Lynn Ilon
Seoul National University
[email protected]
Question: Why does Google give you a
service and charge you nothing?
Question: Why do you give Google
free information to improve its
products and charge them nothing?
Question: Why is Facebook worth
millions of dollars but has never
made a profit?
Question: What is going on here?
Answer: Knowledge economics.
Prevailing theories of economic growth are
built around an economic model that
maintains that growth comes from markets
and, therefore, must derive from industry.
Much of Africa is still rural and quite poor.
Traditional theories of development view
these communities as “costs” which must be
“fixed.”
But a relatively new theory, proposed by
Romer in 1992 has begun to have
prominence which emphasizes the role of
ideas and knowledge.
New Growth Theory
The theory is based on
two major tenants:
First, it posits that a
nation’s ability to grow
its economy is partly
based on its ability to
create and absorb new
ideas (originally thought
to be ideas about
technological change).
Second, it posits that ideas
have specific economic
characteristics that make it
perform unlike other goods or
services.
Knowledge is costly to develop, but, thereafter,
it is free to duplicate and benefit a lot of
people at low or no cost unlike physical
goods which continue to cost something to
duplicate.
For example, we all benefit from the idea of
vaccines, maps and pasteurization. While
each of these can take on a physical form,
each idea benefitted a lot of people, was
spread cheaply and added to our society’s
well being.
The theory is important for African
development. Rather than industry being
the center of ideas, we now know that it is
networks of people who build and shape
ideas. Network theory tells us that
networks are weakened when some people
are marginalized or left out of the network.
The Value of Collective Learning
Amartya Sen’s Nobel Prize winning work. Sen
believed that societies that had the ability to
talk freely about their issues and problems,
exchange information, and raise awareness,
effectively built new knowledge. If they could
then take action, then they collectively raised
the value of their lives – through knowledge
creation rather than industrial production.
New growth theory combined
with Amartya Sen’s theory of
collective knowledge building
and network theory shows that
it is in the world’s interest to
view communities as part of a
global network. Their local
knowledge is invaluable to
help solve globally linked
problems as a source of
ingenuity, innovation and
strength to drive economic
development.
Many issues such as
health, communications,
governance, education,
environment, housing,
literacy, development,
community organizing
and social awareness;
virtually any issue that
involves collective
awareness or responses
can see substantial
effectiveness benefits
and cost reductions by
using knowledge
strategies.
Universal problems of disease, environmental
degradation, terrorism, migration, refugees
and hunger have two ways to be tackled. The
old way is to bring in the experts once the
problems have been created. Another way is
to engage local communities in mitigating the
underlying problems before the problems get
out of hand.
OR
Before
after
The key is to link such
communities into a network and
provide them with the learning
tools and opportunities to make a
contribution.
Thinking of community as
a resource, lowers the
cost of problem
management for
government, industry and
the entire world. New
growth theory not only
helps us understand how
development really works,
it shows us how social
progress can be achieved
by lowering the burden
now carried by industry,
government and global
institutions.
Policies
First, all entities
must be brought
into the
knowledgegenerating
network.
Train “experts”
to listen to
communities;
their expertise
extends only as
far as a
particular field
Second, government needs to begin to
recognize that knowledge-value is now
being created both within and outside of
industry.
Third, knowledge is synergized around
networks. As networks are only as strong as
their weakest link, it is poor national policy
to build networks around top knowledge
users and neglect the least educated.
Fourth, reducing
national costs of
development means
heavily engaging all
communities.
Investments not just in
formal education, but
in learning
infrastructure and
knowledge linkages of
poor communities will
reduce long-term costs
of social progress.
Question: How can government
reduce the cost of its services?
Question: How can the learning
ability of communities, NGOs and
civic society be captured?
Question: How can society be
improved without increasing
monetary resources?
Answer: Knowledge economics.
Lynn Ilon
Seoul National University
[email protected]