi, 1995)

It is important also to note that a transition to Knowledge Economy may lead to systemic market failure because it is so radically different from industry based economy. Thus conventional economic understanding in terms of production, services and importance of needs to be revisited and changed (Benhabib and Spiegel, 1994).

Of course knowledge in the form of human resources and technology has always played an important economic role throughout history. However, two main factors became more pronounced at the beginning of the 21st century. Firstly, there is an unparalleled expansion on a global scale of Computer and Information Technology (CIT). The uniqueness of CIT is that it can provide access to information anywhere in the world in a fraction of a second. It provides communication opportunities through which data, interaction and transaction can be provided to any person and organisation cost effectively (Bates, 1995; Harasim, 1993). Secondly, as a global economy is advancing and changing the way of how we think about production and distribution of goods and services, the relative importance of knowledge is becoming increasingly significant for APEC member countries.

The dependence on knowledge economy brings with it the need to reconsider not only economic but also higher educational strategies. The concept of global educational networks is emerging, for example, through the consortium of universities known as Universitas 21. Networking between universities is not knew, but using CIT as a way of networking provides new opportunities for university-industry collaboration. One such option is the development of Cyber Education Networks, which have the potential to enhance the development of more productive and successful knowledge work force, or what is called by some the .cognitariat・ (Davis, 1996) and human resources. The rationale for Cyber Education Network is simple: In order to be successful in a global economy, countries need to restructure their workforce. This requires at times a painful reordering of the workforce, and at some point, the industrial economy work force needs to be pulled into the .cognitariat・. This reordering can only be achieved through education and training. However in order to maintain the existing equilibrium throughout the epoch of retraining, new ways of accessing education and training must be implemented. A work force cannot be simply pooled out of the labour market. Thus, there is a need for individuals to be able to access education and training in their own time and from the .best・ available provider (Jakupec 2000). Given this background, there are a number of issues to be considered here if one wishes to attempt to develop Strategic Plans for Formulation of APEC Cyber Education Network.

Knowledge and Economics: From Economies of Scale to Economies of Scope

There is a stark difference between the role of universities and the higher education sector of the 1990s and the beginning of the 2000s. In the late 1990s, for example, there was the tendency by governments in many developed and developing countries, including APEC member countries, to focus on internationalisation utilising the notion of Economies of Scale. As far as higher education was concerned, the driving force was the Taylorist concept based on mass education systems and the Fordist and Global Fordist notions of knowledge production through principles of standardised and at times inflexible learning environments (Garrick and Jakupec 2000). At the same time there was a need to utilise a variety of educational technologies in order to provide access to higher education to a large number of individuals. Give the dominant Fordist and Global Fordist ideology, educational technology and practices followed assembly line principles (Campion 1996).

Universities and higher education systems in the 1980s and 1990s were required to support national economies by producing specialists in specific disciplines such as engineering, accounting, management and information technology (Jakupec 1996). This led to restructuring of higher education systems in a number of countries, including amalgamations on claims of efficiencies that can be achieved through Economies of Scales. For example, GAL (1997) argued that Australian universities are competitive with other Western nation universities due to the Economies of Scale that have been achieved through amalgamations in the late 1980s. In essence the prevailing ideology was that economic growth could be better achieved through Economies of Scale. Another examples of Economies of Scale are the mega-universities, which provide higher education to a large number of students. They operate on an unprecedented scale of 100,000 or more students (Daniel 1996).

The higher education institutions in many developed countries such as Australia and United Kingdom were required to follow business principles in terms of governance, course offerings and thus knowledge dissemination and accumulation. It was argued that greater gains could be made by the higher education sector, if the Fordist and Global Fordist approach was adopted. The underpinning assumptions were that fiscal achievements could be based on Economies of Scale through production of standardised course design and delivery.

At the end of 1990s cracks started to appear within those higher education systems, which modelled themselves on Global Fordism and Economics of Scale. Post-Fordism and Economies of Scope superseded Fordism (Huber, 1992). Higher education institutions learned very quickly that the Fordist rigidity of mass education did not provide the benefits it was claimed previously (cf. Felderer and Obersteiner, 1999). Thus the concept of Economies of Scope was introduced and partially adopted by higher education institutions such as the universities that formed Universitas 21.

