Although the rise of the knowledge-based economy has to date been most visible in advanced industrial economies, it represents new opportunities and poses new challenges for all developing countries, particularly the LDCs. As a matter of fact, the emergence of a global knowledge-based economy should, in principle, be good news. As the ratio between power and price of information equipment continues to rise, and the cost of transferring information across borders keeps dropping, there are unprecedented opportunities for catching up. At the same time, the portability, flexibility and affordability of such technologies allow smaller players to become competitors worldwide. Responding effectively to these challenges will, as with past technological revolutions, require new attitudes and mindsets.
Investment remains a key to growth in the digital age, just as it was in the heyday of the railroad.
Because investing in phone lines, satellites or computers involves the new technology through the import of capital goods and licensing arrangements, technological catching-up requires increased foreign exchange earnings to pay for the needed imports. Together with the expanding role of knowledge in underpinning competitive processes, the past decade has witnessed a more liberal global trading environment. Some LDCs might also be able to exploit niches in the fast-developing biotechnology industries. Intellectual property is critical for the development of sectors such as the protection of indigenous knowledge, folklore and culture, as well as for protecting their access to genetic resources. However, a serious concern has arisen in recent years over the tendency to overprotect intellectual property rights.