Knowledge Economy

A knowledge economy is either economy of knowledge focused on the economy of the producing and management of knowledge, or a knowledge-based economy. In the second meaning, more frequently used, it is a phrase that refers to the use of knowledge to produce economic benefits. The phrase was popularised if not invented by Peter Drucker as the heading to chapter 12 in his book The Age of Discontinuity [1].

Various observers describe today's global economy as one in transition to a "knowledge economy", or an "information society". But the rules and practices that determined success in the industrial economy of the 20th century need rewriting in an interconnected world where resources such as know-how are more critical than other economic resources. These rules need to be rewritten at the levels of firms and industries in terms of knowledge management and at the level of public policy as knowledge policy or knowledge-related policy.

An aspect of knowledge that has been largely forgotten in knowledge economy thinking is wisdom. Wisdom invokes questions of judgement, ethics, experience and intuition, all of which are necessary for the best application of knowledge.

Here, there may be a need to differentiate with the Web Economy of Google, Skype and Ebay that seems to have created wealth based more on services dependent on mass interconnectivity rather than on knowledge-based skills.