Knowledge economy is an economy where growth is dependent on the quality, quantity, and accessibility of information available instead of actual production. It focuses on the production of knowledge in economic straints.With knowledge economy, knowledge is the main driver of growth and wealth, as well as creation of employment. For example, this economy is one that focus shifts from being based on manufacturing services to actual mental skills of information and knowledge people retain. There is no way to actually see the value of this economy because it is knowledge and not physical production.
On the other hand, a physical economy is one that deals with things that are actually touchable and can be physically seen. Physical economy deals with goods, services, and resources that you can see exist in a tangible location. People have to actually work with their hands to see production and the value in a physical economy is seen mush easier.When you sell a product, it changes hands from the seller to the buyer. Although, in a knowledge economy, you may buy some software from Microsoft and now you own the rights to the software, the company Microsoft still primarily owns the software.
Examples of knowledge economy can be people having acquired certain skill sets over time that they are able to apply to products or services.This can include things like the research behind the products being made, technical support, and consultation. Examples of a physical economy are machines used by people created with knowledge economy, or computers used and the software which was created by knowledge economy. With a physical economy, machines and computers will eventually break down or need to be replaced, but with knowledge economy you will always have the knowledge and skill sets needed and the only thing that can happen is the knowledge can become outdated.
There is a rise in the knowledge economy that is becoming more intense and it is being driven by the new and ever so increasing pace of the information technology revolution, and the increasing pace of technological change we see everyday. The increasing knowledge intensity that we are seeing involves both the individual goods and services produced, as well as the growing importance of those good and services in our economy today. To some companies, a knowledge based economy is the secret to their success and many wish to keep it secret because they will have an advantage other companies and by sharing the information, they would lose this competitive edge. A knowledge economy is becoming more important because in some aspects it is different then the physical industrial economy we have known for over 200 years now.We are able to have a more competitive economy full of products, and constantly see evolving products becoming better and better.
Most of the time, the knowledge economy and the physical economy cross over each other because it takes the knowledge to be able to create the software for these computers, knowledge to create these databases we use today, knowledge to design buildings and programs we use, but it takes the physcial economy to actually see these things being made and produced, and to have the hands on man power to create the goods. Although, it takes both the knowledge economy and the physical economy for things to be produced and made. Without the knowledge, you wont know how to use the machines or computers to create products, and without the physical economy, you wont be able to use the devices to create the products. For example, it is like building a house. You need the knowledge to create the blue prints and choose the right tools to use, and you need the physical ability to work with the tools to build the house. Without the proper knowledge of how to build the house, you will have no foundation to start building. Without the knowledge that has been possessed by people of our world today, there would be no way to create all the products and innovations that have been created.
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