A brief comparison between some important characteristics of universities under the two given economic assumptions are

Economies of Scale

university model

Economies of Scope

university model

Single location university

Self-contained expertise

Independent self-contained activities operating in a global market

Vertical organisational integration

Uniform hierarchical academic and administrative structure

Parochial mindset

Efficiency focussed

Multiple locations

Shared expertise with other organisations

Independent activities operating with partner organisations in a global market

Flexible horizontal organisational integrations with multiple alliances

Diverse hierarchical academic and administrative structures

Global mindset

Flexibility focussed

The key issue for success became the concept of flexibility in relation to locations, expertise, operations, organisational integration and the dominant philosophies. The underpinning idea is not that efficiencies will be achieved through Economies of Scale, but that flexibility will allow institutions to reduce waste and increase the productivity of both academic labour and capital investment through Economies of Scope. It is important to note that a focus on flexibility has the potential to avoid extreme specialisation and compartmentalisation through sharing of responsibilities, teamwork, job-rotation, and multi skilling. This, so the theory goes, can be achieved through knowledge management, integrating theory (thinking) and practice (doing) into all aspects of organisational endeavours. At organisational level this means that obstacles to information flow at institutional and inter-institutional levels need to be minimised if not removed.

STRATEGY: There is a need for APEC member country governments to put in place mechanisms leading to removal of obstacles to information flow between participating universities of APEC member countries.

In other words, in order to achieve more with less, educational institutions need to become flexible organisations. They need to merge flexibility of delivery, course content, choice of educational technologies, learning environments, and high quality of service (including student support) and programs (including a degree of customisation) with the speed of low cost mass production and delivery of learning materials and services. But more importantly they need to develop networks and post-Fordist structures (Jakupec, 2000).

Today flexible post-Fordist approaches allow universities to achieve higher levels of productivity through Economies of Scope, in the provision of more diverse and customised programs and services without forfeiting the advantages of Economies of Scale. This can be achieved through a greater utilisation of academic, administrative and technical staff and an integration of academic, administrative, technological and entrepreneurial cultures of a university and subsequently through network arrangements amongst universities.

In essence, Economies of Scope can be achieved when costs can be reduced by operating one or more enterprises under the same administrative and managerial cover, sharing overheads.  Economies of Scope can also be accomplished where cost savings opportunities are brought about by sharing resources and infrastructures anywhere along operational .value chains・ (Benjamin and Wigand, 1995).

For example, if a number of universities within APEC member countries were to form a network, they could provide educational opportunities for a significant number of students without necessarily having to duplicate each other・s resources and infrastructures. Thus the scope of delivery increases without the proportional cost associated with capital investment by individual universities.

Using this example, it could be argued that Economies of Scope are much more conducive to diversification and flexibility than Economies of Scale. The latter being supply driven (if we build it they will buy it) the former is demand driven (if they want it we will build it). It is important here to notice that in order to diversify and move from a supply driven capacity towards a demand driven enterprise depends mainly on the ability to reuse the existing knowledge. Thus, one will be able to distinguish between principles of Economies of Scale and Economies of Scope on the basis of how knowledge is re-used. Adopting the former, knowledge is used for provision of ever increasing numbers of identical educational services and products. In the case of the latter knowledge is accumulated and diversified through networks and used for provision of flexible and divergent educational services and products (Davenport and Prusak, 1989; Koulopoulos et al 1997).

