Creating a base of knowledge workers in an economy can benefit society as a whole.

Let’s look at knowledge workers. Where do they come from? And how can they transform society?

Education is an important factor. After acquiring knowledge through education, knowledge workers become empowered and rise to positions of leadership in society.

For Drucker, the virtue of the knowledge worker was perfectly exemplified by E-Veritas, a Philippines-based electronic trading company. The firm trained uneducated people living in poverty in some of Manila’s poorest districts to work as electronic traders.

Through this process, E-Veritas created human capital (in other words, knowledge workers) where it is often needed most – at the bottom of the social and economic hierarchy.

And thanks to microfinance initiatives organized by E-Veritas, these workers were able later to launch their own small-scale business ventures. (Microfinancing refers to small, low- or no-interest loans.)

The takeaway? As a company, E-Veritas used education to empower impoverished communities.

It’s important to highlight the fact that capital investment is most likely to be effective in these kinds of circumstances – that is, when capital is targeted at knowledge workers.

Drucker didn’t realize this early in his career. While he was working as an adviser to the World Bank in the 1940s, Drucker endorsed the “standard model of development,” which is all about giving money to needy populations in an unstructured way.

But Drucker later recanted, after he realized that capital investment fails in many cases.

For example, considering the amount of money that’s been poured into Egypt over recent decades, the country’s economic development should essentially be on par with Japan’s. Yet the fact that Egypt’s economy is still sorely underdeveloped all but invalidates the “standard model.”

And yet, capital investment served a country such as South Korea surprisingly well. But in this case, investment was entirely geared to educate and train knowledge workers, through a policy which brought 200,000 Korean students to United States.

Many of these students returned home as knowledge workers, started businesses and helped make South Korea the innovative, economic powerhouse it is today.