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Formal definitions of information and knowledge and their role in growth through structural change

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  • Hilbert, Martin

Abstract

The article provides a way to quantify the role of information and knowledge in growth through structural adjustments. The more is known about environmental patterns, the more growth can be obtained by redistributing resources accordingly among the evolving sectors (e.g. bet-hedging). Formal equations show that the amount of information about the environmental pattern is directly linked to the growth potential. This can be quantified by treating both information and knowledge formally through metrics like Shannon's mutual information and algorithmic Kolmogorov complexity from information theory and computer science. These mathematical metrics emerge naturally from our evolutionary equations. As such, information becomes a quantifiable ingredient of growth. The policy mechanism to convert information and knowledge into growth is structural adjustment. The presented approach is applied to the empirical case of U.S. export to showcase how information converts into growth potential.

Suggested Citation

  • Hilbert, Martin, 2016. "Formal definitions of information and knowledge and their role in growth through structural change," Structural Change and Economic Dynamics, Elsevier, vol. 38(C), pages 69-82.
    • Handle: RePEc:eee:streco:v:38:y:2016:i:c:p:69-82
    DOI: 10.1016/j.strueco.2016.03.004
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    Cited by:

    1. Oleg Sukharev, 2021. "Measuring the Contribution of the “Knowledge Economy” to the Economic Growth Rate: Comparative Analysis," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 12(4), pages 1809-1829, December.
    2. Bata P. P. & Norman A. & Allen D., 2021. "Information Sharing Behaviour of Complex and Extended Organisations," International Journal of Business and Management, Canadian Center of Science and Education, vol. 15(11), pages 1-41, July.

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    More about this item

    Keywords

    Evolutionary growth; Information; International trade; Bet hedging; Fitness decomposition; Knowledge;
    All these keywords.

    JEL classification:

    • B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian; Stockholm School
    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;
    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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