The Knowledge-Based Economy, Intellectual Capital

and Well-being

Lidia Galabova

Abstract

The European Union (EU) has as a goal the development of sustainable knowledge-based economies (KBEs) in its member states. It seeks to achieve this whilst retaining regard for social cohesion and reducing inequalities in economic development both within and between its member states. A key strategy for achieving this is encouraging member states to acknowledge the impact of education, research and innovation as central to the development of a KBE. Nonetheless there remains a substantial differential in progress towards the establishment of KBEs within the EU. The purposes of the paper are to demonstrate the impact intellectual capital (IC) has on achieving this goal, and to raise awareness of its interdependence with peoples’ well-being (WB).

The development of a KBE and the relationships between IC and WB are investigated by reviewing secondary data. A comparative analysis is made between three geographically and demographically comparable EU member-states, all at different stages in their development of a knowledge-based economy: Bulgaria, Finland and Scotland (United Kingdom).

This analysis demonstrates that the development of a KBE is linked to both IC and WB. In Finland, which scores above average on EU economic performance indicators, IC growth is high, as a result of concerted government policy and the prioritisation of innovation. Further, the level of WB is also above the EU average according to the report of the New Economics Foundation. In Scotland, where there is a well-developed research, science and innovation policy, but measures for IC support are still fragmented, the growth of the KBE is modest, and the level of WB is closer to the average for the EU. In Bulgaria, although there is a general government policy promoting innovation, there are no coherent measures to support education, research or innovation. Further, the importance of IC is not widely recognised as a factor contributing to economic growth, and the level of WB is below the average for EU.

This exploratory study provides some evidence that countries having a higher level of IC and taking coherent measures for its overall growth (including its knowledge-based element) perform better and have higher levels of WB.

The research leading to these results has received funding from the EU, FP7: Marie Curie Actions, under grant agreement n° PIEF-GA-2009-236334. The author would like to express her special thanks to the support of the EU, FP7: Marie Curie Actions, who made this research possible.