The closing decade of the 20th century saw widespread claims of economic and social transformation: centred on the new information technologies, but going way beyond technology in its ramifications. To make sense of this transformation, to evaluate its positive and negative consequences and if possible to steer its development became a central priority of public policy makers. It is with some of these efforts that this book is concerned, with particular reference to the European Union.

Claims that the industrial economy was being overtaken by new economic and social forms were of course nothing new. Nor were the hopes placed...

The European Union has long been preoccupied with the fear of falling ever further behind the economies of the United States and east Asia. During the 1980s the main barrier to European economic development was seen as being the fragmentation of different national markets: the response was the drive to create a Single Market, a project which was in principle at least to be completed by 1992 (Cecchini, 1988). With a single home market, European enterprises would, it was hoped, be able to operate on a scale to match their American and Japanese rivals. During the 1990s economic and monetary...

The US economy enjoyed sustained growth through the 1990s and this, although interrupted during 2001/2 thereafter made some recovery. This was the more remarkable, when set against the performance of Japan and the Eurozone, both becalmed. This was also the period when it seemed that a new economy might be developing, based around the new information technologies. Here also the US was the leader, Japan and the EU the laggards. The implication seemed clear: the new information technologies were driving economic growth, and at an accelerated tempo.

To disentangle the various elements involved in this process, and to measure their...

The Lisbon Summit recognised that in order to develop a knowledgebased economy, the member states of the EU would need to accelerate the pace of innovation. This would require structural reform but it could also be promoted by pooling best practice and by transferring technological and organisational know-how from the leading international performers. Benchmarking for purposes of policy learning and innovation is therefore at the heart of the Lisbon agenda.

However, innovation performance has been markedly uneven across the EU member states, and even more so at regional level (which will be shaped in part by the national innovation system...

Our aim is to understand the new knowledge-based economy. However, it is also to identify the major challenges that this economy presents for policy makers and to suggest tools which they might use for monitoring change and for steering social and economic transformation.

Policy makers have hailed the new economy as an engine of dynamism and innovation, productivity growth and competitiveness. Thus, for example, the policy statements developed within the Lisbon process, leading to eEurope 2005, characterise Europe as suffering from a competitiveness gap with the United States and Japan. This is said to arise from an inadequate productivity record,...

Human investment is central to the new knowledge-based economy. In Chapter 4, for example, we saw that human capital occupies a key role within recent neo-Schumpeterian growth theory; and that sociological models of organisational learning give a central place to ‘communities of practice’ which apply skills of practical creativity. Chapter 5, concerned with organisational change, identified the skills of those working at different levels within an organisation as the necessary complement to ICT investment, business strategy and managerial leadership, in securing the dynamics of innovation.

The new economy generates new requirements for human capital and skills, so that the workforce...

Successive waves of technological innovation generate hopes of a ‘social dividend’ and an improved quality of life. The telegraph was welcomed in the 19th century because “technology supports a kinship of humanity” (Scientific American 1881, quoted in Fischer, 1992); some decades later the radio was welcomed, as “making us feel together, think together, live together” (Marvin, 1989). Similar hopes have been raised by the spread of ICT: personal computers, the internet and mobile phones could promote social inclusion, increasing educational and labour market opportunities and enriching social networks.

The “social dividend of technology” has been on the European policy agenda...

In this study we have been concerned with the processes of dynamic change and innovation that seem to characterise the new knowledgebased economy. Chapter 4 developed a conceptual model of the innovation process: the subsequent three chapters applied this model to enterprises, education and training, social cohesion and inclusion.

The conceptual model broke down the innovation process into four stages. We used a taxonomy ofreadiness, intensity, impactandoutcomeindicators, corresponding to these four stages, with different categories of indicators being assigned to different stages of the innovation process. This taxonomy was by no means original. However, like other...

In Chapter 2 we examined the Lisbon strategy for turning the European Union into “the most competitive and dynamic knowledge-based economy in the world, capable of sustaining economic growth with more and better jobs and greater social cohesion”. At the centre of this strategy were procedures for policy benchmarking among the member states, intended to promote policy convergence and the exchange of best practice but without enlarging the areas of policy which were an EU competence.

We also recognised, however, that within this Lisbon strategy there was a basic ambiguity (see also Room, 2005). The process is in part the...

As we saw in Chapter 1, when setting the context for this study, the development of the new knowledge-based economy is intimately bound up with the process of globalisation (see, for example, Soete, 1999; Togati, 2002). The ICT revolution enables enormously greater speed and accuracy of communication, transcending national boundaries and permitting greatly increased transparency of markets worldwide. These global markets then foster more intense competition, driving technological and organisational innovation and reshaping the global division of labour and welfare. They pose new challenges for the regulation of commerce and the protection of intellectual property rights.

Any attempt to conceptualise...