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Invisible Economy

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The Intangible Economy: an Overview.

Understanding Economic Change

Generally speaking and according to our perception at present, we could say that production and products pertain to the material universe: production, which is based on natural resources and energy, is fundamentally tangible. We got so used to this idea that we do not attempt to analyze it any more.

Our economic and legal constructions are based on production, ownership and exchange of tangible goods.
Economy, as it appeared after the industrial revolution, comprised activities related to the transformation of natural resources and was mainly an economy of goods. Under the mass production system with homogenous goods, the knowledge content of goods was low and the most important phase of the production process was manufacturing, since firms relied on economies of scale for market performance. Hence, the tangible aspects of factors of production were the most important (productivity thereby explained by the amount of physical capital and quantity of labor employed).

Nevertheless, with the development of the economy and society as a whole, the importance of knowledge increased, leading to information and ideas playing a crucial role in determining economic performance. Nowadays, the knowledge content of goods is higher, and the pre- and post- manufacturing phases are crucial for value creation.

The new type of economy that is emerging is more about a shift of mindset relating to building and extracting value - in both the tangible and intangible worlds. Far from being new topics, knowledge and intangibles have been important throughout history (for over 30 years we have been talking about intangible and tangible investments, for example; moreover, because our economic systems have always been functioning based on information, knowledge, human skills and competences, intangible

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