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Concept
Knowledge economy
Summary
The knowledge economy, or knowledge-based economy, is an economic system in which the production of goods and services is based principally on knowledge-intensive activities that contribute to advancement in technical and scientific innovation. The key element of value is the greater dependence on human capital and intellectual property as the source of innovative ideas, information and practices. Organisations are required to capitalise on this "knowledge" in their production to stimulate and deepen the business development process. There is less reliance on physical input and natural resources. A knowledge-based economy relies on the crucial role of intangible assets within the organisations' settings in facilitating modern economic growth.
A knowledge economy features a highly skilled workforce within the microeconomic and macroeconomic environment; institutions and industries create jobs that demand specialized skills in order to meet the needs of the global market. Knowledge is viewed as an additional input to labour and capital. In principle, one's primary individual capital is knowledge together with the ability to perform so as to create economic value.
In a knowledge economy, highly skilled jobs require excellent technical skills and relational skills such as problem-solving, the flexibility to interface with multiple discipline areas as well as the ability to adapt to changes as opposed to moving or crafting physical objects in conventional manufacturing-based economies. A knowledge economy stands in contrast to an agrarian economy, in which the primary economic activity is subsistence farming for which the main requirement is manual labour or an industrialized economy that features mass production in which most of the workers are relatively unskilled.
A knowledge economy emphasizes the importance of skills in a service economy, the third phase of economic development, also called a post-industrial economy.
Official source
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