Knowledge to build the world, knowledge to destroy the world. K.S. Pang (2013)The Knowledge EconomyChapter 1: The ForewordKnowledge economy is to be defined as production and services based on knowledge-intensive activities that contribute to an accelerated pace of technical and scientific advance, as well as rapid obsolescence. The key component of a knowledge economy is a greater reliance on intellectual capabilities than on physical inputs or natural resources. Knowledge production is driven by the emergence of new industries and recent technological advances have raised productivity. All these new forms of work that embody technological change have generated more worker autonomy or greater managerial control.Over the past several decades, a number of scholars and commentators have argued that the leading edge of the economy in developed countries has become driven by the advanced technologies based on knowledge and information production and dissemination. All these new technologies which emerged in the late 1950s, expanded with the proliferation of personal computers. And then surged dramatically with the widespread use of email and the Internet have considerable potential to remake the nature of work and the economy.Nevertheless, our understanding of the purported knowledge economy remains rather hazy, clouded by both enthusiasts and doomsayers who are quick to offer labels and assessments without much attention to evidence. Still others see a growth industry in providing professional services to organizations and nations to assist them in the transition to knowledge intensive modes of production.In this paper is to sort through these debates and provide an overview of the scholarly literature in the social sciences on the knowledge-based economy. We present evidence for the acceleration in knowledge production and discuss the key issues that have been addressed by the empirical literature.

1.1 IntroductionThese are factors increasing economic efficiency, innovation, the quality of goods and services, and equity between individuals, social categories, and generations.

The creation of new knowledge and the improvement of access to the knowledge bases thus constituted in every possible way:1) Education and training2) Transfer of technological knowledge3) Diffusion of innovations

Two phenomena in particular will be considered:1) Long-standing trend, reflected in the expansion of knowledge-related investments and activities.2) A unique technological revolution that radically changed the conditions of production and transmission of knowledge and information.

The collision between these two phenomena has spawned a unique economy, characterized essentially by:1) The accelerating speed at which knowledge is created and accumulated at which it also depreciates in terms of economic relevance.2) Largely substantial decrease in the costs of codification, transmission, and acquisition of knowledge.

This creates the potential for a massive growth of knowledge flows and externalities. Indeed, the strength of such externalities is historically dependent on technological and organizational conditions that have never been met as well as they are today. Yet this scenario, in which the rapid creation of knowledge and easy access to knowledge bases enhances efficiency, quality, and equity, is still highly uncertain.

Example: The distributional consequences of a knowledge-based economy with respect to growing inequality in wages and high-quality jobs. (Assignment)

While it may be plausible and even probable for certain types of activity and even certain countries as a whole, it is far more uncertain and even unrealistic in many other cases. These basic underlying trends must not be allowed to obscure the growing importance of science- and technology-related activities. Knowledge-based economies are not, of course, restricted to the realm of high technology, but science and technology tend to be central to the new sectors giving momentum to the upward growth of the economy as a whole over the past few decades.

Examples: Pharmaceuticals and scientific instrumentation, information and communication technologies, aeronautics, new materials.

The term knowledge-based economy also enables readers to fully understand a qualitative innovation in the organization and conduct of modern economic lifenamely, the factors determining the success of firms and national economies are more dependent than ever on the capacity to produce and use knowledge. The immediate result of this new situation can be found in particular forms of polarization in labor x Introduction markets, reflecting a bias in favor of qualified workers.

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