Critical Success Factors for a Knowledge-Based Economy: An Empirical Study into Background Factors of Economic Dynamism

Abstract

During the past decade the notion of a knowledge-based economy has gained in popularity. The relationship between knowledge and economic growth is often studied in a conceptual and empirical context by addressing in particular the existence of correlations between factors of growth (on the basis of, for example, the new growth theory or endogenous growth theory). The present paper, however, takes an actor-oriented and more exploratory route to compare the knowledge-drivers in different regions. In our study, a sample of Dutch “knowledge experts” is used to identify the relative importance attached by these key-actors to the various factors that shape the force field of a knowledge-based economy, and their results are compared with those of a larger sample of European “knowledge-experts”. The study in particular distinguishes between developed regions, developing regions, and semi-developed regions. Starting from the notions of mainstream growth theory, a factor analysis is carried out to trace the main determinants of growth. Empirical analysis shows that Dutch experts are of the opinion that economic dynamism is explained by increasing returns to scale and knowledge and business network effects, rather than by international free trade in a global economy. In particular, competitiveness is related to the location of industries and economies of agglomeration (i.e. linkages), whereby also social, cultural and institutional factors in the spatial economy play an important role. Furthermore, statistical regression and multivariate factor analysis show that Dutch experts are supportive of the notion that it is especially the interplay between knowledge development and institutional dynamics which shapes the economic landscape of a particular region. We, therefore, conclude that a more evolutionary view instead of the new trade theory or new economic geography may offer promising new insights.