The Role of Education in Formation of Knowledge Economy

Mechanics, Materials Science & Engineering, September 2016

ISSN 2412-5954

The Role of Education in Formation of Knowledge Economy Tetiana Chumachenko1 , Olena Hladun1 1DOI 10.13140/RG.2.1.4242.7125

Keywords: knowledge economy, knowledge, education system, innovative economy, competence, professional qualities, creativity.

ABSTRACT. The article describes conceptual basis of education system for knowledge economy. Using analytical method, the theoretical aspects of the role of education in formation of innovative economy were studied. It sets out the tasks education system facing based on the knowledge of the new format. It determines key skills required for preparation of highly skilled specialists for labour market professional qualities and competence, the basis of effective management and entrepreneurial skills.

Introduction Modern trends in world economic development stipulate necessity of strengthening an innovative component and a systematic approach to training specialists on the knowledge of new format, corresponding to the modern requirements and capable to provide strong economic growth.

For this reason, it is important to improve the efficiency of markets and the level of education [1], forming a system of educational services for knowledge economy.

Analysis of the global education market development showed that education is undergoing a major relation to developed countries. Although there are different interpretations of the definition of knowledge economy [3.4], the researchers agree on one thing without knowledge, their accumulation, development is impossible. Knowledge economy includes mechanism of production knowledge and technology, concentrated primarily in universities in form of basic and applied science, research and development, as well as effective protection of intellectual property system. At the same time, this knowledge is not regarded as a finished product, but as a process, improving and undergoing evolutionary changes. It is impossible to implement this knowledge in economy at once without taking into account the level of economic development in general, and without developed communications system, including formation of a systematic approach to knowledge transfer - technology transfer. These provisions define the contemporary trends in the education market, and attitude of the governments to education.

The purpose of the study is to define the conceptual basis of the educational system of for the knowledge economy, based on the knowledge of new format, which is formed as an innovative system where competitive advantages are created through investment in human capital by training qualified specialists for high-tech economy and possess management skills and creative thinking, having developed entrepreneurial skills.

Today, competition is shifting towards creation and development of knowledge. The company's future is determined by the ability to create and accumulate knowledge. The nature of knowledge required in contemporary labour market has changed. If earlier knowledge should be more formal and materialized in the form of clear instructions, standards and technologies, today the speed of creating and updating of knowledge has sharply increased, and their volume increased significantly.

The business related to intellectual work: software development, development of science and technology, are developed actively. In these areas, the ideas are valued above all else. Many countries are already beginning to realize that the future prosperity of their economies depends on the MMSE Journal. Open Access www.mmse.xyz

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innovation flow, and the ability to think creatively is becoming more important than formal education.

Creativity - today is not a luxury, but a means of survival. Companies entice each other's employees who are able to think outside the box or create inside their structures the conditions in form of courses, seminars and trainings to enhance the creative potential of their employees. The involvement in the process of higher education institutions can become a part of marketing strategy of universities and considered as a part of commercialization of higher education institutions through the development of special education programs. Success depends on how and how quickly educational institutions are able to adapt to the labour market realities, to prepare specialists of new level, who are able to think strategically innovation. Universities should not just give a set of specific knowledge through their educational programs, but to teach students to formulate their idea, to bring this idea to practical implementation, covering thus the whole complex of relations: from accumulation of knowledge to production and consumption, thereby contributing to economic development. It puts forward the relevant requirements to the whole education system.

The impact of technology on economy was studied by many economists, who argued that the technology is an important determinant of society, as well as each step is a method of production; it is obvious that with each new stage the humanity rose to a new stage of development [5]. Namely, the method of production is considered to be a factor determining the institutions of human society, and not vice versa, and new technologies and new knowledge is the source of economic development is [6].

Francis Bacon was the first who put forward the idea that in order to improve the living conditions of any society must it is necessary to develop a science [7].

Analysing the work of economists, the famous theoretician of economics Erik S. Reinert, showed that Schumpeter and Marx, being supporters of various concepts of economic development, argued that the capital is fruitless without investment opportunities, and only new technologies and innovations can provide them. The synergy effect has great importance, because the development of processing industry enables a country to modernize its agriculture [8], and technological progress, is the primary source of growth and transformation of society [9].

