Knowledge as a Set in Idea Space: An Epistemological View on Growth

This articlepresents a model of knowledge, seen as a set of ideas definedin a multidimensional idea space. Knowledge is created throughconvex combinations of older ideas and through paradigm shifts.When normal science has made the knowledge set convex, scientificopportunity is exhausted. Individual countries are endowed withdifferent knowledge sets, which gives rise to idea gaps. Thegrowth of a country's knowledge depends on diffusion from othercountries, on own production, and on the state of its human capitaland institutions. In the long run, economic growth will dependon knowledge growth, but only paradigm shifts can save R&Dfrom diminishing returns