Knowledge economy can be defined as a system that is comprised of consumption and production and it is based on the intellectual capital of the business. In other words knowledge economy can be defined as the activity hub of all the knowledge based activities in the developed countries. In knowledge economy the intangible assets are more important as compared to intangible assets and most of the percentage of the economy of the country or entity is consist of intangible asset. These intangible assets can be categorized as the knowledge, intellect, skills and experience of the employees or the citizens of the country or the economy. However these intangible assets are very important part of the business economy however the accounting principles rules and regulations don’t allow business to report these intangible assets on their balance sheet.
Knowledge economy varies from country to country. For example the under developed countries have agriculture or agriculture plus manufacturing based economies, developing countries have manufacturing and service based economy where are the develop countries have strictly service based economy so the knowledge economy of each and every company depends upon the type of its economy. The proportions of the above mentioned economies within the countries depend upon the relative amount of the wealth of the country.
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