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See Need New Model Within New Economic System Based On The Knowledge

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  • Tihomir Domazet
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    The excellent idea within EU Lisbon strategy - knowledge (based) economy - unfortunately, failed. In addition, the Lisbon strategy is failed because knowledge is failed. There are a number of diagnoses of current world crisis called the Great recession that hit western hemisphere economies, however, knowledge economy failure is one of the main causes of the crisis. Mostly, knowledge economics is moved from West to Far East. On the other hand the SEE, South East European countries have been hit hard by the global economic downturn, which started in 2008. SEE economies now practically all of them had a lower development level compared to EU than in 1989. Let's stress again: knowledge economy failure is the main causes of those economies contraction. SEE economies are facing solving current crisis and to establish economic system with growth and sustainable development. A challenge for the economics has been to find metrics to gauge the extent to which society has become more dependent on knowledge production. Although there is wide recognition of the importance of knowledge and intangible capital in fostering economic growth and social change, devising useful measures of these assets has been difficult. To establish new economic model within new economic system is primarily task of each SEE economy though need to put theory into practice by moving sustainable development into mainstream economics where that knowledge creates relations across sectors and institutions. The new model and new economic system would not discuss extreme relations between market and state and similar relations and not to design regulation on some ideal of what a market should be rather than provides a mechanism through which conduct can be regulated and certain problems of resource allocation can be solved. Like all policy instruments, the use of free markets should be contested and assessed in the same way as democratic societies would assess tax policy, legislation, and economic subsidies. Also there are some dangers of "cyberbalkanization" in US, EU and elsewhere. Yet structural change is a key: as the Great Depression was part of the transition of the economy from agriculture to manufacturing, the Great Recession is part of the transition from manufacturing to a service-sector economy. However, knowledge is a main tool. Developing, sustaining, and governing knowledge commons will also require significant investment in education and knowledge that is indeed new economics and development paradigm, which would prevailing the global society in the time ahead. In order to achieve wealthier status by all the people of each SEE country it is necessary to leave current economic model and to establish the new one as the new economic paradigm, the key element of that model would be knowledge, education, innovation as a third factor in production factor and balance between saving and investment (S - I). Economic growth as one part of new economic model should be at least 5% of GDP annually in long term. One of the precondition to achieve some of mentioned is competitiveness products that should be realized by regional cooperation.

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    Article provided by Economic Laboratory for Transition Research (ELIT) in its journal Montenegrin Journal of Economics.

    Volume (Year): 8 (2012)
    Issue (Month): 2 ()
    Pages: 235-252

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    Handle: RePEc:mje:mjejnl:v:8:y:2012:i:2:p:235-252
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