REALITIES OF A KNOWLEDGE ECONOMY

Realities Of A Knowledge Economy



Realities Of A Knowledge Economy

Introduction

Knowledge -Based Economy (KBE) and Sustainable Development (SD) are evolving concepts that describe complex, dynamic social and environmental realities mostly by means of the imperfect analytical framework provided by neo-classical economics. Numerous theories and indicators have been developed in the attempt to show that KBE can promote SD through more innovation sustained by economic growth. This paper challenges the idea that SD can be promoted by technological innovation only, since sustainable development requires adequate knowledge both of facts and of purpose. It proposes recovery by science of “rational awareness”, a kind of non-empirical knowledge known since Plato's time but currently disregarded by science, as a means to justify the epistemic validity of objective value. It also proposes a specific focus on sustainable development as a principle of social continuity on earth.

Finally, KBE and SD are related by means of a wider pre-analytical vision (Schumpeter, 1934). The paper is organized as follows: a presentation of the two concepts and the theoretical approaches used so far, a discussion of rational awareness and of objective value, a discussion of sustainable development as a principle, and a view of the KBE as an open, complex, dynamic sub-system potentially able to secure sustainable development. The conclusion summarizes the findings and presents considerations for further research.

Knowledge-Based Economy

The term knowledge -based economy, coined by the OECD in the 1990's, defined a type of economy which was “directly based on the production, distribution and use of knowledge and information” (OECD, 1996). At that time, it was hoped that the convergence of knowledge/ information and computer technology will become “the main driver of growth, wealth creation and employment across all industries” (APEC, 2000). Previous theoretical work by P. Drucker referred to the “ knowledge society”, a society in which the basic economic resources were no longer capital, natural resources and labor, but knowledge. Therefore, organizations were challenged to build systematic practices for managing self-transformation (Drucker, 1993). Economic analysts believed that knowledge can do more than increase economic growth; it can lead to structural economic and social change by affecting the volume of unemployment, the technological policy, the regulatory framework of a country's economy, the way work and production were organized (Soete, 1996), even the way life was lived (Neef, 1998). However, in 2001, the uneven rate of growth in several OECD economies was attributed not to knowledge production and distribution but to “information and communication technologies (ICT) (particularly investment in ICT), as well as to an increased use of quality labor and to the multifactor productivity growth arising in part from increased business innovation” (OECD, 2001).

There are two main economic theories that attempt to clarify the role of knowledge and technology in making sustained economic growth possible: the new growth theories and evolutionary theories. They have been developed when some economists have “perceived the limits to growth that finite resources and undesirable side effects would pose if no new recipes or ideas were discovered” (Romer, ...