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The Weightless Economy (Quah, D.)

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``Can people eat 1s and 0s?''

First, what the weightless economy isn't: It isn't just the knowledge-based economy.

The knowledge-based economy might be taken to be nothing more than the proposition that knowledge matters for economic performance. Such an idea is both classical and new.

It is classical in that the economists who invented growth accounting in the 1950s had already estimated over two-thirds of economic progress in the 20th century to be due to technical change, i.e., to ongoing progress in knowledge generally defined.

Going back further, we might consider the first Industrial Revolution, where the deployment of machines such as spinning Jennies and steam engines significantly boosted economic performance. These machines were the physical embodiment of new knowledge. The world was therefore, by the time of this Industrial Revolution, already a knowledge-based economy.

Take yet another example. Knowledge is very much the key ingredient in, say, the mathematical development of the properties of the square root of -1. (What else could be?) This knowledge allows understanding the properties of electricity and magnetism. Ultimately therefore, the spread of electricity usage throughout modern economies from 1899 on must be due to knowledge.

Such an interpretation of the knowledge-based economy---perhaps mundane, arguably low-key, undoubtedly pervasive---applies not only to the past. Its relevance continues today in poorer parts of the global economy. The World Bank's 1998 World Development Report reminds us that certain very basic knowledge of health, sanitary procedure, and disease control has saved over 30 million West Africans from the affliction of river blindness. Turning to where room for improvement remains, a little knowledge of the presence of readily-available treatments will go a long way to alleviate the suffering of the 2 million who die each year and the 900 million made ill by the dehydrating effects of diarrhea.

These examples of the economic importance of knowledge are classical, illustrating principles at work in any economy. They shed no light on what is new and important in the knowledge-based economy now.

Instead, it is the weightless economy where the economic significance of knowledge achieves greatest contemporary resonance. The weightless economy, in this view, comprises four main elements:

  1. Information and communications technology (ICT), the Internet.
  2. Intellectual assets: Not only patents and copyrights but also, more broadly, namebrands, trademarks, advertising, financial and consulting services, and education.
  3. Electronic libraries and databases: Including new media, video entertainment, and broadcasting.
  4. Biotechnology: Carbon-based libraries and databases, pharmaceuticals.

(In principle, 3. and 4. could be grouped together in one encompassing category Libraries and databases. However, listing separately the silicon- and carbon-based forms helps emphasize the broad coverage intended.)

A rationale and coherence inform the selection of these categories. The different items enumerated have two features in common: First, they are systems for managing knowledge. Second, they are knowledge-products, i.e., commodities whose physical properties resemble those of knowledge, regardless of whether the commodities themselves contain significant amounts of knowledge as traditionally understood.

A visual metaphor might help. Appropriately interpreted, knowledge, at its most basic, is just a string of 1s and 0s, i.e., a bitstring. Any idea, any image, any information can be written as a bitstring. To read or interpret a bitstring, we use yet another bitstring. To manage bitstrings---to add them together, to merge them, to remove them, to mutate them---we use still other bitstrings. Bitstrings can be implemented in electronics, in silicon, or in carbon. The casing material is irrelevant: it doesn't affect how the bitstrings work, and it doesn't affect their value.

Such a picture of the weightless economy brings its analysis close to mathematics developed earlier by Alan Turing and John von Neumann.

The writings collected below attempt to expand on and criticize this theme.

Another source is the knowledge trail on D.Quah picture on Fathom Fathom.com (search for "Quah"). A couple of Fathom stories freely available are Welcome to the weightless world (2000) and Going cheap on the Net (2000).

Danny Quah, dq@econ.lse.ac.uk

LSE Economics Department
Houghton Street
London WC2A 2AE


(Sure, there's some duplication here, but the stuff is infinitely expansible.)
Software tools are back here.