Government Policies in Member Countries

APEC member countries continue to witness a shift from industrial to post-industrial knowledge economics (Kumar1995). The crucial point is that the shift is uneven between the developed and developing member countries. The national economic growth on basis of knowledge economy and productivity depends to a large extent on two factors. The first factor is the ability of individual countries to increase the rate of technical progress and the second is the ability of educational institutions in individual countries to accumulate and disseminate knowledge not only nationally but also globally (Foray and Lundvall, 1996). Thus, of crucial importance are networks and systems that can flexibly and effectively disseminate knowledge and information. CIT is the most advantageous technology for storing and accessing information and knowledge. Using CIT, Cyber Education Networks provide learning opportunities for individuals and human resource development for employers (Jakupec and Garrick, 2000). Learning through Cyber Education Networks is becoming increasingly important for realising productivity capability of CIT for long-term economic growth.

Government policies, especially those relating to linking economic growth to education require a new focus in knowledge based global economies (GAL 1997; Jakupec1997). Endorsement of Cyber Education Networks by APEC Governments is one important initiative, which can be achieved through development, utilisation and enhancement of national and multi national innovation systems, which encourages institutions and private enterprise to invest in Cyber Education. Thus there is a need for governments to develop policies focussing on the strategies that

(i)             enhance knowledge dissemination and expansion

(ii)           upgrade and maintain relevant human capital

(iii)          promote organisational change.

These strategies can be formulated as follows:

STRATEGY: There is a need to increase support from governments for innovation of Cyber Education Network by moving from mission oriented higher education technology projects to expansion oriented higher education technology programs.

STRATEGY: All three social partners (universities, governments and industry) should facilitate the development and expansion of Cyber Education Network infrastructures in order to provide favourable conditions for university-industry-government collaboration. This will allow greater access to education and training to a wider variety of industry sectors and commercial enterprises, individuals and society.

STRATEGY: All three social partners should promote broad base access to skills, knowledge and capabilities formation and qualifications, and to encourage life-long learning. This should include initiatives leading to (i) flexible broad-based formal education, (ii) establishing incentives for employers and employees to engage in continuous and life-long education and training in order to provide a better match between work force supply, and industrial and commercial demand for human capital.

STRATEGY: Governments need to provide a conducive economic and political environment, and supporting infrastructures for technological changes through appropriate financial, competition, information and other relevant policies. These policies should: (i) enhance technological change in order to obtain productivity gains , and (ii) promote organisational changes at university-industry level so as to increase flexibility, networking, multi-skilling and decentralisation.

Cyber Education and University-Industry Collaboration: A question of Knowledge Dissemination and Knowledge Economy

Cyber Education will play an important role in the Knowledge Economy because it has the potential to disseminate knowledge throughout the society, globally and locally, and across economic infrastructures. In this context, there is a need to be cognisant of the factor that in Knowledge Economy the dissemination of knowledge is as important as the creation of knowledge. But this is only a valid proposition if knowledge distribution networks, such as Cyber Education Networks support knowledge dissemination and creation. In such a case Cyber Education Networks transcend national systems of knowledge innovation and can be shared globally. Essentially, Cyber Education Networks support the advance and use of knowledge in economy through industry-university collaboration. This is important for a successful transition from industrial economy to knowledge economy, especially as countries need to diffuse innovations and to assimilate and maximise the contribution of technology to education and training. This requires knowledge creation as much as knowledge assimilation trough industry and commerce. (OECD, 1996).

If this argument is accepted, Cyber Education Networks in APEC member countries will have an important role to play in knowledge creation. This is not only important for economic progress, but also for the development and maintenance of a common cultural basis for the exchange of knowledge and information, and thus a better understanding of the cultural and social characteristics, history and heritage of the individual countries.

APEC includes both, developing and developed countries. Their economies therefore are characterised by different degrees of economic, political and cultural distribution power in the capacity to transfer knowledge and technology within and across networks of researchers, research and educational institutions, and university-industry collaborative enterprise. It must be noted however, that any distribution power of a country to transfer and disseminate knowledge will largely depend on policies, incentives and strategies of governments with reference to education and research institutions such as universities. Thus, effective dissemination of knowledge is subject to government-industry investment into higher education institutions and systems, and the ability of industry to adapt and use the created and disseminated knowledge for economic and social well-being of individuals, groups, organisations, and commercial and industrial entities (Stopford, 1996).

