Today's ''knowledge economies'' are seeing the emergence of new paradigms for innovation and the advancement of knowledge in relation to economic activities. This report explores some key determinants of innovation and their implications for the advancement of knowledge in a particular sector - primary and secondary education.The analysis shows that there is considerable scope for certain drivers that have helped speed up innovation in other sectors to take effect in education. However, in practice, a number of basic characteristics of education systems have prevented innovation from changing this sector fundamentally.Nevertheless, educational policy makers can learn much from observing how innovation occurs and how sectors are transformed in the most knowledge intensive parts of the economy.