WEBSITES FOR THE INFORMATION ECONOMY

WEIGHTLESS ECONOMY COLUMNS AND ARTICLES

(by Diane Coyle)

  • Economic View, The Independent, 22 April 1996
  • The weightless economy produces a new breed of superstar, The Independent, 19 December 1996
  • We need new ways to measure the `weightless' economy, The Independent, 4 February 1997
  • Services make countries rich, says Bank, The Independent, 10 February 1997
  • Economics, but not as we know it, The Independent, 09 September 1997
  • The Weightless World, Capstone London and MIT Press Cambridge, 1997 Weightless World book cover
    (Diane Coyle's The Weightless World)
  • Why knowledge is the new engine of economic growth, The Independent, 23 April 1998
  • Let science drive economic growth forward (Enterprise Issues), The Independent, 17 March 1999
  • Getting the Measure of the New Economy (with Danny Quah), May 2002. iSociety at The Work Foundation

Many writings, still to be organized and annotated

  • Listing in World Wide Words
  • Has the IT revolution had its chips? (Mark Atkinson, The Observer, 27 October 1996)
  • Twin peaks: Ca ne se passe pas qu a la tele (Bernard Cazes, Les Livres et Les Idees, Societal, February 1997)
  • Economic growth in the information age: From physical capital to weightless economy (Gavin Cameron, Journal of International Affairs, Spring 1998, 51(2))
  • Weighing the `weightless economy' (Anthony Harris, The Times, 19 February 1997)
  • Policymakers are losing their grip on the weightless economy (David Howell, The Independent, 26 June 1997)
  • Weightless economy rewrites the rules (Charles Leadbeater, New Statesman, February 1998)
  • Living on Thin Air (Charles Leadbeater, 1999, Viking: Penguin Books, London)
  • Making it so: The weightless economy is crap (Denis MacShane, Tribune, 10 April 1998)
  • The Outlook: `Weightless economy' raises heavy issues (Kimberley Strassel, The Wall Street Journal Europe, 08 June 1998)
  • The European Economist interview: The Weightless Economy (Kimberley Strassel, The Wall Street Journal Europe, 25 January 1999)
  • The weightless economy (Economic Spotlight, No. 20, March 1999, Structural Issues, HM Treasury)
  • The Techno-Elite: Floating to wealth in a weightless economy (Robert Chote, p. 10, The Financial Times, 20 April 1999)
  • "In the beginning was the Command Line", Neal Stephenson. April 1999. Cars and Operating Systems. Selling 1s and 0s to the masses (Print version)
  • The World Economy Survey (Pam Woodall, The Economist, 28 September 1996)

(Columns, articles, and recent presentations by Danny Quah)

Full itemization occurs further below, but for those who want a quick peek into what I've written on this topic, some representative dissemination (i.e., nontechnical) material is:

  • The excess supply of knowledge (December 2005)
    A condensed version appears in Newsweek's Special Edition Issues 2006 The Knowledge Revolution: Why Victory Will Go to the Smartest Nations and Companies (December 2005 - February 2006), p. 43.
  • A weightless economy (December 1998)
    Published (in 18 languages): The UNESCO Courier, December 1998
  • The weightless economy: In whose interest? (April 2000)
    CEP's CentrePiece, Spring 2000, vol. 5 no. 1, pp. 28--30. PDF (essentially my presentation to the ESRC Social Science Conference, November 1999)
  • The weightless developing economy: Presentation to the United Nations Economic and Social Council (May 2000) PDF
    Published: Department of Economic and Social Affairs, Second Committee of the Fifty-fifth session of the General Assembly and the Economic and Social Council 2000

More technical papers include:

  • Almost efficient innovation by pricing intellectual property (May 2002) [Technical paper]
    [ and abstract]
  • 24/7 competitive innovation (April 2002) [Technical paper]
    [Paper and abstract]
  • Matching demand and supply in a weightless economy: Market-based creativity with and without IPRs (March 2002) [Technical paper]
    [Paper and abstract]
  • Spatial agglomeration dynamics (February 2002) [Technical paper]
    [Paper and abstract]
  • Technology dissemination and economic growth: Lessons for the New Economy (February 2002). Public Lecture
    The University of Hong Kong's 90th Anniversary Celebrations
    [Paper and abstract]
  • Demand-driven knowledge clusters in a weightless economy (April 2001) [Technical paper]
    [Paper and abstract]
  • The weightless economy in economic development (January 1999)
    [World Institute for Development Economics Research/UNU DP#155]
    Also, [CEP DP#417]. Published: Ch. 4 in Information Technology, Productivity, and Economic Growth: International Evidence, ed. Matti Pohjola, Oxford University Press, 2001
  • Internet cluster emergence (February 2000)
    [CEP DP#441]. Published: European Economic Review May 2000, vol. 44 no. 4-6, pp. 1032-1044.
    Easier to read:
    1. The mother of all Internet clusters (From a NASA satellite) Source
    2. [Groningen Conference, The Web as an Economic Phenomenon, 21 December 1999 (with pictures); getting waves in space to converge]
  • Increasingly weightless economies (February 1997) [Abstract]
    Published: Bank of England Quarterly Bulletin, February 1997, vol. 37 no. 1, pp. 49-56 (PDF version available here with thanks to the Bank of England's Inflation Report Division).

