And multidimensional. Yet in models of economic growth — whether neoclassical or evolutionary —

knowledge usually gets reduced to a single number: total factor productivity. Knowledge is an input,

Which combines with capital, labor, and other inputs to produce goods and services — and is thus a

Source of total factor productivity. But knowledge is also an output — the product of existing knowledge

And investments in innovative activity. Information systems became a major tool for improving the costeffectiveness

Of investments. They led to higher productivity, particularly in the industrial and service

Sectors. Technological innovation has become the major factor behind increases in productivity. Technology

Is knocking down geographical boundaries, changing the structure of production and trade within

And among countries. Previously nontraded goods (services) are becoming internationally tradable

Through information technology. Previously immobile factors of production (labor) are becoming mobile

As geographic barriers have less meaning. Some manufacturing production is becoming globalized,

With different components produced simultaneously in different countries. Services have been the fastest

Growing component of both international trade and foreign investment in recent years. Information