This chapter outlines the origins of the knowledge economy concept, as well as its core characteristics. Drawing on recent academic scholarship, it distinguishes knowledge-driven growth strategies from the market-driven approaches to growth with which these strategies are often conflated. It explores how transitions between different “growth regimes” occur, through a combination of intellectual developments, socioeconomic change and political leadership. Finally, it applies this framework to the rise of the knowledge economy, demonstrating how new ideas – such as the “endogenous growth theory” referred to in the poem above – provided politicians in developed democracies with tools both to critique market-driven approaches to growth and to map out an electorally-appealing alternative.

Origins

The concept of the “knowledge economy” can be traced back as far as the 1960s and early 1970s, when the term was first used to contrast “manual workers” (who engage in physical labour to produce conventional goods and services) with “knowledge workers” (who engage in intellectual labour and produce ideas and information). According to these early commentators, technologically advanced economies were experiencing a shift from manual work to knowledge work, which would drive future growth and prosperity for individuals, firms and countries alike. The “knowledge economy” was conceived as the end point of this upheaval, a state of affairs in which knowledge work would become the dominant productive force in society.

The concept was not widely adopted during the 1970s and 1980s (see Figure 1.1). Relative to the broader shift from manufacturing to services in developed democracies over those two decades, the trends associated with the knowledge economy were small in size and significance.