In the knowledge-based economy (KBE), a strong education system should produce a
citizenry that is equipped with the tools for success: skills,ompetencies, and knowledge. The role of higher education in the development of the KBE is crucial because institutions are the "creators of, and venues for, cultural and social activity” (OECD, 2007: 39). Around the world, governments are aiming to provide higher education equitably and en masse while ensuring it is both of high quality and of relevance to the labour market. This is a challenge that Ontario, too, faces as it prepares its strategies to enhance the knowledge and skills of its citizens. This research note is the second of a three-part series that examines international trends in strategies for developing knowledge-based economies1. It examines issues pertainingto the development of skills, competencies, and knowledge — areas of focused government attention — and the labour market issues faced by skilled graduates. It draws heavily on the experiences of the United Kingdom, the European Union, and the United States and examines particular fields of government interest in addition to the issues of labour market demand, of skills-matching, and of employer needs. An understanding of these international activities and trends should be of help when Ontario is developing a comprehensive and informed strategy for ensuring students are prepared for the KBE labour market. This research note is structured in three sections, each covering a major theme in the literature. In the first section, debates on the role of higher education within the knowledge based economy are addressed. The role of government in determining future skills needs is discussed, and international trends toward developing a demand-led rather than a supply-led system are addressed. The second section provides an overview of trends in such government activities designed to produce
graduates with specific skill sets and qualifications in Science, Technology, Engineering,and Mathematics (STEM), Creative Competencies, and Middle Skills which many governments consider priority areas. The third section examines skills-matching in the labour market and deals specifically with skills-matching and valued graduate characteristics by examining Ontario data on skills training.