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The Hong Kong economy has been influenced by globalization, regionalization, and the emergence of the knowledge‐based economy perhaps more than any other. Hong Kong is unique in terms of its geographical location, its position in global production and service networks, its openness to market forces, and its history. As a result, it has been able to take advantage of globalization to develop a regional economy that is among the world's most knowledge intensive. This development has created one of the world's most prosperous economies, but it also has left Hong Kong vulnerable to external shocks such as the economic crisis that began to grip Asia in the middle of 1997. This chapter examines these issues.

This chapter explains how and why public policy has turned to entrepreneurship as a mechanism for generating economic growth and employment. It reviews the public policy approach consistent with the capital-driven, or Solow economy. It then turns toward the knowledge-based, or Romer economy. It defines entrepreneurship policy and distinguishes it from SME policy. The mandate for entrepreneurship policy and the sources of market failure for entrepreneurship are identified, which provide an economic rationale for public policy intervention. The reasons why entrepreneurship policy is diffusing across many different national and regional contexts are explained. It is argued that entrepreneurship policy is a purposeful attempt to create an entrepreneurial economy.

This chapter discusses features of the evolving knowledge‐based economy as perceived from a European policy maker's perspective, and confronts these features with two different economic research traditions: mainstream economic theory (including neoclassical and new growth theories) and evolutionary economics (in particular, the ‘national innovation system’ approach). The discussion shows that mainstream economic theory is more concerned with issues of allocation and market clearing than with the complexity of innovation processes and business dynamics. As a consequence, the resulting ‘market failure’ approach to business and innovation policy has led to policies that seem to be misguided in the light of features that characterize the knowledge‐based economy. Evolutionary theory is more successful in capturing the characteristics of the innovation process, and of the factors leading to failures and successes in the current complex competitive environment, although the policy recommendations remain somewhat too abstract and general to provide policy makers with a clear sense of direction. The authors see the solution in the expansion into new areas of research and in new cooperative patterns of interaction between social scientists and policy makers; the Danish LOK (Management, Organization, and Competencies) initiative is presented as an example of such a new type of interaction.

Innovation systems and local global networks of high‐technology industry in Korea are examined with regard to the evolution of the knowledge‐based economy. Major data for the study are derived from a recent questionnaire survey of SMEs (small‐ and medium‐sized enterprises) conducted for the IMF in 1997, and from an interview survey conducted in 1995 for the high‐technology industries in Korea. Changes are outlined in Korean industry since the rapid industrialization period of the 1970s, when chaebols (conglomerate business groups) rather than SMEs emerged as the leading actors in industrial development; the chaebol system was broken up following the foreign exchange crisis of November 1997. The main sections of the chapter cover regional variation of innovation performance, local innovation networks of SMEs, and local and global networks of high‐technology clusters in Kyonggi and Kumi.

Many countries distant from the mainstream of knowledge‐based wealth creation have a number of related concerns: whether it can be ensured that, as nations, they will participate fully in emerging global growth processes; what policies, in respect of both multinational enterprises (MNEs) and local firms, will best secure this participation; and whether this participation, if it is achieved, will generate growing divergence on a regional basis within the nation. The objective of this chapter is to explore the reality of these phenomena, and the diversity of policy responses to them, for the case of one small, open economy far removed from the main sources of knowledge generation—Australia. After briefly reviewing some recent relevant developments in economic theory, the analysis focuses particularly on the roles of foreign direct investment (FDI) and of both local firms and MNEs within Australia, and on some of the regional aspects of this involvement.

Offers an analytical framework for evaluating the implications of recent economic events on the spatial distribution of economic activities, and of the role played by multinational enterprises (MNEs) and cross‐border coalitions of firms on the international and intranational division of labour. In particular, it is concerned with the parallel, yet apparently antithetical, forces towards the geographical dispersion of asset‐augmenting and asset‐exploiting activities, and the concentration of such activities in limited spatial areas—what has been referred to as the paradox of ‘sticky places within slippery space’.

This chapter looks into how the rise of knowledge capital affects globalized competition, the changes in employment arrangements, the restructuring of firms and its ownership, and the falling demand for commodities and low knowledge-intensive products. Despite the upsurge of information in the media, society is still left eager for knowledge because of the lack of understanding of the notion of a knowledge-based economy and its implications on globalization, corporate restructuring, employment, and the like. Despite the efforts of government and corporate strategies to facilitate the understanding of this knowledge-based economy, this is hard to achieve without establishing the economic value of knowledge. This chapter presents the changes that have resulted from the shifting demands of firms for different skills and resources and explains the attempts that the government has made for these transitions.

The issues involving the links between the geography of economic activity and the emergence of the knowledge‐based economy addressed in the first chapter are examined in more detail in seven main sections. These address the following: the loss of the former comparative advantage of mature, technically moderate industries in Europe and North America; the breakdown at the level of the firm of the knowledge production function (this shows that the empirical link between knowledge inputs and innovative outputs becomes stronger as the unit of production becomes increasingly aggregated); knowledge spillovers to small firms from larger firms or universities; the importance of location and geographic space in knowledge spillovers; and the use of foreign direct investment as a strategy to access localized knowledge spillovers for transfer back to the home country.

