This study by the Asian Development Bank (ADB) seeks to analyze the ways in which Asia’s middle- and low-income countries can tap knowledge-based economic development to maintain and strengthen the growth momentum and to move up global value chains. The ADB study uses the Knowledge Economy Index (KEI) rubric to benchmark the performance of developing economies in Asia against advanced economies of the world. It is clear that on all the four pillars of the knowledge economy—innovation, education and skills, ICT, and the economic incentive and institutional regime—developing economies in Asia significantly lag behind advanced nations. Policy makers in developing Asia need ensure appropriate investments and conducive policies across all the four pillars. The report traces the journey of the Republic of Korea, Singapore, and Finland as KBEs and the lessons developing economies can derive.

However, going beyond this, the report also highlights a number of special advantages that Asia can effectively tap that will help them leapfrog to the knowledge frontier. The relative lack of legacy infrastructure in developing economies, particularly in information communication technology, could enable developing economies to leapfrog over certain technology cycles and access the latest technologies, such as moving to cloud computing solutions. Asia needs to effectively combine established wisdom from the experience of developed economies with contemporary knowledge and options that new technologies bring to strengthen KBE processes. An important dimension for developing economies in Asia to consider, given the rising inequality in the region, is making KBE processes inclusive. This report explores a number of opportunities in this direction.