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The dominant view today is of a global knowledge-based economy, driven by the application of new technologies, accelerating the shift to high-skilled, high-waged European economies. This view is reflected in the expansion of higher education and the key role of higher education in national and European economic policy. The Lisbon agenda seeks to make the European Union "the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion". Not only is education believed to hold the key to international competitiveness but to the foundations of social justice and social cohesion. This article outlines the underlying assumptions of this mantra, which in many respects has changed little since the 1960s when human capital theory gained increasing prominence in education and economic policy (Halsey, 1961). It examines the prospects for the creation of high-skills economies throughout Europe in light of new realities of the global economy. This analysis is based on interviews with senior managers and executives in leading transnational companies and government policy makers in seven countries including China and India. In conclusion, the authors outline a series of issues as a contribution toward a new agenda for education and the knowledge economy within the European Research Area. Following this essay are two responses: (1) "Expanding the Higher Education System and Building World-Class Universities: China's Response to Globalization and the Knowledge Economy." (Wang Yingje); and (2) "Education, Globalisation and the Future of the Knowledge Economy: Three Comments" (Stephan Vincent-Lancrin). (Contains 1 figure, 1 table, and 25 notes.)

Comparison of national policies in South Korea, Singapore, and Britain to respond to low-skills equilibria (self-reinforcing institutions that stifle demand for skill improvements) shows that different responses stem from national differences in supply/demand and the differential impact of globalization due to the individual economic and social histories of nations. (SK)

An introduction is presented in which the editor discusses articles in the issue on the topics include rhetoric and policies about the importance of higher education (HE) and the knowledge economy; and understanding of changes in the labour market for economic development.

The article discusses the relationship between education and economic development through an examination of human capital theory and the power of transnational companies. The author discusses the origins of human capital theory and notes its popularity within the field of education and economic development research, and he addresses policy responses to the influence of transnational companies (TNC).

Analyzes the factors generating low skill equilibria in South Korea, Singapore and Great Britain. Importance of the nature of competitiveness in understanding issues related to economic survival and welfare; Inclusion of education on the platforms of politicians; Political consensus on the social capacity for productivity and skill formation.

The article examines how the educational system in Western industrial societies should be organized to meet the social and economic challenge of the late twentieth century. In advanced industrial societies the educational system has been identified as making a major contribution to national economic prosperity. In recent decades Western societies have been experiencing a major transformation heralding a new era which can be described as post-industrial, post-modern, post-fordist or in terms of the rise of the information society. This transformation has been the result of a number of factors including the technological revolution in communications, computers and robotics; globalization; and the rising competitive force of Pacific Rim countries. So long as industrial production is distinguished by the routine tasks symbolized by the assembly line, where the majority need only to conform to the demands of the task in hand and a minority conceive and develop policy, a rigid division of labour based on bureaucratic procedures proves a reliable technology for the administration of production. The aim of education in this context is to process the raw material of human abilities into workers who are then fed into the appropriate level of the productive hierarchy. Consequently, despite the shift to a fairer system of educational selection during the twentieth century and major gains in economic efficiency, the way in which systems of education and training have been organized in industrial societies on the principles of machine bureaucracy has resulted in a massive waste of talent.