What is KNOWLEDGE ECONOMY?

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What does KNOWLEDGE ECONOMY mean? KNOWLEDGE ECONOMY meaning - KNOWLEDGE ECONOMY definition - KNOWLEDGE ECONOMY explanation. What is the meaning of KNOWLEDGE ECONOMY? What is the definition of KNOWLEDGE ECONOMY? What does KNOWLEDGE ECONOMY stand for? What is KNOWLEDGE ECONOMY meaning? What is KNOWLEDGE ECONOMY definition?.

The knowledge economy is the use of knowledge (savoir, savoir-faire, savoir-etre) to generate tangible and intangible values. Technology and in particular knowledge technology help to transform a part of human knowledge to machines. This knowledge can be used by decision support systems in various fields and generate economic values. Knowledge economy is also possible without technology.

The term was popularized by Peter Drucker as the title of Chapter 12 in his book The Age of Discontinuity (1969), that Drucker attributed to economist Fritz Machlup, originating in the idea of "scientific management" developed by Frederick Winslow Taylor.

Other than the agricultural-intensive economies and labor-intensive economies, the global economy is in transition to a "knowledge economy", as an extension of an "information society" in the Information Age led by innovation. The transition requires that the rules and practices that determined success in the industrial economy need rewriting in an interconnected, globalized economy where knowledge resources such as trade secrets and expertise are as critical as other economic resources.

A key concept of the knowledge economy is that knowledge and education (often referred to as "human capital") can be treated as one of the following two:

1. A business product, as educational and innovative intellectual products and services can be exported for a high value return.
2. A productive asset
It can be defined as:

roduction and services based on knowledge-intensive activities that contribute to an accelerated pace of technical and scientific advance, as well as rapid obsolescence. The key component of a knowledge economy is a greater reliance on intellectual capabilities than on physical inputs or natural resources.
The initial foundation for the knowledge economy was introduced in 1966 in the book The Effective Executive by Peter Drucker. In this book, Drucker described the difference between the manual worker (page 2) and the knowledge worker. The manual worker, according to him, works with his or her hands and produces goods or services. In contrast, a knowledge worker (page 3) works with his or her head, not hands, and produces ideas, knowledge, and information.

The key problem in the formalization and modeling of knowledge economy is a vague definition of knowledge, which is a rather relative concept. For example, it is not proper to consider information society as interchangeable with knowledge society. Information is usually not equivalent to knowledge. Their use, as well, depends on individual and group preferences (see the cognitive IPK model) which are "economy-dependent".