Abstract

those best able to produce, acquire, deploy, and control valuable knowledge. Knowledge, especially new knowledge unavailable to one’s rivals, is key to international competitiveness and therefore to national prosperity. This assumption is simplistic and not entirely accurate. Oil-rich Qatar and Brunei can do quite nicely without having to be creative at all, except perhaps in finding the best ways to invest their income. But India is mired in poverty that may take generations to eliminate, despite Bollywood, its impressive and rapidly expanding software industry, and its sizeable and growing biotechnological capacity in relation to its GNP. Nonetheless, this assumption is fervently held by many policymakers around the world. As the United Kingdom government expresses it, for example, the nation’s economic competitiveness, and that of its competitors, “is increasingly driven by knowledge-based industries, especially in manufacturing, science-based sectors and the creative industries.” Such thinking is hardly new, but has not necessarily inspired policies conducive to innovation. In the middle ages, Venetian glass was renowned for its quality and generated great wealth for the city state. Understandably, this made the government desperate to protect its highly valuable know-how. The glassmakers, whose techniques were acquired partly from Germany and Syria, were forbidden to ply their trade outside the city state or to give away their secrets. Transgressors could lose their lives. At the same time, foreign glassmakers were banned from operating there. It may not be entirely coincidental that Venice was the first place in the world to pass legislation providing patents for inventions; it understood the strategic importance of protecting valuable knowledge. But neither should we be surprised that despite its illustrious history and the persistence of its now small glass industry, the city has long been a glorified open-air museum sinking slowly but inexorably into genteel decline—and into the Adriatic. Historically, Venetian-style “knowledge mercantilism” has not been uncommon. But valuable as new or scarce technical knowledge can undoubtedly be for

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