Knowledge as a Set in Idea Space: An Epistemological View on Growth.

This article presents a model of knowledge, seen as a set of ideas defined in a multidimensional idea space. Knowledge is created through convex combinations of older ideas and through paradigm shifts. When normal science has made the knowledge set convex, scientific opportunity is exhausted. Individual countries are endowed with different knowledge sets, which gives rise to idea gaps. The growth of a country's knowledge depends on diffusion from other countries, on own production, and on the state of its human capital and institutions. In the long run, economic growth will depend on knowledge growth, but only paradigm shifts can save R&D from diminishing returns. Copyright 2000 by Kluwer Academic Publishers