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Footnotes
- Marshall (1890).
- OECD (1998a).
- Quoted in Scottish Enterprise (1998).
- Kay (1993, 1996).
- A parallel document, also published with the White Paper, looks at our performance in ICT in more detail. DTI (1998b).
- See DTI (1998b) for more detail.
- The OECD define an internet host as 'a domain name that has an IP (Internet protocol address) record associated with it. This would be any computer system connected to the Internet, via full or part-time, direct or dial-up, connections.' On this basis, the total number of 'hosts' will broadly equate to the total number of Internet Service Providers, of servers utilised by individual companies and special interest groups, and a number of machines of private individuals who operate a web-site from their home PC.
- Spillovers occur when R&D spending in one country raises output in other countries - see Coe and Helpman (1995).
- Pearce (1997).
- Barrel and Pain (1997b).
- Aghion and Howitt (1998).
- Romer's 'Ideas Gap' quoted in Crafts (1996a).
- Cameron (1998).
- OECD (1996b).
- Cameron (1996).
- O'Mahony (1992).
- Levine and Renelt (1992).
- O'Mahony (1992).
- Societies need what Moses Abramowitz termed the 'social capability' for growth. Abramowitz (1986).
- For definitions used in charts sourced from OECD, see box at end of chapter.
- OECD (1998a).
- OECD (1998a).
- A benchmarking exercise carried out by DTI in 1997 revealed at best a mixed performance, with a significant gap in productivity and living standards persisting. DTI (1997).
- Owen (1996).
- DTI (1997) and HMT (1998c).
- O'Mahony (1998).
- HM Treasury (1998b and 1998c).
- OECD (1998e).
- Company Reporting Ltd., (1998).
- Craggs and Jones (1998).
- Hicks and Katz (1997).
- DTI (1996).
- Shapiro and Varian (1998).
- OECD (1998b).
- Bank of England (1996); Piper and Lund (1997).
- HM Treasury (1998a).
- Whittaker (1998). Since q is a ratio of market value to book value, it will also be influenced by broader macroeconomic and stock market trends, in addition to the presence of intangible assets.
- Berman, Bound and Machin (1997). Machin, Ryan and Van Reenan (1996) find that during the 1980s, over 80 per cent of the increase in the proportion of the wage bill accruing to more skilled workers can be attributed to technical change (R&D) in Sweden, but only 27 per cent and 19 per cent in the US and UK respectively.
- Slaughter and Swagel (1997) survey the literature on the impact of increased trade and capital mobility on wages. They conclude that despite widely differing methodologies the consensus is that increased trade accounts for about 10-20 per cent of changes in wages and income distribution in advanced economies.
- OECD (1998a).
- Berman, Bound and Machin (1997); Machin, Ryan, and Van Reenan (1996).
- Low Pay Commission (1998).
- HM Treasury (1997); Manacorda and Manning (1998).
- Manacorda and Manning (1998) find evidence that the proportion of the variance in observed wages that can be explained by education seems to be rising (although modestly) over time.
- The Pre-Budget Report (HM Treasury 1998c) announced a consultation on employee share schemes and targeted incentives for managers in smaller, dynamic enterprises.
- The importance of "customer capital" is seen most vividly in the
financial services sector where the high street supermarkets are now challenging the traditional banks by providing a dual function as food retailer and source of financial services. This is based upon the customer knowledge gained from loyalty cards which can be exploited to develop financial products to meet more precisely customer needs.
- Knowledge capital is defined broadly as "the sum of everything that everybody in a company knows that gives it a competitive edge".
See Stewart (1997). This is also the definition used by Warwick
Business School.
- David Teece, in his lecture on The Knowledge Economy and Intellectual Capital Management in May 1998, saw wider implications of knowledge management for the nature of the firm. He believes competitive advantage increasingly requires "dynamic capabilities" - the ability to sense, understand and seize new opportunities and to reconfigure and re-organise to achieve sustainable competitive advantage.
- For an early theoretical explanation of these benefits, see Akerlof (1982).
- Cully et al (1998).
- For instance, Coase (1937) and Williamson (1975) explained that managers do not contract out everything they need doing, but organise in firms instead, to minimise the costs of negotiating, re-negotiating and monitoring contracts. Hart (1995) extended this analysis. The knowledge driven economy affects transactions and monitoring costs in a number of ways, as discussed in the text.
- Barrell and Pain (1997a).
- "Clusters" are defined here as a concentration of competing, collaborating and interdependent companies and institutions which are connected by a system of market and non-market links.
- "Networks" is the term used here to describe collaborative arrangements between individuals, firms and other institutions, through which innovation and best practice are disseminated. Networks need not involve co-location, though they often will.
- Adam Smith noted how inter-relatedness of trade brings businessmen together; "artificers, too, stand occasionally in need of the assistance of one another... they naturally settled in the neighbourhood of one another". Smith (1776). See also Marshall (1890); Myrdal (1957); Krugman (1998).
- Porter (1998a and 1998b).
- Krugman (1998).
- Venables (1998).
- Jaffe (1989).
- Glaeser et al (1992).
- Article by Gary Abramson on "Cluster Power". Can be found at http://www.cio.com/archive/enterprise/0815/98_cluster
- Gibb (1998).
- Huggins (1998), quoted in Financial Times, 25 November 1998.
- Nadiri (1993).
- Article by Paul Krugman entitled 'Soft Microeconomics'. can be found at http://web.mit.edu/krugman/www/
- Personal communication from Professor Aoki of the University of Stanford and MIT.
- OECD (1996a).
- Proudman and Redding (1998); DTI (1998a).
- Proudman and Redding (1998); Oulton (1998); Barrel and Pain (1997b).
- Abramowitz (1986).
- Sutton (1991).
- Shapiro and Varian (1998).
- Shapiro and Varian (1998); Blundell, Griffiths and Van Reenen (1997) suggests that this effect may not simply apply to the information society. They show that, due to imperfect capital markets, the innovations of high market share firms receive a greater value on the stock exchange hence "all industries will have a tendency towards persistent dominance by leading firms rather than action-reaction between followers and leaders." Sherwin Rosen has used similar arguments to explain why income distribution across opera singers differs from that across shoemakers.
- Shapiro and Varian (1998).
- Company architectures are what John Kay, in Foundations of Corporate Success (1993), called combinations of internal organisation, incentives and information which are hard to replicate. They may be the best way to keep 'trade secrets'. Complementary assets might include ready access to major customers who are willing to buy novel products. Such access may be based upon the innovator's reputation which itself could have similar effects to a brand name.
- Index of the Massachusetts Innovation Economy, available at http://www.mtpc.org/research/indica.htm
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