A New Measurable Definition of Knowledge in New Growth Theory

New Growth Theory helps us make sense of the ongoing shift from a resource-based economy to a knowledge-based economy. It underscores the point that the economic processes which create and diffuse new knowledge are critical to shaping the growth of nations, communities and individual firms. In all too many contributions to New (Endogenous) Growth Theory – though not in all – central reference is made to 'a stock of knowledge', a 'stock of ideas', etc., this variable featuring centre-stage in the analysis. Yet it is immediately apparent that this is far from being a crystal clear concept. The difficulty and uncertainty of being able to capture the value associated with knowledge is a real problem. The intent of this paper is introducing new thinking and theorizing about the knowledge and its measurability in new growth theory. Moreover the study aims to synthesize various strain of the literature with a practical bearing on knowledge concept. By contribution of institution framework which is found within NGT, we can indirectly measure the knowledge concept. Institutions matter because they shape the environment for production and employment of new knowledge

Authors:

• Mohammad Ali Molaei

Keywords:

• Institution Framework
• Knowledge
• New GrowthTheory (NGT)

References:

[1] Romer, P.M., Implementing a National Technology Strategy with Self-
Organizing Industry Investment Boards, in Brookings Papers on
Economic Activity: Microeconomics. 1993.
[2] Steedman, I., On ÔÇÿMeasuring- Knowledge in New (Endogenous) Growth
Theory, in Growth Theory Conference. 2001: Pisa, Italy.
[3] Cortright, J., New Growth Theory,Technology and Learning, in Reviews
of Economic Development. 2001, U.S. Economic Development
Administration: Portland.
[4] Nelson, R.R. and P.M. Romer, Science, Economic Growth and Public
Policy. Challenge, 1996. March-April, 1996: p. 9-21.
[5] Jarboe, K.P. and R.D. Atkinson, The Case for Technology in the
Knowledge Economy: R&D, Economic Growth, and the Role of
Government. 1998, Progressive Policy Institute: Washington, DC.
[6] Romer, P.M., Endogenous technical change. Journal of Political
Economy, 1990. 98: p. 71-102.
[7] Polanyi, M., The Tacit Dimension. 1967, New York: Doubleday.
[8] Dosi, G., The Contribution of Economic Theory to the Understanding of
a Knowledgebased Economy. Employment and Growth in a Knowledge-
Based Economy. 1996, Paris: Organization for Economic Cooperation
Development.
[9] Nonaka, I. and H. Takeuchi, The Knowledge Creating Company: How
Japanese Create the Dynamics of Innovation. 1995, New York: Oxford
University Press.
[10] Pavitt, K., Internationalisation of technological innovation. Science and
Public Policy, 1992. 19(2): p. 119-123.
[11] Nelson, R.R. and S.G. Winter, An Evolutionary Theory of Economic
Change. 1982, Cambridge: Belknap Press of Harvard University Press.
[12] Arthur, B., Increasing Returns and the Two Worlds of Business. Harvard
Business Review, 1996. July-August, 1996.
[13] Romer, P.M., Beyond Classical and Keynesian Macroeconomic Policy.
Policy Options, 1994. 15(July-August, 1994): p. 15-21.
[14] Olson, M., Big Bills Left on the Sidewalk: Why Some Nations are Rich,
and Others Poor. Journal of Economic Perspectives, 1996. 10(2): p. 3-
24.
[15] North, D.C., Institutions, Institutional Change and Economic
Performance. 1990, Cambridge: Cambridge University Press.
[16] Thurow, L., Building Wealth: The New Rules for Individuals,
Companies, and Nations in the Knowledge-Based Economy. 1999, New
York: Harper Collins.