From the 19th to the 21st Century: Indicators for the Knowledge Economy

The term the 'knowledge economy' is becoming an inevitable part of modern life - frequently turning up in the popular media, in policy documents, and in academic journals. It is also frequently combined with globalization, with the knowledge economy both driving the process of globalization and offered as a solution to the problems that globalization creates. We have all heard that Europe must develop into a knowledge economy in order to compete not only with the United States, but in the future with China and India. The proposed solution usually involves both working for longer hours and an acceptance of greater income inequality in order to provide an incentive for our best scientists, entrepreneurs and engineers to remain in Europe, rather than migrating en masse to California. The idea of a knowledge economy has also, unfortunately, become intricately connected with another concept - that of R&D. The 'knowledge economy' conjures up images of an elite group of scientists and PhD holders, or computer whiz kids who spend their lives hunched over their keyboards. But what is this 'knowledge economy'? Is there anything unique about it that would require a shift in European policy to promote new types of knowledge? And, would this require the development of new indicators?