Abstract

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This paper has attempted to study the development and growth of a knowledge based economy in two developing countries, namely Malaysia and Thailand. A summary of different economic theories states that the best theoretical grounding for a knowledge based economy is the endogenous growth theory. The conceptual framework established for statistically measuring the success of knowledge-based economy (KBE) comprise of the following variables: 1). Innovation, 2). Information and communication technology, 3). Development and 4). Business Environment. Recommended additions to the framework were proposed in this paper based on integrating the following variables: 1). Government incentives, 2). Better human capital, and 3). Institutional factors. The last section of the paper proposes policy recommendations and conclusions.

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