At the same time, it is possible to see clearly a correlation between scientific discoveries and innovations, between the development of theory and practice. According to Eric Reinert [10], the and introduce innovations is the pleasant obligation of humanity. However, this process is not possible without accumulation of new knowledge, and how much wisdom the humanity has accumulated, it continues year after year to expand the endless boundaries of knowledge [11]. Carlos Moedas, Commissioner for Research, Science and Innovations of EU, speaking at the World s in the world do not realize that there would be no Today innovations are the basis of competitive advantages of national economies, which are formed due to the introduction in the results of scientific and research activities production aimed not only at optimizing production processes, but also on the formation of non-economic - environmental, social standards of economic activities of enterprises and their implementation in economy [13].

Thus, in the bases of economic growth as a joint synergy product, along with a purely economic factor, new knowledge are lying. It is through knowledge, transmitted through innovations and used in production process, it is possible to reduce significantly the costs that contribute to the growing impact that, in fact, is a source of economic growth.

Among the basic rules of economic development, two of them directly related to scientific activities: recognition of importance of training / education and promotion of valuable knowledge. The attitude to science and education depends on the industry development, since the production process is considered as a multiplier, which requires knowledge, mechanization, technology, division of labour, increasing returns, and at the same time it creates them itself [14].

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As it was rightly noted by American economist James Bright, the only one process that combines science, technology, economics, entrepreneurship and management is innovation. An innovative economy is the basis of formation of the knowledge economy. In the works of G. Becker [15] economy is provided for the first time. Not only economists, but also philosophers and sociologists work on the development of the ideology of the knowledge economy. However, American economist F. Makhlup for the first time equated knowledge to the sector of economy, the development of which indust However, the invention and innovation, as well as accumulated knowledge lying in the basis of the modern education could never be recreated on free markets without government interference.

The objectives of the state, tending to development of higher education, are understood as the labour market needs changes with the development of economy. University graduates more easily adapt to society than those who only finished school, they actively participate in social activities, commit less crime, better train their children and rarely get sick because they adhere to a healthy lifestyle. These are the additional benefits that even more important for the state than the additional income from higher education for every individual throughout his life.

However, in the transition to mass higher education, the entire educational system has a risk to develop faster and cheaper forms of education, which will be much less useful for students and society. Mass leads to reduction of the quality of education, levelling the role of universities in forming of society, ignoring what has been considered for a long time as the most important goals of education: strengthening of moral qualities of students and their preparation for life as active, informed citizens.

Today there is a necessity of reforming the classical model of education. But in order the process start actively, it is necessary first of all to focus on the question, what is the purpose of education in a historical and contemporary perspective, to identify correctly the disadvantages of the existing university education models, and what prevents more personalized, direct and free approach to education?

The main mission of higher education remains unchangeable - to prepare highly qualified specialists able to implement their knowledge and competence, creative approach to any process and able to work on the final result.

In terms of marketing the conceptual model, the sphere of market relations in the system of higher education is presented by relationship between universities engaged in basic and further training of young specialists, the labour market, which is the consumer of young professionals and young professionals themselves as a specific item. University, entering the market of educational products and services with its educational programs, at the same time produces specialists of various levels and profiles. Quality of training programs determines the demand for graduates of certain schools from the labour market.

However, university by offering to all students of the same course in the same faculty the same educational program, releases different specialists as a result. They differ in degree of assimilation of the said program, in quality of knowledge, in personal orientation on various aspects of t profession, etc. Therefore, the university is not the manufacturer of graduates, but educational programs for the labour market, in the form in which they are mastered by its graduates, that is, entering the labour market with the results of its educational activities, mediated by the knowledge, professionalism and skills of graduates. Graduates offer their labour force to enterprises, those, in turn, assess the skills of this labour force in form of starting salaries and other conditions of employment.