When a PDF version has been made available, it is likely easiest if your browser is configured to view PDF files online. If a PDF file appears corrupt, try clearing the disk (and memory) cache on your browser.

The full list is:

  1. The invisible hand and the weightless economy (May 1996, transcript from a public lecture 26 February 1996) [CEP OP#12]
    See also Discarding non-stick frying pans for economic growth (September 1996)
  2. Growth and dematerialisation: Why nonstick frying pans have lost the edge (October 1996) (Preprint:PDF)
    Published: CEP's CentrePiece, October 1996, vol. 1 no. 3, pp. 20-25
  3. Increasingly weightless economies (February 1997) [Abstract]
    Published: Bank of England Quarterly Bulletin, February 1997, vol. 37 no. 1, pp. 49-56 (PDF version available here with thanks to the Bank of England's Inflation Report Division).
  4. The weightless economy: Nintendo and heavy metal (February 1997) (Preprint:PDF)
    Published: CEP's CentrePiece, February 1997, vol. 2 no. 1, pp. 25-27
  5. The weightless economy packs a heavy punch (May 1997) (Preprint:PDF)
    Published: The Independent on Sunday, 18 May 1997 (Business, p. 4)
  6. The weightless economy: Weight of the evidence (June 1997) (Preprint:PDF)
    Published: CEP's CentrePiece, June 1997, vol. 2 no. 2, pp. 25-26
  7. Weightless economy radio interview (transcript)
    ABC (Australia) Radio National Background Briefing, 28 September 1997
  8. As productive as a French farmer (September 1997)
    Published: The Asian Wall Street Journal, 29 September 1997 (PDF)
    A (slightly longer) preprint ``TFP myths for East Asia's fast-growing economies''[PDF] is also available.
  9. The weightless economy: ``Europe'' in the weightless economy (October 1997) (Preprint:PDF)
    Published: CEP's CentrePiece, October 1997, vol. 2 no. 3, pp. 29-32
  10. Eating 1s and 0s: Interactive digital media and the weightless economy (November 1997) (PDF)
    [Keynote address delivered to `` The Artist, the Citizen, and the Entrepreneur,'' an international seminar for the Council of Europe (organized by ARTEC and CICV in collaboration with the Arts Council of England) 26 November 1997]
  11. NOT the revenge of the nerds (April 1998)
    Published as `` Devise and conquer,'' in: Information Strategy (The Economist Group), May 1998, pp. 18-21 (Reprint version available here with thanks to Information Strategy).
    (Related) Informed Business Services: 13 May 1998 Press Release on the Knowledge Management Informed Debate, 25 June 1998 (Transcript)
  12. Policies for the weightless economy (April 1998) (PDF)
    Social Market Foundation Lecture, 21 April 1998
  13. The weightless economy: ``Planes, trains, and technological advances'' (May 1998) (Preprint:PDF)
    Published: CEP's CentrePiece, June 1998, vol. 3 no. 2, pp. 27--29
  14. Creating wealth in the weightless economy [Presentation, 18 June 1998]
    CEPR Lunchtime Briefing, 18 June 1998
  15. Knowledge Management Informed Debate 25 June 1998
    (Transcript)
  16. How weightless is the UK economy? [Seminar, July 1998]
    10 Downing St. seminar, 03 July 1998
  17. Boom or Bust [Radio interview]
    BBC Radio 4 Analysis programme with Bridget Roswell, 08 July 1998 (repeated 12 July 1998)
  18. Does it matter that Britain no longer makes things? [Radio interview]
    BBC Radio 4 The World This Weekend programme with James Cox, Sunday 16 August 1998
  19. The weightless economy: No heavy lifting (August 1998) (Preprint:PDF)
    CEP's CentrePiece, Fall 1998, vol. 3 no. 3, pp. 30--32
  20. Creating wealth in the weightless economy [Corporate briefing]
    SNS Studiefvrbundet Ndringsliv och Samhdlle, Center for Business and Policy Studies, Stockholm, 29 September 1998
  21. Growth and wealth creation in the weightless, knowledge-based economy (October 1998) (Preprint:PDF)
