Knowledge economy programme ñ new report published

The Work Foundation today publishes a report outlining its research thus far into the knowledge economy, 18 months into a three-year, 1.5 million research programme which will conclude in April 2009.

The Knowledge Economy: How Knowledge is Reshaping the Economic Life of Nations argues that the phenomenon of the knowledge economy is driven by the demand for higher value-added goods and services created by more sophisticated, more discerning and better educated consumers and businesses. These pressures have interacted with both technology and globalisation, accelerating the process of change and enabling new and disruptive patterns of supplying consumers.

The report covers:

Work: knowledge-based industries and knowledge-related occupations have provided most of the new jobs over the past decade*

Trade: The UK has emerged as a world leader in trade in knowledge services with the biggest trade surplus of the major OECD economies. While the City of London and financial services remain important, two thirds of this trade comes from business services, high tech, and education and cultural services.

Innovation: innovation in the knowledge economy comes from both the successful exploitation of R&D undertaken in the UK and overseas and from wider forms of innovation ñ design and development, marketing and organisational change.

Small firms: Provisional findings show that in the decade between 1995 and 2005, small and medium sized enterprises (SMEs) have become much more concentrated in ëknowledge intensive sectorsí - high skill, high tech sectors, such as accountancy, legal and consultancy services, architectural, engineering and technical services, and advertising. They have increased the numbers of people they employ by 17 per cent or 445,000 people.

Offshore Outsourcing: Thus far, offshoring has had no measureable impact on knowledge economy jobs. Occupations theoretically at risk from offshore outsourcing continue to add numbers overall in the UK. Meanwhile, the trade in knowledge services remains overwhelmingly with richer countries, rather than developing nations such as India.

The report was launched at The Work Foundationís major conference on the knowledge economy held in central London on 6 March 2008. The Building the British Knowledge Economy conference featured presentations from John Hutton and John Denham, secretaries of state for business, and for universities and innovation respectively, and from Peter Mandelson, the European external trade commissioner.

Ian Brinkley, director of The Work Foundationís knowledge economy research programme, and author of the report, said: ëYou can see the knowledge economy in the industries that flourish most today and in the kinds of jobs that more people do, but perhaps most of all in the ways that organisations today search for competitive advantage. Value is extracted from intangible things such as ideas, R&D, software, design and marketing, human and organisational capital, in a way that was not the case in previous eras. No one can point to it, but it is becoming more real in advanced nations as the 21st century unfolds.

ëIn the time that remains in the programme, we shall be teasing out what the knowledge economy means practically for organisations and for the kinds of work that individuals do.í

* OECD/Eurostat define a knowledge based industry as high to medium tech manufacturing, high tech services, business services, financial services, health and education services (OECD) plus cultural and recreational services and international transport services (Eurostat). Knowledge workers are defined by proxy measures as either the top three occupational classifications (managers professionals and technical) or graduate or higher levels of education.