what is the knowledge economy 
the knowledge economy is a system of consumption and production based on intellectual capital it refers to the ability to capitalize on scientific discoveries and applied research the knowledge economy represents a large share of the activity in most highly developed economies a significant component of value might consist of intangible assets in a knowledge economy such as the value of its workers knowledge or intellectual property understanding the knowledge economydeveloping economies tend to be heavily focused on agriculture and manufacturing highly developed countries have a larger share of service related activities this includes knowledge based economic activities such as research technical support and consulting the knowledge economy is the marketplace for the production and sale of scientific and engineering discoveries this knowledge can be commodified in the form of patents or other intellectual property protections the producers of this information such as scientific experts and research labs are also considered to be part of the knowledge economy the bayh dole act of 1980 was a major turning point in the treatment of intellectual property in the u s it allowed universities to retain title to inventions or discoveries made with federal r d funding and to negotiate exclusive licenses 1the world economy has become more knowledge based thanks to globalization bringing with it the best practices from each country s economy knowledge based factors also create an interconnected and global economy where human expertise and trade secrets are considered important economic resources generally accepted accounting principles gaap don t allow companies to include these assets on their balance sheets however the modern commercialization of academic research and basic science has its roots in governments seeking military advantage knowledge economy and human capitalthe knowledge economy addresses how education knowledge and human capital can serve as a productive asset or business product to be sold and exported to yield profits for individuals businesses and the economy this component of the economy relies heavily on intellectual capabilities rather than natural resources or physical contributions products and services that are based on intellectual expertise advance technical and scientific fields in the knowledge economy this encourages innovation in the economy as a whole the world bank defines knowledge economies according to four pillars example of a knowledge economyacademic institutions companies engaging in research and development r d programmers developing software and search engines for data and health workers using digital data to improve treatments are all components of a knowledge economy these economy brokers pass on the results of their research to workers in more traditional fields such as farmers who use software applications and digital solutions to manage their crops more effectively these fields also include advanced technological based medical procedures such as robot assistant surgeries and schools that provide digital study aids and online courses for their students 