    Colloquium, Belgian Enterprise Foundation, Brussels, 07 October 1998
    Published (in 3 languages): Invitation pour la societe de la connaisance. Aspects lies au management et a l'organisation du travail. Actus du colluque organise le 7 Octobre 1998 par la Fondation de l'Enterprise Fondation de l'Entreprise, Bruxelles, 1998
  22. A weightless economy (December 1998)
    Published (in 18 languages): The UNESCO Courier, December 1998
  23. The weightless economy in economic development (January 1999) [Technical paper]
    [World Institute for Development Economics Research/UNU DP#155]
    Also, [CEP DP#417]. Published: Ch. 4 in Information Technology, Productivity, and Economic Growth: International Evidence, ed. Matti Pohjola, Oxford University Press, 2001
  24. The weightless economy: Weightless Property (February 1999) (Preprint:PDF)
    CEP's CentrePiece, Spring 1999, vol. 4 no. 1, pp. 30--32
  25. The weightless economy in growth (March 1999) (PDF)
    Published: The Business Economist, March 1999, vol. 30 no. 1, pp. 40--53
  26. A weightless economy on the Internet (January 1999)
    SNS Studiefvrbundet Ndringsliv och Samhdlle, Center for Business and Policy Studies Conference The Internet and Society, Stockholm, 25 January 1999
  27. Increasingly weightless economies and economic growth (January 1999)
    DTI/CEPR Conference on the Economics of the Knowledge-Driven Economy, London, 27 January 1999
  28. Doing business in the weightless economy (February 1999)
    Andersen Consulting European Technology Summit, Cannes, 01 February 1999
  29. The weightless, knowledge-based economy (March 1999)
    Anglo-German Foundation and KPMG, Berlin, 19 March 1999
  30. Cluster emergence on a global continuum (March 1999) [Technical paper]
  31. E-commerce and the weightless economy (June 1999)
    Economic Policy Roundtable, Frankfurt, 11 June 1999
  32. The weightless economy: Because it's your weightless economy too (June 1999) (Preprint:PDF)
    CEP's CentrePiece, Summer 1999, vol. 4 no. 2, pp. 30--32
  33. Knowledge, the weightless economy, and economic growth (June 1999)
    (Australia) Department of Industry, Science, and Resources. Canberra, 18 June 1999
  34. Knowledge and competitiveness (July 1999)
    ESRC and Department of Trade and Industry. DTI Conference Centre, London, 12 July 1999
  35. The weightless economy: Tradeoffs going cheap on the Net (October 1999) (Preprint:PDF)
    CEP's CentrePiece, Winter 1999, vol. 4 no. 3, pp. 28--32
  36. Unpacking globalisation and new technology in Britain (16 November 1999)
    ESRC Social Science Conference Future Britain: A Global Future?, London
  37. BBC Newsnight: New economy, 12 January 2000
  38. Internet cluster emergence (February 2000) [Technical paper]
    [CEP DP#441]. Published: European Economic Review May 2000, vol. 44 no. 4-6, pp. 1032-1044
  39. Cross-country growth comparison: Theory to empirics (February 2000) [Technical paper]
    [CEP DP#442]
  40. Bloomberg TV: Internet economy, 25 February 2000
  41. The weightless economy BBC Radio 4 Analysis programme, May 2000 (Recorded Cape Town, South Africa)
  42. Policies for the weightless economy in economic development (May 2000)
    Panel on Development of information technology in a knowledge-based economy, United Nations Economic and Social Council 2000, New York, 05 May 2000.
    Published: UNU WIDER Angle August 2000
  43. The weightless economy: In whose interest? (April 2000)
    CEP's CentrePiece, Spring 2000, vol. 5 no. 1, pp. 28--30. PDF (essentially my presentation to the ESRC Social Science Conference, November 1999)
  44. ICT++ in Economic Performance (May 2000)
    Merrill Lynch Panel on Controversies that Matter for Markets, London, 09 May 2000. PDF
