Framework for Analysis of Knowledge Economy

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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

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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: