1 Implications on Economic Model Bhekuzulu Khumalo Independent Scholar, Canada Digital Economy and Knowledge Economics: Chapter 1 ABSTRACT The digitization of information has been one of the greatest stories of the last two decades. This paper seeks to explain the meaning of this process and how it affects already established models concerning trade and knowledge economics. This paper is based on the simple premise that knowledge is the most important resource, without which nothing can be done. The paper starts by looking at the competitive advantage theory that was largely promoted by Michael Porter whose works have greatly influenced the first part of this paper. The paper then discusses the ever more important role of knowledge due to competitive advantage theory and the digitalization of information. Finally the implications and dis- crediting the comparative advantage theory, this theory has no place in modern economic thinking. As we have more tools in our disposal, we must investigate the importance of wave theory as well as the true meaning of competition. It also looks into the greater role collaboration will play in the future. The paper briefly discusses the effects that the digitization of information will have over time. INTRODUCTION Need for a New Model The digitization of information indeed has been revolutionary in every sense of the word. There has been arguments of new economic models com- ing to the forefront, some saying there needs to DOI: 10.4018/978-1-4666-1556-4.ch001 be a new economic model. Indeed Robert Nolan, in one of his writings in his blogspot PEHUB, titled his article, written on September 5 2008, as "Wanted: New Economic Models for Media in the Digital Age". The digital age has affected economics, and will continue to do so. However economists must be careful when they attempt to create new models. Unless work has not been done in a field, a model will be a gradual change to show the new realities. Quoting Robert Nolan Copyright © 2010, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.