This paper focuses on the knowledge problem of economics by discussing its current status in light of digitalization. This problem highlights the paradox of not having the necessary knowledge to take an economic decision, but pretending to have it and act, hence questioning the legitimacy of governmental decision-making and its impacts on the economy. Current technological developments are challenging this problem. Big Data has been a neglected phenomenon when it comes to its impact on the nature of knowledge and the decision-making processes associated with it, and it is easy to think that Big Data solves this problem. This research gap is evaluated by re-visiting the knowledge problem and evaluating whether the knowledge problem can still be valid in the digital era. The digital governance issue has been largely covered by literature in terms of technical possibilities. However, the main challenge is not the technical one, but rather how to create governance structures to involve people in decision-making processes, and at the same not fall into the trap of the knowledge problem. The sustainable transition from digital government to digital governance is a transition from a technical structure to multiple processes on different levels, and these processes have their own limits.
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