The Competitiveness of Nations

in a Global Knowledge-Based Economy


Exhibit 3

Production Function

Y = f  d, s, t   ( Ke, Le, Ne ) T X G                                                    (1)


Y = output as Person, Code & Work

K = codified & tooled capital

L = personal & tacit labour

N = toolable natural resources

f = some function of

d = disembodied technological change *

s = space

t = time

e = embodied technological change *

T = endogenous technological change *

X = exogenous technological change *

G = government **


T = g (P, O, D)                                                                                (2)

X = h (P, O, D)                                                                                (3)


g, h = some function of


P = physical technology ***

O = organizational technology ***

D = design technology ***


P = α ( p, c, t )                                                                                (4)

O = β ( p, c, t )                                                                                (5)

D = γ ( p, c, t )                                                                                (6)


α , β , γ  = some function of


p = personal & tacit knowledge

c = codified knowledge

t = tooled knowledge                                                                     


* Technological change in Economics is defined as the impact of new knowledge on the production function of the firm or nation.  Alternatively, such new knowledge may be disembodied (systemic) or embodied (localized); and/or, endogenous or exogenous to the firm, economy or the nation.

** Government: as ‘rule maker’ of, among other things, intellectual property rights and national innovation systems.  While government partners with private owners of K, L & N decision making is political and therefore exogenous to the economic system.  Plays one or more of five roles as Custodian, Facilitator, Patron, Architect and/or Engineer of the national knowledge-base.

*** Physical Technology emerges from the Natural & Engineering Sciences (NES); Organizational Technology emerges the Humanities & Social Sciences (HSS); Design Technology emerges from the Arts – Literary, Media, Performing and Visual Art.


HHC  © September  2004

Draft in Progress

Table of Contents

The Competitiveness of Nations

in a Global Knowledge-Based Economy