University is interested not only in the fact that its educational programs meet consistent requirements of the labour market as much as possible, but also that the graduates assimilate this program as fully as possible. The labour market, in turn, defines the basic standards of the quality of education in form MMSE Journal. Open Access www.mmse.xyz

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of changes in demand for these or other specialists, clarifying of knowledge and skills, which the applicants for a certain job must have, and assesses the qualifications of this labor force in form of salary. On the other hand, the prospect of employment is an important motive that contributes to the choice of educational products by the main consumer - the graduates of the secondary schools. [18] The protracted economic crisis in Ukraine showed that employers increasingly need creative, flexible and adaptable to changes workers. Can the Ukrainian higher educational system, even in light of the recent legislative changes in the field of educational services, meet the requirements of the labour market? Probably not, because the existing education system no longer corresponds to the real needs of economy. In addition, the climate of motivational to knowledge is deteriorated in Ukraine. The interest of students to the process of education itself reduces and educational programs almost do not provide personal development. The same trend is observed in relation to scientific research.

Solving these problems is possible through increasing the creative activity of students, the development of programs to reveal their creativity, develop the potential of functional knowledge and to teach students not only to think creatively, but also to realize their ideas through the baggage of theoretical knowledge. Thus, this knowledge is converted into competence, and the presence of a variety of educational programs, the variability of their use for training throughout life, makes it possible to increase the human capital of the state.

The attitude of the state to formation of higher education system varies depending on development of economic processes. Economic globalization forces the governments to invest heavily in training of new work forces, especially in developing countries. Governments of the countries, where there is a serious economic downturn, vice versa, begin to reduce funding in higher education, making it more and more elitist. For someone who is looking for an opportunity to get higher education, it means that he would bear all costs and risks himself.

The potential students still adhere to the stereotype that if to study hard, enrol to university and get a diploma, it is possible find a quiet job with good earnings and be in easy circumstances until the end of life. This explains the fact that 2/3 of secondary school graduates each year tend to enrol in higher education institutions in Ukraine. Now the situation has changed. Although a degree of higher education still pays off, the analysis of general trends in the salary market showed that the is no longer guarantee that education can provide a high-paying job. Most often, work and salary are not equivalent of received education. The number of unemployed university graduates is steadily growing in Ukraine. Thus, according to the State Statistics Service, the unemployment among young people under 25 years makes 23% more than 13% of university graduates remain unemployed, at least 20% do not work in their specialty. [19] There is a general depreciation of traditional academic education, so-called inflation of diplomas. The situation is partly rescued by unification of educational programs of universities in accordance with international standards. Recognition of the national educational programs opens the borders of the labour market for university graduates.

Mass higher education has led to that in the recent years the level of professionalism of graduates has dropped to 15%. In traditional system of higher education, students study a very narrow set of compulsory subjects, because it was believed that the knowledge of these subjects were prospective in terms of employment, and our politicians even now believe that in future it will be useful for economy. However, according to businesspersons, university graduates do not have propensity to innovations, cannot work as a team and do not know how to communicate effectively even with each other. Today, the professionalism of university graduates is determined not only by academic knowledge, but is achieved through joining them with practical skills, participation in selfimplemented projects, in a word, what is primarily required by employers.

In order to meet the requirements of modern times, educational system should be integrated into the -researchies should be modernized and adjusted accounting for emergence of new circumstances and needs that require the flexibility of education system.

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According to Ken Robinson, the human development cannot be linear [20], and the main purpose of education is to teach creativity, using non-standard approaches in the process of acquiring knowledge.

The main factor hindering the development of personal qualities is obsession with standardized tests and, due to financing, the need to teach for tests. The existing educational system, supported by the development of interactive technologies, unfortunately, teaches us to think alone, whereas the cooperation of enthusiastic people together, namely, leads to growth and progress.

Higher education institutions, giving professional knowledge, unfortunately, do not teach the culture of collective relations. The number of bachelors are not so important as how well students develop cognitive skills such as critical thinking and ability to solve a problem.

Recently, the approach of school graduates to selection of universities has changed. Along with increasing of popularity of higher education [21], they are more focused on selection of training programs, basing primarily on the interest to profession. Being guided by the algorith a certain specialty have given the dominant role to the quality of educational services. It was confirmed by the research carried out among the students o [22].

The absolute majority of students (90%) consciously treated to a choice of profession, choosing namely profession, but not institution, therewith 36.5% of them were guided by the interest in their future profession, and 21.6% believed that the profession would give them the opportunity of good earnings in future. Only 19% of respondents chose university. The vast majority of students during the process of education formed a positive opinion about the chosen specialty, which has either improved after enrolment (40.2%), or the good attitude has not changed (34%).

