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  • Knowledge economies risk leaving the poor behind

Matthew Willman/ OxfamAUS

Speed read

  • A danger in innovation is that not all people benefit from resulting economic growth

  • Those such as farmworkers and poorer students can lose out in the knowledge stakes

  • Capitalist economies should not lose sight of the goal of banishing poverty

In August this year I had the honour of speaking at the inauguration of Professor Adam Habib, the new vice chancellor of the University of Witwatersrand — one of the leading academic institutions in South Africa. Addressing him publically, I said he had been selected to lead the university in confronting challenging social and economic realities — while at the same time ensuring that the work of the university is grounded in making sense of these realities.

I said this because knowledge is becoming such an important currency across Africa and developing nations across the globe. However, it must be applied carefully — and our higher education institutions have a vital role to play in ensuring that this is so.

This is because our societies have a responsibility to recognise that there are dangers in knowledge-based economies.

Although I wholeheartedly support the knowledge drive in developing nations, I also want to sound a note of caution. Governments must ensure that all citizens can share in their economies. They should scrutinise choices about how to apply new knowledge, science and innovation to make sure they do not increase inequality in the process.

Innovation can leave some behind

The changing nature of agriculture provides a stark illustration of this danger. There have been many advances in agricultural technologies — from improved seed cultivars, to pesticides, to mechanisation, and now satellite-guided precision farming methods.

“Through innovation we may remain globally competitive, but at what cost to the poorer members of our society?”

Derek Hanekom, South Africa’s minister of science and technology

Yet they have also resulted in the loss of many farm labour jobs. The expertise of farmers and farmworkers is steadily being replaced by the advances embodied in the tools and inputs themselves.

Some may suggest that farm jobs are being lost because commercial farmers no longer need as many unskilled workers. But what that perhaps says is that farm workers’ skills are no longer needed or valued, because machines and chemicals can do the job just as well — and they do not get tired or go on strike.

The point is that innovation can have a downside. Through innovation we may remain globally competitive, but at what cost to the poorer members of our society?

And there are more subtle ways in which knowledge-based economies can snap at our heels. For example, at first glance it might sound like great news that South Africa’s overall rate of enrolment at higher education institutions has almost doubled, from about 470,000 students in 1993 to some 940,000 in 2011.

In the process, there has been much better representation in the student body: by 2011 black students constituted more than 78 per cent of enrolments, up from 52 per cent in 1993, and women now make up almost 60 per cent in public higher education institutions, redressing a bias in favour of men.

Despite this, graduation rates remain lower than I would like. One reason is the expense of higher education, which may mean that only well-off students can afford it. In trying to increase the skills and knowledge of our citizens — for all our good intentions — it is possible that we will manage this only for a small section of our population.

Capitalism should combat poverty

To remedy this situation we need to do two things. First, we have to remember the real point of capitalism.

I do not wish to ‘bash’ capitalism, but we should remember that it can contribute to widening inequality. Capitalism goes wrong when it divorces wealth from its true purpose, which is to satisfy very simple needs: for food, shelter, education and so on. In other words, the point of wealth should be to banish poverty.

The second thing we must do comes naturally if we understand that the goal of a knowledge-based economy is, ultimately, the eradication of poverty and inequality. We must undertake a creative and robust effort to put the poor in the driver’s seat of knowledge creation, as well as in the application of knowledge and technological advances.

Is it not the case, in fact, that the real danger of inequality is that it makes the poor feel powerless? The challenge, then, is to envisage an innovation strategy that puts grassroots empowerment at its core, ensuring that this knowledge-based economy is one all citizens can share in. The economic growth that African countries strive for must be inclusive.

Perhaps policymakers have to be more thoughtful about where and how innovation takes place. Otherwise they risk promoting economic growth that leaves people even further behind than before.
They need to acknowledge that the knowledge-economy revolution shares some of the downsides of the industrial revolution of two centuries ago, and act to avoid the negative consequences.
Derek Hanekom is South Africa’s minister of science and technology. He can be contacted at or @Derek_Hanekom