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Economic globalization results in unbalanced development and growing inequality between the centre and the periphery of the global economic map. This process is driven by the expansionist policies of the corporations and the financial capital, being in collision with the social protection system. Markets are good for wealth creation, but they fail to take care of the citizens’ social needs. Social justice is a public good that can be provided for only by means of the political process. Globalization fails to meet the needs of the ultimate beneficiary of the development processes - the citizen. The modality in which economic localization foundations were set in the development and transitional economies, did not exhibit clear development capacities in order to improve the global position of these countries. Alternative development strategies are required in order to keep the territorial integrity of the nation-state and radical reforming of the central government role in the process is a prerequisite. The main driving force of the sustainable governance concept refers to the participation, knowledge and information distribution and cooperation among stakeholders. Economic prosperity is dependent on the effectiveness in production, collection and use of knowledge in the economic processes. Economy converts into a hierarchy of networks and what comes out as a result is a network society in which individual or corporative capacity for participation and networking determines the socio-economic position. Knowledge - Based Economy (KBE) refers to an economy that applies information resources, technology and knowledge into the economic development processes. Innovations entail increased communication intensity and feedback among companies, academic institutions, laboratories, consumers. They are a result of a number of interactions and synergies of specific innovative systems that tend to expand outside national borders, ideally becoming global, incorporating numerous global-local connections. (JEL Q01, F60, F00)

Sustainable Governance and Knowledge-based Economy – Prerequisites for Sustainable Development of the Developing and Transitional Economies