It has over the last decade been accepted by many commentators that the economy is moving into a new phase of development based particularly upon knowledge production and consumption. And although the ‘knowledge-based economy thesis’ may have been overstated, it is difficult to deny that important changes have been occurring in the ways that economies work, and that these changes do indeed revolve in part around the creation, transfer and use of knowledge. Since the 1980s we have for example witnessed the expansion of ICT and the internet, and the emergence of knowledge intensive business services, as well the deepening of R&D inputs into manufacturing industry. Unfortunately, however, the KBE thesis is also associated with an excessive emphasis upon the last of these changes – upon the role of science and technology in manufacturing – an emphasis that has led to the neglect of other economically relevant knowledge forms. In the following pages we examine this emphasis and its consequences, and we suggest that policy research should be rebalanced to produce a more interesting and realistic assessment of the ways in which knowledge now contributes to economic development.