Successful innovative economies need the right capabilities.  They need sufficient resources of technology, physical capital and skilled labour if they are to generate rising living standards.  Five sets of resource indicators are considered:  

• Human capital - in the knowledge driven economy, knowledge and skills increasingly become key determinants of both economic prosperity and social cohesion.   For the second edition, the indicators on human capital have been expanded to include higher level skills, lifelong learning and management skills.

• Physical capital - investment in physical assets helps ensure that business has the latest available technology and spreads technological innovations throughout the economy as a whole

• Finance - investment whether in skills, ideas or physical assets requires finance.

• Information and communication technology - ICT allows firms to transform the way they do business, creating new markets and changing the dynamics of the old. Uptake and use of IT have been considered as separate indicators in this edition.

• Science and technology - the strength of the science base is a key determinant of a country’s ability to generate new ideas.

Last updated on 12 March 2002