Framework for Analysis of Knowledge Economy

Knowledge is now embedded in every single part of the economy. It now represents more than 50% of global GDP and has become the major driving force of economic and social development.

To be successful in building a knowledge economy, countries should first measure where they stand in terms of revealed comparative advantage (RCA) and level of economic complexity. Several questions then need to be addressed:

  • What is the role of the State in supporting knowledge based industries and sectors?
  • What is the demand for knowledge and innovation based sectors?
  • What is the supply of human capital?
  • What is the current innovation environment and what are the drivers of innovation?

Unlocking the potential of under-performing regions: mapping regional RCA complexity to identify policy levers and areas of improvement

Regions with products with high complexity RCA

In order to make the knowledge economy happen, it is fundamental to take into account the following key success factors:

  • Public policy: adopt a comprehensive approach, taking into account the interdependencies between policies, and involving among areas trade, investment, tax, competition policy, and human capital development
  • Market demand: Understand relative market demand by sector, capability and territory
  • Human capital: Gauge the skill gaps between market demand and skill supply
  • Innovation eco-system: strike the right balance between demand (e.g. public procurement policy) and supply side measures (e.g. R&D tax credits)

For further information please see: