Today at the global level changes are taking place in an accelerated pace. These changes are issuing forth new challenges and also new opportunities. These challenges must be addressed and opportunities must be utilized if any nation or community is to keep abreast with these changes and forge ahead in the contemporary competitive global situation.

The major change that we are currently experiencing is Globalization and its deep impact with many implications not only in the financial system of the world, but also in other spheres such as social and cultural. The Globalization process has made the integration of information technology an important component of trade and commerce, media and communication. There is a paradigm shift in all aspects of life bringing revolutionary changes in the social order. The most important change is the shift from industrial society to information society in which knowledge is playing a significant role, and the technology based on knowledge has replaced manual labour. It is this skill that forms the core element in achieving success in the new global market.

According to Peter Drucker, the strength of a society in future will be based on the strength of a society’s knowledge and it is the learning societies that will lead the future generation. As knowledge assuming the role of the capital in the new economy, it is the knowledge workers who will be playing the key role in the development process, because it is they who will make knowledge work.

(Nik Mustapha, Hj. Nik Hassan, The Path of Global Prosperity, an Islamic Approach, in The Economic & Financial Imperatives of Globalization ; An Islamic Response, IKIM, Malaysia, 2000, p.32)

In this context one must have a clear perception of the two basic terminologies that are related to the subject under discussion. They are, “Human Capital” and “Knowledge Economy”.

Human Capital is generally defined as follows:

“Human Capital is the knowledge and skill embodied in an individual as a result of education, training and skill which is required for productive work. Human Capital is acquired through education and training”

In the production of the human capital in the contemporary world, knowledge plays the most important and significant role. It is knowledge and training in skills that generates and develop human capital. Hence, knowledge economy has become an important component of global economy. Knowledge economy which is also known as knowledge based economy or knowledge driven economy is generally defined as :

“An economy characterized by the recognition of knowledge as a source of competitiveness, the increasing importance of science, research, technology and also innovation in knowledge creation, the use of computers and the internet to generate, share, and apply knowledge”

According to UNDP report in major OECD countries more than half of the GDP is knowledge based.

The growth and development in knowledge based industries requires investment on knowledge and the role of universities in this context assumes a new dimension. They are considered not only as producers of knowledge and transmitters of culture, but also as agents of economic growth.

In order to aim at a competitive edge in the knowledge based economy, the Muslim world must evolve a development strategy that would pave the way for the growth of human capital through investment on knowledge, education and training in skills.

In evolving such a development strategy, on the basis of a futuristic vision, the present state of the Muslim world must be taken into consideration in respect of its physical and human resources and also the internal and external challenges it encounters.

The Muslim world stretching from Morocco in North West Africa to Indonesia in South East Asia consists of countries that occupy an important position, controlling the main gateways of world trade. They are rich in natural resources and they produce more than two third of worlds oil, 70% of its rubber, 67% of its spices, two third of all palm oil and half of all tin and phosphates. It is also rich in gas resources and endowed with mineral resources, with all these resources, they account for less than 5% of world economic production and more than 600 million of the Muslims live below the poverty line.

Human development in Islamic countries is lower than their per capita income. This reveals the startling truth that income derived from the resources is not fairly distributed among the people. The overall Human Development Index for Islamic countries is only 0.393 placing Islamic world in low human development category.

The major problem faced by the Muslim world is widespread poverty and illiteracy. It is this state of backwardness that acts as the major hurdle for development in the Islamic world. Muslim world also encounters the problem of debt burden. Another major factor that acts as a deterrent to development is the regional conflicts and the high defense expenditure which drain the economy of the Muslim countries. As the fair share of income is diverted to settle the foreign debts and for defense purposes, there is little allocation of resources for development in the field of education and social welfare.

“According to the statistics of International Institute for Strategic Studies at present the Muslim countries spend around 77 billion US Dollars on defense and nearly six million people are currently employed in this sector.”

(Ali Muhammad & Muhammad Ahsan, Globalization and Recolanisation, London, 2002,p.155)

In comparison to the amount of money spent on defense, the spending on education and investment on knowledge is rather very low.

If the Muslim Ummah is to forge ahead in the present competitive world, where knowledge and knowledge based economy plays an important role, knowledge development and investment on education must assume top priority. Human resource is the basic ingredient for development. “Man is the central element in development, non human factors with all their abundance can do very little without human resources and in the development of human resources education plays an important role”.