  45. The Weightless Economy (May 2000)
    Norbolsa Annual Conference, Bilbao Spain, 23 May 2000
  46. The weightless knowledge economy (June 2000)
    Keynote address to Asia-Europe Young Leaders Symposium IV, Limerick Ireland, 13 June 2000. PDF transcript
  47. The new weightless economy (September 2000)
    EVA - Centre for Finnish Business and Policy Studies seminar. Nokia HQ, Helsinki, 08 September 2000 PDF transcript Official EVA transcript and summary
  48. Some distinctive aspects of the New Economy (September 2000)
    NIESR - Technical Progress, Economic Growth, and the New Economy. London Chamber of Commerce and Industry, 29 September 2000
  49. The weightless new economy (October 2000)
    European Institute LSE and the British Council - Gurukul Chevening Senior Scholarship Programme on Globalisation and Leadership. London, 05 October 2000
  50. New technology, new economy (October 2000)
    Enterprise LSE - Keynote session, Merrill Lynch Executive Program. London, 13 October 2000 PDF transcript
  51. The Weightless Economy: Strategic Implications for Business and Government (December 2000)
    Commonwealth Top Management Programme: Transformation towards the Knowledge Economy. Penang Malaysia, 09 December 2000 PDF Presentation slides (3/page)
  52. Look to consumption, not production, for key to growth (January 2001)
    Letter to Editor, Financial Times 05 January 2001
    [Text]
  53. B2C [pdf] - English translation from Kauppalehti, Finnish independent business news (January 2001)
    UNU WIDER media -> 'In Media 2001' -> Kauppalehti, 16 January 2001
  54. ICT Clusters in Development: Theory and Evidence (February 2001)
    [Preprint and abstract]. Published: EIB Papers 2001, vol. 6, no. 1, pp. 85-100
  55. Is there an e-Economy? (March 2001) 3/page PDF slides
    Opening session, The European Commission's The e-Economy in Europe conference, Brussels 01 March 2001
  56. Demand-driven knowledge clusters in a weightless economy (April 2001) [Technical paper]
    [Paper and abstract]
  57. Technology dissemination and economic growth: Lessons for the New Economy (February 2002). Public Lecture
    The University of Hong Kong's 90th Anniversary Celebrations
    [Paper and abstract]
  58. Spatial agglomeration dynamics (February 2002) [Technical paper]
    [Paper and abstract]
  59. Matching demand and supply in a weightless economy: Market-based creativity with and without IPRs (March 2002) [Technical paper]
    [Paper and abstract]
  60. 24/7 Competitive Innovation (April 2002) [Technical paper]
    [Paper and abstract]
  61. Almost efficient innovation by pricing intellectual property (May 2002) [Technical paper]
    [Paper and abstract]
  62. Digital goods and the New Economy (October 2002)
    [Paper and abstract]
  63. The new economy: Challenges to economic policy (May 2003, Helsinki) Program and video
  64. History matters: Trading technologies and the marketplace for ideas (LSE Magazine, June 2003).
    Preprint
  65. Spatial cluster empirics (June 2003) with Helen Simpson
    [Paper and abstract]
  66. World Science Forum (November 2005)
    [Presentation: The production and consumption of knowledge.
    (WMV format) video of session]
  67. The excess supply of knowledge (December 2005)
    Condensed version in Newsweek's Special Edition Issues 2006 The Knowledge Revolution: Why Victory Will Go to the Smartest Nations and Companies (December 2005 - February 2006), p. 43.
  68. A World Without Intellectual Property (Rights) (January 2006)
    CEO Series Workshop, World Economic Forum Annual Meeting
    Davos

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Danny Quah, dq@econ.lse.ac.uk

LSE Economics Department
Houghton Street
London WC2A 2AE

Copyright © Danny Quah 1999 - 2003

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