Economic Fundamentals of the Knowledge Society

ABSTRACT This article provides an introduction to fundamental issues in the development of new knowledge-based economies. After placing their emergence in historical perspective and proposing a theoretical framework that distinguishes knowledge from information, the authors characterise the specific nature of such economies. They go on to deal with some of the major issues concerning the new skills and abilities required for integration into the knowledge-based economy; the new geography that is taking shape (where physical distance ceases to be such an influential constraint); the conditions governing access to both information and knowledge, not least for developing countries; the uneven development of scientific, technological (including organisational) knowledge across different sectors of activity; problems concerning intellectual property rights and the privatisation of knowledge; and the issues of trust, memory and the fragmentation of knowledge. 1. Historical Perspective Knowledge has been at the heart of economic growth and the gradual rise in levels of social well-being since time immemorial.[1] The ability to invent and innovate, that is, to create new knowledge and new ideas that are then embodied in products, processes and organisations, has always served to fuel development. And there have always been organisations and institutions capable of creating and disseminating knowledge: from the medieval guilds through to the large business corporations of the early twentieth century, from the Cistercian abbeys to the royal academies of science that began to emerge in the seventeenth century. ‘Knowledge-based economy’, however, is a recently coined term. As such, its use is meant to signify a change from the economies of earlier periods, more a ‘sea change ’ than a sharp discontinuity. This transformation can be analysed at a number of different levels