The first part of this chapter argues that the geographical origin, destinations, and mastery of economically useful knowledge have more profound impacts on the changing shape of development than do the issues of location and specialization used in the usual economic analysis. The rest of the chapter discusses standard approaches to the question of globalization and territory, the four levels of globalization, the internationalization of productivity, and price norms in routine contestable production.

After an introduction, this chapter has five main sections. Sections (2) and (3) provide a brief review of the existing literature on the knowledge‐based economy, and on the forces for globalization and localization, with the purpose of explaining why the nature of the competitive challenge facing multinational enterprises (MNEs) is changing. Section (4) introduces the concept of global practices as a key driver of firm competitiveness in a knowledge economy. Sections (5) and (6) consider the implications of global practices, first in terms of the evolution of the MNE, and then in terms of the theory of the MNE.

Although it is a given that all of the services in the world's largest knowledge-based economy (KBE) need managers and leaders, there is still a need for janitors, fast food service crews, and other such workers. This chapter reviews the evidence for the claims of policy-makers on the shift to a KBE. The evidence presented by the policy-makers, particularly in the United States and in the UK, is examined through the interpretation of available occupational data by these policy-makers and through the author's own interpretation. The notion of scaling down the size of the proportion of knowledge workers is also evaluated, as are the implications for a dramatic increase in graduates brought about by the demand of KBE for high-skilled and high value-added labour.

Offers a theory of regional policy—or more accurately, a theory of policy, at various levels of governance, to deal with the allocation of resources and capabilities between and within subnational spatial areas, which, themselves, may vary considerably in size and function. The necessary building blocks for the theory of regional policy are outlined, and a model of subnational regional policy is presented, operationalized, and extended. Regional policy in a system of knowledge capitalism is discussed, and the dynamic aspects of competition among microregions are addressed.

The impact of the completion of the European Internal Market Programme (IMP) on the geographical distribution of economic activity within the European Community (now Union) is considered. More particularly, the empirical validity of a number of hypotheses, drawn from foreign direct investment (FDI) theory, on the likely effect of the removal of tariff barriers on intra‐EC and extra‐EC trade and FDI flows and the relationship between the two are considered. The evidence strongly suggests that the twin forces of regionalization and localization have been accelerated by recent European integration, and that the balance between the two is strongly determined by the knowledge intensity and mobility of the economic activities involved.

No other period in history has brought so many fundamental technical advances in such a short period of time. This Age of Synergy (1867-1914) saw a rapid introduction of science-based innovations, their prompt commercialization and improvement and their interaction to create a new knowledge-based economy and a high-energy civilization. This unprecedented technical progress laid the lasting foundations for modern societies: it created not only the basic material, economic, consumption, and social patterns of the 20th century but it will determine our fortunes for generations to come.

The shift from an industrial economy to a knowledge-based economy gives rise to the value of intelligence and talent as employers focus on diversifying their talent pools. Governments around the world find ways to enhance the employability of their workforces by expanding access to higher education, disregarding social barriers, utilizing human creativity and enterprise, and other such measures. The challenge is not the limited supply of managerial and professional jobs, but the assurance that the workforce has access to high-waged jobs that require high skills. The socially disadvantaged are now preparing for opportunities for high skilled employment, but without a guarantee. In analysing this ‘promise’, the study makes use of interviews with six organizations from both the public and private sectors to obtain information regarding their competitive strategies, human resources, and recruitment processes. Also, sixty graduates are interviewed and their recruitment into these organizations is observed.

Today, it is important for organizations to get the right people with the right knowledge into the jobs that suit them best to attain success. The rise of new technologies led to a major revision in the way division of labour was understood. With the post-industrial society, meritocracy is observed as differential status and differential income is now based on higher education and on technical skills. The competitive advantage of companies in the knowledge-based economy (KBE) no longer depend on mass-produced and standardized goods and services but on technological innovation, applied knowledge, and the knowledge capital of a highly skilled workforce. The consensus view promotes democratization and ‘diversity’, thus, a more ‘scientific’ approach is used in recruitment to match individual capabilities with the requirements of managerial and leadership roles in an organization.

This chapter examines discourse in the process of social change in Eastern and Central Europe. It discusses the application of a transdisciplinary framework and critical discourse analysis in evaluating societal transition in this region, focusing on the case of the recontextualization of the European Union's strategy to develop a knowledge-based economy and information society in Romania. It also analyzes the Romanian government policy text.

This chapter discusses the role of the new information technologies as a general purpose technology pervading all areas of production, distribution, consumption, and governance. It notes that the debate about the knowledge-based economy is therefore, perhaps inevitably, a debate also about the process of globalisation. It explains that the OECD has produced a number of reports which aim to bring together the most up-to-date policy research and promote debate on the alternative paths of socio-economic development that countries are pursuing.