STRATEGY: Industries and individual companies should balance investments between the production of and the capacities to disseminate and use knowledge for the purpose to partake in a knowledge economy.

STRATEGY: Governments must balance not only investments into knowledge creation such as research and knowledge dissemination, but also into dissemination of knowledge to social and economic actors, including enterprises and individuals who can exploit and use this knowledge for social and economic betterment.

In order to enhance knowledge dissemination, many developed and developing countries are endeavouring to develop linkages between universities, industries and government and non-government enterprises. This requires a strategy of university-industry collaboration. The results and initiatives are at present haphazard and not well coordinated. A more focussed strategy may well be in place here: 

STRATEGY: Governments should provide incentives for universities-industries collaboration to develop efficient Cyber Education Network(s).

Universities-industries collaborations in developing and maintaining an efficient Cyber Education Network, has the potential to increase access and relevance of university educational mission, and to invigorate new learning, teaching and research directions. Thus, Cyber Education Networks built on universities-industries collaborations can be used as a vehicle for effective dissemination of economically useful knowledge and for enhancing the flexibility of accessing knowledge by individuals and corporations for skill and human resource development (Jakupec and Yoon, 2000). 

Flexibility of accessing knowledge is the key to dissemination of knowledge. There are two points to be made here. The first point is that universities have .resources・ that need to change without the need of significant additional capacity building. However, universities have a long and proud tradition and changes are not easily achieved. In universities the most important kind of resources are academics and the managerial capacity of the leadership. Both need to accept and initiate changes to the academic, administrative, technological and entrepreneurial cultures of the organisation. This is important if a successful universities-industries collaboration to establish and maintain a Cyber Education Network is to be achieved. In order to realise these changes, academics, administrators, technologists and senior managers need to apply existing knowledge, skills and experiences to new, but related areas. 

STRATEGY: Universities need to change academic, administrative, technological and entrepreneurial culture from traditional to flexible models of knowledge accumulation and dissemination.

The second point is that industries have traditionally a rather limited appreciation of academic work in creation and dissemination of knowledge. With reference to the latter, the advent of flexible learning has created new demands on academics to teach and facilitate learning, thus, the academic tradition is changing. Equally important is the factor that industries assume the supremacy of directly economically exploitable knowledge over pure academic knowledge. Perhaps because of a lack of understanding of academic activities by the industry and a greater focus on knowledge economy, academics and universities find themself torn between traditional forms of knowledge creation and knowledge dissemination and those imposed upon them by governments and industry requirements. There are two schools of thought to be considered here. Firstly, there is the school of thought which states that if academics are to create knowledge for the future they should be given the freedom explore their own ideas. Academics and researchers should be encouraged to pursue their own research directions and curiosities, even if the knowledge created has no immediate benefit to economy. The second school of thought is that as the most important scientific understandings have emerged from research findings directly related to industrial and technological problems, academics and universities should focus on finding solutions that are of immediate benefit to industry.

The first school of thought cannot be right and the second school of thought must not be right. In a knowledge economy with all its impacts on our economic social and cultural life, it can be argued that there is a strategy that industry needs to adopt:

STRATEGY: Industries need to raise the profile of academic work through collaboration with universities in creating knowledge that provides opportunities to probe their own knowledge creation and dissemination.

Balancing the claims of the two schools of thought is somewhat difficult. But is there a need to balance it at all? The argument can be put as follows. Firstly, as most of knowledge created in the universities is freely reported at conferences and in publications, and disseminated to students it is difficult for industries to capitalise directly from it. Secondly, research results and thus newly created knowledge is mainly enabling rather than directly beneficial for economic exploitation. Thirdly, newly created knowledge may provide indirectly solutions to existing problems of industries. Industries can adapt this knowledge free of charge to their particular situation without having to invest heavily into their own research, which may lead to a dead end. As a result a free Cyber Education Network can assist industries directly or as a basis for strategic research and knowledge dissemination.

