Knowledge Economy

What is 'Knowledge Economy'

Knowledge economy is a system of consumption and production that is based on intellectual capital. The knowledge economy commonly makes up a large share of all economic activity in developed countries. In a knowledge economy, a significant part of a company's value may consist of intangible assets, such as the value of its workers' knowledge (intellectual capital). However, generally accepted accounting principles do not allow companies to include these assets on balance sheets.

BREAKING DOWN 'Knowledge Economy'

Lesser-developed countries tend to have agriculture or agriculture and manufacturing-based economies, while developing countries tend to have manufacturing or manufacturing and service-based economies, and developed countries tend to have service-based economies.





Most countries' economies will consist of each of these three major categories of economic activity, but in differing proportions relative to the wealth of that country. Examples of knowledge economy activities include research, technical support and consulting.

RELATED TERMS
  1. Intellectual Capital

    The value of a company or organization's employee knowledge, ...
  2. Intellectual Property

    A broad categorical description for the set of intangibles owned ...
  3. Knowledge Capital

    An intangible asset that comprises the information and skills ...
  4. Developed Economy

    While there is no one, set definition of a developed economy ...
  5. Knowledge Process Outsourcing - ...

    A form of outsourcing in which knowledge- and information-related ...
  6. Weightless Economy

    A portion of the economy which exchanges intangible services ...
Related Articles
  1. Markets

    These Will Be the World's Top Economies in 2020

    Discover the current economic forces that are anticipated to significantly shift the landscape of the world's most powerful economies over the next decade.
  2. Markets

    How Education And Training Affect The Economy

    Economically successful countries hold competitive advantages over other economies in the global marketplace. Education and training are big reasons why.
  3. Markets

    Which Countries Will Drive Global Growth in 2016?

    Given the volatility that has already shaken the global economy, the world's largest economies will be leaned on to stimulate growth in 2016
  4. Markets

    What's the Economy?

    The economy is the production and consumption activities that determine how scarce resources are allocated in an area.
  5. Markets

    What is Globalization?

    As a business term, globalization refers to the tendency of international trade, investments, information technology and outsourced manufacturing to weave the economies of diverse countries together.
  6. Markets

    Evaluating Country Risk For International Investing

    Investing overseas begins with determining the risk of the country's investment climate.
  7. Investing

    What is a Developed Economy?

    A developed economy is typically one with a high level of growth and security.
  8. ETFs & Mutual Funds

    The Knowledge-Experience Continuum: Where Do You Fall?

    Theory and practice are worlds apart, but problems arise when people treat them as one and the same.
  9. Markets

    Exploring The Current Account In The Balance Of Payments

    Learn how a country's current account balance reflects the country's economic health.
  10. Markets

    How to Inspect a Country's Debt

    Being developed doesn’t necessarily make an economy better, as far as debt is concerned.
RELATED FAQS
  1. Is intellectual property considered a form of capital asset within a company?

    Discover what certain types of intellectual property are considered to be a form of capital asset recorded on the financial ... Read Answer >>
  2. What is the relationship between human capital and economic growth?

    Learn what human capital and economic growth are and how human capital is related to economic growth, and see examples of ... Read Answer >>
  3. What are some advantages of a market economy over other types of economies?

    Learn what a market economy is, the main assumption behind a market economy and some important advantages a market economy ... Read Answer >>
  4. Is France a developed country?

    Discover what qualifies France as a developed country and how its diverse economy has helped it become one of the largest ... Read Answer >>
  5. What does it mean when a country has little activity in its capital account?

    Know what a country's capital account represents and understand what the implications are if a country has little activity ... Read Answer >>
  6. How does globalization impact comparative advantage?

    Learn how comparative advantage is becoming increasingly relevant due to globalization and how this has affected both advanced ... Read Answer >>
Hot Definitions
  1. Put Option

    An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security ...
  2. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  3. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  4. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  5. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  6. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
Trading Center