1 OECD/NSF Conference on Advancing Knowledge and the Knowledge Economy National Academies, Washington DC January 2005 OECD Work on Knowledge and the Knowledge Economy by Berglind Ásgeirsdóttir, OECD Deputy Secretary-General

2 Recent OECD Projects on Knowledge and the Knowledge Economy  The Growth Project aiming at identifying the factors determining growth  The economic impacts of ICT investments  The role of job-related training  Knowledge management  Measurement and indicator development  Human and social capital investments and returns

3 First Conclusion: “Good “economic fundamentals”are important for stimulating the knowledge economy Good “economic fundamentals” such as Stable macro-economic labour policies that allows long-term planning; Well functioning labour, product and capital markets; Efficient training policies that help ensure that the low-educated are equipped with the right skills, thus avoiding “knowledge divide”; Competition policies, which drives down the costs of technologies; Liberalisation of telecommunication policies; Openness of trade and foreign direct investments to let in “new ideas”. are important for stimulating the knowledge economy

4 Economic Fundamentals Innovation New Technologies Human Capital Enterprise Dynamics Knowledge Economy GlobalisationR&DInternet Highly- skilled MNEs Second Conclusion: The development of the knowledge economy is dependent on four main “pillars”: innovation, new technologies, human capital and enterprise dynamics

5 First pillar: Innovation: R&D growth driven by industry structure Percentage point increase in business R&D intensity as a share of GDP by industry sector, Source: OECD ANBERD Database

6 Second pillar: new technologies: ICT capital to GDP growth (in percentage points) The US and small EU countries have had a large impact of ICT investment, France, Germany and Italy a small one (contribution to GDP growth, in percentage points) Source: OECD Productivity Database, May 2004.

7 Third Pillar: Human Capital: Population that has attained at least upper secondary education (2002)

8 Third conclusion: Globalisation is a pervasive factor that affects all four pillars of the knowledge economy R&D share of foreign affiliates/total Business and R&D Source: OECD, STI Outlook, 2004 based on Carrodo et al, 2003.

9 Fourth Conclusion: New social, organisational innovations, and knowledge management practices as well as social capital have to be developed to deepen the benefits of the knowledge economy The “softer” social and organisational changes are in many cases very important for the development of the knowledge economy The adoption of new work practices and the presence of labour- management institutions tend to facilitate the take-up of new technology Knowledge management practices seem to have effect on innovation Social capital in the form of networking and trust can help realise innovative environments Increasingly countries will have to think about how education promotes effective participation in communities of knowledge; and this will include social and moral competences as well as technical ones.