According to its proponents, the `new economy' is associated with sustainable growth, increased demand for labor and zero inflation. On the micro-level, this bright avenue into the future is propelled by knowledge capital, flexibility and new ways of organizing production, such as clusters and networks. Progress in information technology, together with massive deregulation on the national and the international levels, have been credited with setting this development into motion. The concept of the `new economy' has been rapidly embraced by politicians, as it seems to offer a way out of the traditional trade-off between unemployment and wage inflation. However, empirical evidence regarding the microeconomic mechanisms of the `new economy' is scarce. Knowledge Capital and the `New Economy': Firm Size, Performance and Network Production intends to narrow this gap by empirically analyzing the composition of knowledge capital and how knowledge capital is distributed across firms of different size. Moreover, the impact of knowledge capital on firms' profitability and international competitiveness is also examined. Finally, we compare cluster dynamics and the institutional set-up in Europe and the U.S., with the purpose of identifying regulations that seem to hinder a conducive environment for expanding and dynamic European clusters. The results of this study emphasize the role of knowledge capital and flexibility. Thus, irrespective of how sustainable the `new economy' turns out to be, the policy implications in terms of providing institutions that facilitate knowledge-enhancing economic activities, flexible markets and transparent incentive structures are undeniable. Countries that fail in this respect may find themselves trailing in the international growth and welfare rankings.
This is an open access book. Europe faces significant challenges in the coming decades: geopolitical, demographic, technological, increased competition, climate-related, and health issues due to an aging population, to mention a few. Given these challenges, technological progress and new ways of handling complex issues will be key to continued prosperity and growth. To accomplish a growth process driven by innovation and entrepreneurship, the institutional environment must take into account a multitude of different policy areas that interact to either strengthen or weaken an economy's innovative potential. Innovation is not only about R&D and higher education but is also intimately related to entrepreneurship. Similarly, entrepreneurship is not only about low start-up costs and favorable tax rates. Hence, a consistent and coordinated policy environment conducive to innovation and entrepreneurship is required to translate innovation into high-growth firms and macro-level growth. This book presents the basic cornerstones required to provide a policy regime that can nurture such dynamics. The authors draw extensively on empirical analysis of the development of the Swedish economy, which has been transformed from a so-called "sclerosis" state in the 1980s until the early 1990s to an economy characterized by successful entrepreneurship and innovation. This transformation resulted from a reform agenda that has been gradually rolled out, beginning in the mid-1980s. The authors argue that the Swedish experience provides useful lessons for other nations as well.
This monograph is about the forces that underpin the creation of knowledge, its diffusion and commercialization, and the role of the entrepreneur in these dynamic processes. The main objective is to identify the microeconomic foundation of growth, the extent to which contemporary models fail in that respect, and suggest improvements.
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