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This volume analyses some of the major current trends and policy challenges in the 'new economy' from the point of view of technical innovation and competence building. It brings together the leading European expertise on different topics in this field. Together the authors give a picture of the most dramatic new challenges in a world where competition is becoming increasingly knowledge-based and global. Why has the US economy been able to realise a so-called new economy based on the effective exploitation of information technology while Europe still suffers from chronic high rates of unemployment? How is it that contemporary economic systems have become more knowledge-intensive but social inequality, both within and across countries, is increasing? The contributors to this volume share the belief that knowledge is a fundamental component of economic growth and welfare. However, the ways in which knowledge is transmitted and distributed among economic agents requires shaping by public policies. The individual chapters report on the most significant policies adopted and assess them in the light of the European experience in comparison with the United States and Japan.