Knowledge Economy

The global economy currently is in transition from an industrial economy to a knowledge economy: to an economy in which knowledge is both an input of increasing significance into the productive process and a product. In a knowledge economy, labor costs become progressively less important, and scarcity of resources and economies of scale cease to apply.

One definition of the knowledge economy is that “the generation and exploitation of knowledge play the predominant part in the creation of wealth” (United Kingdom Department of Trade and Industry). Features of the knowledge economy include: 

  • Knowledge becoming more important as an input.
  • Knowledge becoming more important as a product.
  • Codified knowledge becoming more significant as a component of economic relations.
  • Changes in information and communication technologies.
February 2021
Investigates STEM economic activity by state, comparing the actual STEM shares to “expected” shares that reflect each state’s distribution of population across its metro and nonmetro areas. In 2019, Colorado, the District of Columbia, Maryland, Massachusetts, Utah, Virginia, and Washington each had an actual share substantially greater than expected.
February 2021
Calculates STEM economic activity for each of the nation’s 384 metropolitan areas. STEM shares are positively related to metro area size; among metro areas with employment of at least 1 million, STEM intensity in 2019 was greatest in the San Jose, Seattle, San Francisco, Washington D.C., Austin, Detroit, and Boston metro areas.
February 2021
Examines STEM economic activity in Arizona and its metropolitan areas, with comparisons to the United States. Arizona’s STEM share of the economy has declined relative to the nation since 1990, falling from above average to average.
August 2011
Defines and discusses the importance and characteristics of the global knowledge economy, with measurements of the size of the knowledge economy nationally and in Arizona presented. Knowledge is now recognized as the driver of productivity gains and economic growth, leading to a new focus on the role of information, technology, and learning in economic performance.
March 2006
Reviews research and development efforts in the United States, including the role played by universities. Private industry performs over 90 percent of development and about 70 percent of applied research. Basic research, on the other hand, is performed primarily in universities.

Related Articles and Reports

More than an Ivory Tower: The Impact of Research Institutions on the Quantity and Quality of Entrepreneurship, National Bureau of Economic Research, May 2021

U.S. University R&D Funding Falls Further Behind OECD Peers, The Information Technology and Innovation Foundation, April 2021

Five Free-Market Myths About Increasing Federal Research Funding, The Information Technology and Innovation Foundation, January 2021

United States Needs to Expand Domestic STEM Doctorates, The Information Technology and Innovation Foundation, December 2020

State Technology and Science Index 2020, Milken Institute, November 2020

Understanding the U.S. National Innovation System, Information Technology & Innovation Foundation, November 2020

The 2020 State New Economy Index, The Information Technology and Innovation Foundation, October 2020

Tapping Into Talent: Coupling Education and Innovation Policies for Economic Growth, National Bureau of Economic Research, September 2020

U.S. Funding for University Research Continues to Slide, The Information Technology and Innovation Foundation, December 2019

Federal Support for R&D Continues Its Ignominious Slide, The Information Technology and Innovation Foundation, August 2019

National Innovation Policies: What Countries Do Best and How They Can Improve, The Information Technology and Innovation Foundation, June 2019

Building a Knowledge Economy — How Academic R&D Supports High-Tech Employment, Milken Institute, August 2018

Why U.S. Business R&D Is Not as Strong as It Appears, The Information and Technology Foundation, June 2018

Growing the Future: State Efforts to Advance the Life Sciences, The Information Technology and Innovation Foundation, February 2018

Industry Funding of University Research: Which States Lead?, The Information and Technology Foundation, January 2018

The Best States for Data Innovation, The Information Technology and Innovation Foundation, July 2017

The Knowledge Economy, Economicshelp.org, June 2017

False Alarmism: Technological Disruption and the U.S. Labor Market, 1850–2015, The Information Technology and Innovation Foundation, May 2017

Investing in “Innovation Infrastructure” to Restore U.S. Growth, The Information Technology and Innovation Foundation, January 2017

Debunking the Myth of a STEM Surplus, The Information Technology and Innovation Foundation, July 2014

Understanding the U.S. National Innovation System, The Information Technology and Innovation Foundation, June 2014

University Research Funding: Still Lagging and Showing No Signs of Improvement, The Information Technology and Innovation Foundation, June 2014

Driving Innovation and Productivity, The Information and Technology Foundation, April 2014

Federally Supported Innovation, The Information and Technology Foundation, February 2014

Arizona’s Technology Workforce: Issues, Opportunities and Competitive Pressures, Arizona State University, L. William Seidman Research Institute, September 2011

Charting a Course for Arizona’s Technology-Based Development, Milken Institute, December 2009

High-Technology Activities in Arizona: 2007 Update, Arizona State University, Center for Competitiveness and Prosperity Research, prepared for the Arizona Department of Commerce, January 2008

A Strategic Assessment of the Economic Benefits of Investments in Research in Arizona, Arizona State University, L. William Seidman Research Institute and University of Arizona, Economic and Business Research Center, prepared for Science Foundation Arizona, June 2007

Rising Above The Gathering Storm: Energizing and Employing America for a Brighter Economic FutureNational Academy of Sciences, National Academy of Engineering, and Institute of Medicine, 2006

The Role of Universities in Knowledge Economies, Arizona State University, February 15, 2005