Knowledge and Cyber Education Networks

The utilisation of CIT and Cyber Education Networks has drastically improved the opportunities for organising, codifying and communicating knowledge at reduced costs in comparison with other forms of technology and media. This has lead to incongruence between tacit knowledge and codified knowledge. The former is knowledge that is used as a tool to handle or improve what is in focus, such as an idea. The latter is more formal knowledge based on research, technology and development efforts in organisations. Codified knowledge is characterised by being global and universal (Glasmeier, 1994; Cooke and Morgan, 1998).

However increased codification of knowledge, through CIT and Cyber Education Networks, is creating a decline of tacit knowledge. This is especially the case where knowledge management is substituted with information management. As information becomes more easily accessible and less costly, the expertise and ability relating to the choice and efficient use of information become more important, and tacit knowledge in form of the skills needed to articulate and guide codified knowledge, becomes more crucial than ever.

The skills required of individuals in an organisation will be those that are complimentary to investments in CIT and Cyber Education Networks and at the same time these investments need to compliment capital input into human resources and their development. That means that the investments in both human resources and Cyber Education Networks cannot be seen as substitutes for each other. This is of course not dissimilar to the industrialisation period where machines replaced labour and manual skills and thus became the locus of the economic attention. In an era of knowledge economy, Cyber Education Networks will be the focal point of codified knowledge, whereas the work will be based on uniquely human tacit skills. Also, there will be a shift from the manual labour force of the industrial area to a cognitive work force of the post-industrial and global economic epoch. There will be a strong demand on conceptualisation skills, inter-personal management communication and innovation skills, fostering the development of innovation and knowledge networks.

Increasingly, the success of countries in a knowledge economy will depend not only on their expansion and utilisation of knowledge but also, and more importantly, on their knowledge creation.  


Efforts to establish a Cyber Education Network throughout APEC member countries will not be easy to achieve. The idea is being developed in a climate of growing public financial restraint. Present indications are that there is not much enthusiasm from governments to address the potential benefits of Cyber Education Networks. Perhaps one reason is that it is difficult to evaluate what economic impact such a network may have. Thus, it is understandable that governments and industry are reluctant to allocate funding to such a project. If this stands to reason, than there is a need for a better understanding of the economic, cultural and social advantages that a Cyber Education Network could bring to the whole society, including commerce, industry, universities and individual. Those governments, industry and universities which are not addressing the issue of how knowledge should be disseminated with new technologies, will inevitably not be able to participate in and become part of knowledge economy. Thus, the question is not if but how APEC countries should develop Cyber Education Networks. The question is how should knowledge be disseminated to individuals, industry and other private and government enterprises, in order to enhance economic growth and competitiveness. The challenge for governments, industries and universities is to adapt to their new roles as partners in knowledge creation and dissemination. Neither the governments, industry, or universities should loose sight that education has more than economic imperatives and that research as a vehicle for knowledge creation needs to include pure and curiosity driven research that goes beyond mere commercial imperatives. This freely accessible knowledge through Cyber Education Network can bring economic and non-economic, social and cultural benefits to APEC member countries, their industries, universities, communities and individuals.

From the above discussion it is evident that in addition to the already stated strategies there is room for canvassing some immediate and general strategic advantageous points here. Firstly, due to the increased inter-dependence among APEC countries on the basis of trade, education and training, investment and capital flow, technology and technology transfer, it could be argued that there is a need for governments to integrate policies of collaboration relevant to these areas. Secondly, given the factor that knowledge economy is fundamentally different from the industrial economy, there is a need to approach knowledge creation and knowledge and information dissemination in a new key. Thirdly, education and training, as much as innovation and knowledge creation, underpin knowledge economy. Thus governments and industry need to incorporate knowledge creation and dissemination in their key economic policies.

There is much emphasis on the role of governments in this paper. This is unusual in an era of globalisation, where the role of governments and nation states are challenged. So why should APEC governments take initiatives in developing a Cyber Education Networks? Perhaps as the new role of governments in a global knowledge economy has changed, they can act as hosts for activities associated with, and facilities required for, knowledge economy, including knowledge creation and dissemination through Cyber Education Networks.


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