Governing the Global Knowledge Economy: Mind the Gap!

The emergence of a global knowledge economy means that globalization now extends beyond markets for goods and finance into markets for technology, knowledge workers, and innovation finance. An increasing division of labor in innovation has accelerated the creation of markets for disembodied intellectual assets and for the skills and money needed to produce and use these assets effectively. The globalization of these markets is driven by fundamental changes in the economics of innovation and the resultant adjustments in corporate strategies and government policies. The paper describes key features of the emerging global knowledge economy. The next sections highlight the asymmetric nature of driving forces that result in the governance gap, confronting corporate strategies and government policies, and analyze the most pressing issues and the risks of non-action. The paper concludes with a discussion of objectives, design principles for bridging the governance gap, and generic policy suggestions.