The importance of knowledge in the era of globalisation Generating knowledge and translating it into innovation is vital for the future competitiveness of Europe. An EU-financed project has explored the fascinating link between knowledge production and the behaviour of companies and markets. Industrial Technologies © Thinkstock To maintain and enhance its competitive edge against strong global competition, in recent years the EU has been striving to build a truly knowledge-based economy. But how is Europe faring in this emerging world order, and how successfully is knowledge being translated into concrete innovations and products? The 'Science, innovation, firms and markets in a globalised world' (SCIFI-GLOW) project, funded by the EU's Seventh Framework Programme (FP7), endeavoured to map Europe's knowledge sector. Team members analysed the interaction between knowledge production and the behaviour of firms and markets to identify common and contrasting trends. Bringing together economic researchers interested in research and development (R&D) and others who focus on global trade, SCIFI-GLOW explored questions on how globalisation affects productivity, innovation and flows from research to the industrial sectors. After trawling through millions of academic articles, project partners found that the mean citation rate, an important indicator for the flow of scientific knowledge, remains generally higher in the United States than in Europe. In addition, SCIFI-GLOW found that increased global competition can affect productivity both positively and adversely, and leads to leaner, decentralised corporate structures and a worldwide battle for talent. Project researchers also studied the factors affecting innovation and productivity. They discovered that international competition, subsidies and membership of a group foster R&D, while size, R&D intensity and investment in equipment encourage innovation. In addition, process innovation was also noted to facilitate product innovation. By generating knowledge in a little-explored area, SCIFI-GLOW outcomes are not only promising to advance science, they are also providing essential support to policymakers.