What Is Knowledge Economy?
Knowledge Economy Definition
A knowledge economy is a system of buyers and sellers just like any other economic system, but instead of trading tangible assets participants exchange information.
Four Central Characteristics
In order to be classified as a knowledge economy, a system of exchange must demonstrate four central characteristics.
- Systemic provision of incentives for the pursuit of knowledge and entrepreneurship
- Presence of an educated and skilled labor force
- Engagement with information and communication technology (ICT)
- An environment that is conducive for invention and progress that includes both the public and private sectors
Today, especially in the US and other more developed countries, there is a lot of money to be made in the fields encompassed within a knowledge economy.
1) Scientific Research
2) Technical Support
All of which are a result of the growing interconnectedness of the global economy.
Today, with more markets available than ever before as a result of the Internet, expertise has become a vital resource.
Which is why, as we see today why there is such a need for men and women who are skilled technicians, communicators and researchers.
Examples of the Knowledge Economy
The main driver of a knowledge economy, the inputs of production if you will, are a human’s intelligence and education.
An example of an institution using these means of production for capital gain, is the University.
Many professors employed at a university, especially those who specialize in STEM fields, when not commanding a classroom are conducting research.
Which once concluded, can be sold to interested parties for profit which benefits scientist and university alike.
Another example of an institution making use of the knowledge economy is RAND, a private research facility located in Santa Monica, CA.
Similar to a University, RAND employs several experts across dozens of fields to conduct research that can then be marketed and sold to pharmaceutical companies, the military or other private companies.