This paper aims to clarify an economic mechanism behind the growing dichotomy between geo-economics and the borderless global knowledge economy. The proposed hypothesis is that geo-economic fault-lines, which are the product of the past prejudices of racial, linguistic, and cultural segregations, negatively affect the growth of knowledge economy; 1) because they restrict the free flow of knowledge by creating national or regional barriers, 2) because restricted flow of knowledge hinders the process of knowledge creation, 3) because through the above process they delay the growth of knowledge industries and the subsequent wealth creation.