In current discourse the knowledge economy is viewed as the primary saviour of European competitiveness. By increasingly focusing on economic activities that utilise knowledge and innovation as the primary value-adding feature rather than cheap labour or available raw materials the EU should be able to increase its constantly weakening competitive position vis-à-vis North America and the fast growing economies in South and Southeast Asia. In the Lisbon European Council in March 2000, the European Union set a strategic goal for the next decade "of becoming 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". There is thus an implicit expectation that an increasingly knowledge-based economy would automatically generate larger economic growth and prosperity.
Before trying to illuminate further on that issue there is however a need to establish exactly how the knowledge economy could be operationalised to quantifiable measures. A generally utilised option here is the division of the knowledge economy into input and output variables. The former could be characterised as the actual endowments of the knowledge production system and include such issues as the educational level and knowledge of the population, the social capital of the population, the amount of money invested into education or the number of students, investments into research and development (R&D), etc. Output variables could be regarded as measurements of the economic or other output of the regional research environment and include, in addition to direct economic measurements such as GDP, issues such as the number of issued patents or patent applications or employment within certain knowledge-intensive branches.
Thus the main question here centres on the patterns of knowledge economy inputs and outputs in Europe and how are these distributed among the regions of the continent.