(Siddeek, AHM, Mobilization of Resources for Development, AJISC, vol. iv, No. II, 1989, pp.248-249)

In the present world the countries invest on education will be the most competitive. It is only through the education that a nation can attain professional skill which will lead to efficiency which is an important component of human resource development.

In the development of human resources, knowledge and education plays an important role. In the present world the countries invest on education will be the most competitive. It is only through education that a nation can attain professional skill which leads to efficiency, which is an important ingredient of development.

Widespread illiteracy is one of the major challenges faced by the Muslim world and organized effort must be made to spread literacy at all levels of the society. Eeven at the higher level in the field of education, the Muslim countries are far behind non Muslim countries.

“Statistics reveal that in the Muslim world there is lower enrollment in science studies and inadequate research and development funding and facilities, poor industrial infrastructure, absence of S & T manpower. Hence, in the Muslim world policy planning, HRD planning are some of the areas that demands serious attention.”(Khan, A.G, Restricted Areas of S & T and Ways to Develop such Technologies in the Muslim World, International Conference on Science in Islamic Polity in the Twenty First Century, COMSTECH, Islamabad, 1995)

As already observed above, the world today is entering a new phase in the field of knowledge and in the ways of developing human capital. The age of information technology had made a paradigm shift in knowledge. Today, thanks to information technology, the information can be transmitted faster, cheaper and with much greater easy.

It is this new skill in information technology that form the core element in achieving success in the knowledge based economy.

“According to the UNDP report that in the major OECD countries more than half of the GDP is knowledge based. Studies reveal that over the next decade, 30% of the world’s economic growth and 40% of the new employment will be driven by information technology, but the developing countries and the Islamic world that falls within this group, face a stupendous challenge in acquiring the knowledge and skill in information technology. According to UNDP report the information technology field is dominated by those who control world’s knowledge, but the Islamic world does not have the knowledge and skill to compete with them.”

(Ali Muhammad & Muhammad Ahsan, Globalization and Recolanisation, London, 2002, p.124)

The acquisition of hardware, development of software and all other know have related to IT, such as training and maintenance needs heavy financial investment. How can the Islamic world with its present rate of illiteracy and poverty hope to achieve competency in this filed and develop its human capital is the major issue that needs to be addressed as a matter of urgency. Even owning a personal computer is a luxury for an average individual in a Muslim country. It is stated that buying a personal computer costs an average US citizen about a month’s pay whereas for a citizen of Bangladesh, it costs his eight years of wages. Due to the prevalent rate of poverty and illiteracy, the lower rates of internet users are to be found in the Islamic world.

In order to arrest this trend serious effort must be taken for the promotion of education and elevation of poverty in any plan that is envisaged for the development of human capital in the Muslim world. Another important issue that must be taken into consideration in this respect is the production of quality leadership, because the act of transforming ideas into practical programmes requires able, skilled and experienced leadership. The formulation of ideas and the vision, coupled with creation of an effective and dynamic leadership is important at all levels to translate these ideals into reality and to manage the changes.

If the Muslim world is to forge ahead meeting the challenges that are posed by the knowledge based society, attain progress and advancement in the field of human development on the lines stated above, the Muslim world must evolve a comprehensive plan identifying the problems and strategies that must be adopted to solve these problems.

In drafting this comprehensive plan the following areas must be taken into consideration:

1. Promotion of knowledge and education, with the objective of reducing the present rate of illiteracy.
2. Increasing investment on science education and also ensure higher enrollment in science education.
3. Increasing investment on scientific and technological research.
4. Identifying the changing role of the universities in the knowledge based society and effecting changes in the university curriculum to suit the needs of the modern knowledge based society.
5. Evolving a national policy for rational allocation of resources having major focus on education and human resource development.

In order to implement this plan and strategy, the institutional machinery of the existing international Islamic organizations and institutions must be utilized to the maximum possible level. The OIC can function as the major agency to incorporate the services of the institutions such as IDB, Islamic Foundation for Science, Technology & Development and also ISESCO to attain the objective of optimizing intellectual and intellectual and human capital for the regeneration of the Muslim world.