Information Economics & Economics of Informations

Information Economics  :

Information Economics perceives information as a resource of importance in its own right and examine it role in all economic activities, as a factor of production, growth and development. All economic issues are studied with reference to the role of information in markets, decision-making, its cost, price and value, monopoly, competition, etc. At the macro-level, the national economy is viewed as an Information Economy with a particular reference to the contribution of information to the Gross National Product, with information products and services and Information Technology.

Economics of information

Economics of information is the prudent planning and management of households, institutions and governments in the deployment of resources so as to avoid unnecessary waste or expenditure.

New Growth Theory of Knowledge

Paul Romer, Stanford University, Maurice Scott of Oxford, Jacob T Schwartz of New York University are some experts working on the new growth theory of knowledge. The thinking goes as follows:

  • Knowledge is the basic form of capital. Economic growth is driven by the accumulation of knowledge.
  • Technological breakthroughs can create technical platform for further innovations and this platform effect is a key effect of economic growth.
  • Traditional economics predicts diminishing returns on investment in technology. But the new growth economists argue that the non-rivalry and technical platform effects of new advances can lead to increasing returns.
  • Investment can make technology more valuable and vice-versa. According to this new growth theory, the virtuous circle that results can raise a country’s growth rate permanently.
  • Human capital generates the ideas and knowledge that in turn decide how efficiently and effectively traditional inputs of capital (such as plant and equipment) and labour are translated into output.

KNOWLEDGE ECONOMY :An economy where information and knowledge are the prime factors of production.

 Knowledge society : A society in which the society derives its form From a knowledge economy

Digital Divide : “The term ‘digital divide’ describes the fact that the world can be divided into people who do and people who do not have access to – and the capability to use -- modern information technology, such as the telephone, television, or the Internet. The digital divide exists between those in cities and those in rural areas.

Data Mining : Data Mining (DM) is part of a process by which information can be extracted from data and databases and used to inform decision-making in a variety of contexts .DM includes a range of tools and methods for extracting information. DMincorporates not only data analysis but also involves determining appropriatequestions and interpreting the results.


Knowledge Management : The process of organising and sharing the diverse forms of business information created within an organisation. KM can include managing enterprise document

libraries, intranet websites, and other types of knowledge bases.


Declarative Knowledge : The basics of a shared and explicit understanding of concepts, ideas,

relationships, and categories that enables effective communication among people in organisations. It is characterised by knowwhat of an event or task.

Explicit Knowledge : Knowledge that is transmittable in formal, systematic language.

Tacit Knowledge : Is personalised, context specific, and hard to formalise and communicate.

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