| The objective of the thesis is to advance the understanding of what is referred to as the “New Economy” using a systems approach. What is the overall growth expectation for the knowledge-based economy? How are the effects of increasing human capital policy related to the integration of international markets? A critical review of the state of knowledge at present, using the economic growth models, was conducted in order to identify the key uncertainties and avenues for research that appear to be the most promising. Two focal points were identified for investigation: (1) Dynamic systems representation of the economy and finance in a global system; in particular, the relationship of balance of payments, capital account with economic growth . The purpose of government stabilization policies is to stimulate domestic economic growth with in relation to the integration of international markets. The main driver of current account deficit is largely dependent on domestic and foreign economic growth. This implication indicates that the economic growth has always been the core problem in international economies, which leads us to explore the economic growth of knowledge-based economy involving international economic transactions. (2) A key feature of the New Economy is the ever-increasing dominance of knowledge-based economic sectors where intellectual rights are traded rather than physical products. A novel economic growth model was developed based on human capital rather than physical capital, and the R&D investment was the driving force for growth.; The increasing share of economy being driven by human capital will have a decisive, worldwide, socio-economical impact. To consider policies that can meet the challenge of human capital deficit, immigration and education for innovation of models of human capital developed in this thesis will become ever more important.; The model has been implemented for the Information and Computer Technology (ICT) sectors of the USA, European Union (EU), and Japan. These three countries were selected because the historical data was available and, furthermore, because of their predominance.; Parameters were estimated over the 1980–1997 time period, using several alternative estimation functions with logarithmic relationships showing the best correlation. Comparing the results of the model's run with historical time series has validated the model. The model has also been implemented for the software sub-sector and a future scenario has been presented in order to indicate the usefulness of the new human capital based model of economic growth. The scenario addresses the question of what policy the EU should pursue in order to catch up with the projected growth of the ICT sector in the US and Japan. |