Slightly more than a half of the respondents intend to work in the specialty after graduation, and 39% at the time of the survey were undecided on this issue. Only 10% of students after graduation do not plan to tie their future work with the chosen specialty.

The studies have confirmed that the disadvantage of education system existing in Ukrainian is the lack of a full-fledged production practices. 35.1% of students consider themselves well prepared theoretically, but suffer from the lack of practical skills. The students of the fifth year of study of engineering, computer and economic specialties of the University in assessing of the knowledge quality noted the importance of the following factors: the educational programs offered by the institution, including their content and providing of training, the impact of training of the teaching staff in the skills of graduates and conducting production practices.

The evaluation of each criteria was determined as the quotient from dividing the perception rating on expectation rating. The quality of education was evaluated on a scale from 0 to 1, according to the methodology [23]. According to students, the quality educational services of the university is quite high and lies in the ranges from 0,7 to 0,86 (see. Fig. 1).

Content of education process 0,799 Conducting of production practices 0,830

Provision of education process 0,859 Professional and pedagogical skills 0,70

Fig. 1. Comprehensive assessment of quality of educational services MMSE Journal. Open Access www.mmse.xyz

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The students of economic specialties mostly suffer from the lack of the practical skills (see. Fig. 2).

Fig. 2. The results of the assessment of educational services quality by the students of different specialties Highly appreciated quality of education is supported by the results of the annual research carried out by the International Chair of UNESCO [24]. According to the rating indicators, the National Mining University is surely among the TOP-10 of educational institutions of Ukraine. Two-thirds of the students surveyed have noticed a large number of unnecessary, from their point of view, things that prevent them to focus on the major disciplines. However, in terms of university education, it is impossible to prepare a versatile personality, capable to non-standard solutions, having moved to the dry teaching and learning focusing on several academic disciplines, displacing creative and humanitarian disciplines from the university. It is also impossible to imagine a qualitative education without science. The accumulation of knowledge is mostly caused by the need for research. Checking of their results leads to development of innovation and production, and as a result of the University improves educational programs, preparing qualified specialists for economy.

The analysis of the major rankings of university activities has shown that the importance of scientific criteria in them is not less than 20%. By increasing the level of competitiveness of the countries, education and training of the workforce through the regular access to new knowledge and technologies may be crucial [25].

Thus, the main tasks facing the education system in Ukraine nowadays are not only administration, but also the content of educational process, which aims to improve the quality of education. The creation of infrastructure and facilities that can provide accelerated implementation of the acquired knowledge in professional activity is also very important. Taking into account the experience of many foreign universities, it is necessary to expand the training of specialists in the field of innovation management - the organizers, who have the skills of finding prospective scientific and technical ideas and practical implementation of innovation, the specialists who are able not only to acquire new knowledge and technology, but also to implement them.

University graduates must meet not only of the labour market requirements, but also the social demands of society - to be creative, flexible, possess the skills of critical thinking, to understand their goals and goals of their society that are able to form a holistic understanding of the world as a system.

The use of another resource of development - cooperation with high-tech companies is strategically important for universities, improving the educational component, extending the possibility of obtaining practical skills of students, and not only in the professional sphere. This will give an

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opportunity to combine education, science and the economy, forming the basis for the knowledge economy.

The need to perform these tasks is caused by the fact that our national education system is the part of a global educational space. Without updating the content and application of innovative technologies in education it is not possible to prepare professionals who meet the requirements for professional activity in the market conditions. The main scientific and methodical task of universities is to provide mechanisms for formation of professional competencies in students. The structure of professional

Basing on the fact that the knowledge economy is a new type of economy, which development basis are the knowledge that produce innovations, it is necessary to reform the education system that will allow to prepare the specialists, capable to generate new knowledge and technologies. In this type of economy, science and knowledge are the capital investments for all participants of educational process - universities with their staff and scientific potential, students, the quality of education of which provides high-level knowledge and allows meeting the new requirements of the labor market and employers interested in professional staff. However, the demand on knowledge should be formed not only by innovative companies, but also, by the state [26]. Failure to recognize this fact can have serious consequences.

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