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Sri Lanka Human Development Report 2012.pdf

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Building a Knowledge Economy<br />

<strong>Sri</strong> <strong>Lanka</strong> is falling behind in terms of the technical<br />

knowledge necessary to compete successfully in the global<br />

economy. An important measure of the robustness of<br />

a ‘technical’ economy is the World Bank’s Knowledge<br />

Economy Index (KEI). It is constructed as the simple<br />

average of four sub-indices, which represent the pillars<br />

of the knowledge economy: economic incentive and<br />

institutional regime, education and human resources,<br />

innovation and technological adoption, and information<br />

and communications technology infrastructure. The KEI<br />

ranked <strong>Sri</strong> <strong>Lanka</strong> 101 out of 145 countries in 2012, a drop<br />

from its ranking of 87 in 2000. 172<br />

A scrutiny of the indicators used to construct the KEI<br />

reveals that <strong>Sri</strong> <strong>Lanka</strong> performs well in terms of rule of law 173<br />

and gross secondary school enrolment rates. The problem<br />

is with the information and communications technology<br />

indicators, which together measure penetration, and<br />

innovation and technology adoption. For all three<br />

indicators under the latter (royalty payments and receipts,<br />

technical journal articles and patents granted), <strong>Sri</strong> <strong>Lanka</strong>’s<br />

performance is below the average for lower middle-income<br />

countries. For two other indicators (Internet users per<br />

1,000 people, and computers per 1,000 people) <strong>Sri</strong> <strong>Lanka</strong><br />

is either performing below or at par with lower middleincome<br />

countries (Figure 4.8).<br />

Figure 4.8: Knowledge Economy Indicators for <strong>Sri</strong> <strong>Lanka</strong> and Averages for<br />

lower Middle-Income and Upper Middle-Income Countries, 2012<br />

Note: All variables have been normalized to take values from 0 (least favourable) to 10 (most favourable).<br />

Source: Compiled using data from The World Bank 2012b.<br />

74<br />

sri lanka <strong>Human</strong> <strong>Development</strong> report 2012

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