What is Knowledge Economy?

Legal Definition
The knowledge economy is the use of knowledge (savoir, savoir-faire, savoir-ĂȘtre) to generate tangible and intangible values. Technology and in particular knowledge technology help to transform a part of human knowledge to machines. This knowledge can be used by decision support systems in various fields and generate economic value. Knowledge economy is also possible without technology.

The term was popularized by Peter Drucker as the title of Chapter 12 in his book The Age of Discontinuity (1969), that Drucker attributed to economist Fritz Machlup, originating in the idea of "scientific management" developed by Frederick Winslow Taylor.

Other than the agricultural-intensive economies and labor-intensive economies, the global economy is in transition to a "knowledge economy", as an extension of an "information society" in the Information Age led by innovation. The transition requires that the rules and practices that determined success in the industrial economy need rewriting in an interconnected, globalized economy where knowledge resources such as trade secrets and expertise are as critical as other economic resources.
-- Wikipedia
Legal Definition
Building, evaluating, and trading knowledge is the basis of this economy. Labor costs slowly decrease in importance while dwindling concern occurs over scarcity of resources and economies of scale, traditional economic concepts.