DP2094 The Weightless Economy in Economic Development

Author(s): Danny Quah

Publication Date: March 1999

Keyword(s): China , copyright , Growth , Information Technology , intellectual property , knowledge-product , patent , software , superstars , tacit knowledge

JEL(s): N15 , O11 , O14 , O33

Programme Areas: International Macroeconomics

Link to this Page: www.cepr.org/pubs/dps/DP2094.asp

Can the increasing significance of knowledge-products in national income---the growing weightless economy---influence economic development? Those technologies reduce ``distance'' between consumers and knowledge production. This paper analyzes a model embodying such a reduction. The model shows how demand-side attributes---consumer attitudes on complex goods; training, education, and skills for consumption (rather than production)---can importantly affect patterns of economic growth and development. Evidence from the failed Industrial Revolution in 14th-century China illustrates the empirical relevance of the analysis.