Advancing Knowledge in the Public Sector: A World Bank Perspective ©Knowledge for Development, WBI Carl Dahlman World Bank Advancing Knowledge and the

Advancing Knowledge in the Public Sector: A World Bank Perspective

©Knowledge for Development, WBI©Knowledge for Development, WBI

Carl Dahlman

World Bank

Advancing Knowledge and the Knowledge Economy

January 10-11, 2005

Growing Differences in GDP/Capita

Per Capita GDP for Selected Regions or Countries (1990 international $, 1480-1998)

0

5000

10000

15000

20000

25000

30000

1480 1560 1640 1720 1800 1870 1950 1998

Western Europe

Eastern Europe

United States

Latin America

Japan

China

India

Other Asia

Africa

Source: Calculated from Angus Maddison, The World Economy : A M illennial Perspective, OECD: Paris, 2001

GDP/Capita Growth: Korea vs Ghana

0

2

4

6

8

10

12

14

1960 1965 1970 1975 1980 1985 1990 1995 2000

K n o w le d g e m a k e s th e D if fe r e n c e K n o w le d g e m a k e s th e D if fe r e n c e b e tw e e n P o v e r ty a n d W e a lth . . .b e tw e e n P o v e r ty a n d W e a lth . . .

R e p . o f K o r e a

G h a n a

T h o u s a n d s o f c o n s ta n t 1 9 9 5 U S d o lla r s

D if fe re n c e a t t r ib u te d to k n o w le d g e

D if fe re n c e d u e to p h y s ic a l a n d h u m a n c a p ita l


Key Issues for Governments in Developing Economies

How to help them develop appropriate policy knowledge for broad development strategy?

Economic analysis as part of project preparation and or policy dialogueTechnical assistance loansTraining and helping set up institutional capability

What can they do to develop better strategies to make more effective use of technical knowledge for successful economic development

Policy analysis/advice/training/study tours visitsProjects such as metrology, standards, quality control, public research institutions, higher education

Few Countries Have Sustained High Growth Rates over Long Periods

Have analyzed countries with highest growth performance and found that key elements of their strategies, in addition to appropriate macroeconomic management and good economic incentive regimes have been:

Massively tapping into global knowledgeInvesting strongly in educationMore recently, investing heavily in ICTFor most advanced, focusing much more on producing own world frontier knowledge, if not across the board, at least in some sectors

Framework for Using K4D:

Four Key Functional Areas Economic incentive and institutional regime that provides incentives for the efficient use of existing and new knowledge and the flourishing of entrepreneurship

Educated, creative and skilled people

Dynamic information infrastructure

Effective national innovation system


KAM Methodology

KAM: 76 structural/qualitative variables to benchmark performance on 4 pillars

Variables normalized from 0 (worst) to 10 (best) for 121 countries

www.worldbank.org/kam

Basic scorecard for 14 variables at two points in time, 1995 and 2002

Aggregate knowledge economy index (KEI)


Relative Positioning of Countries in Global KE

Conceptual Framework for Innovation in Developing Countries

Innovation in developing countries should be understood broadly as something new to the local environment

Therefore distinguish two broad types of innovation

Local improvements through adoption of existing foreign technology

Development of technologies new to world


Innovation in Developing Countries

In developing countries the first type is the most relevant, the second is rarer, except for the more advanced developing countries

Developing countries will get a bigger economic impact from raising average local practice to best world practice than from creation of their own new knowledgeThey will also get a bigger impact from raising average local practice to best local practice, therefore the critical importance of domestic diffusion


ChallengesFocus of most S&T policymakers is not on the most important elements of the innovation system in developing countries

R&D not the main source of innovationHigh tech sectors are tiny part of developing economiesService sector is largest share of economic activitySuccessfully applying knowledge requires entrepreneurship, management, organizations,and also depends on economic and institutional regime

Need a better conceptual framework and policy tool kit that

Differentiates across countriesProvides made to measure policy advice and specific project design


Differentiated StrategiesAcquiring Creating Disseminating

Catch-Up Sectors Most critical:

-lots of knowledge in pubic domain

-also large stock to be purchased

Therefore need good global scanning and acquisition ability

Less relevant or feasible, but still need R&D capability to acquire and adapt.

Focus limited R&D efforts on complementing what can be acquired

Very important:

-extension services

-technical information

-metrology, standards, testing and quality control

-specialized suppliers

-growth of most efficient firms

Sectors Nearer Frontier

Continue tapping global knowledge

-FDI/licensing

-Strategic alliances

-foreign R&D as antennas to tap knowledge

Refocus public efforts on commercially relevant research

Increase private R&D efforts

Stimulate more interaction among R&D institutes, firms and universities

Dissemination efforts continue to be critical

But also need to

commercialize knowledge

-technology transfer offices

-tech parks/spin-offs

-cluster development

-regional innovation ©Knowledge for Development, WBI

©Knowledge for Development, WBI

Three Key Policy Areas for Innovation Policy

Education and training policiesAppropriate S&T policiesRegional cluster policies

Education and Training Policies

Increasing average educational attainment of labor forceIncreasing higher education enrollment rates as it is now more important to make effective use of knowledge as well as to create new knowledgeStrengthening the research capability of universities and their interaction with firms and research institutesDeveloping life long learning opportunities in order to facilitate continuous learning and re-skilling

Specific S&T Policies

Increasing public R&D funding, and encouraging private sector to increase its own R&D effortAllocating public funding more effectivelyGetting more spin-offs from public R&D effortsEncouraging greater interaction among three key domestic actors: public R&D institutes, universities and productive sectorEncourage greater investment in R&D and knowledge assets by private sectorEncouraging greater interactions between domestic actors and foreign knowledge actors Encouraging brain circulation rather than brain drainEncouraging the development of regional knowledge clusters

Development of Regional Innovation Clusters

While the general economic and institutional framework and broad policies towards science and technology and education, are very important, innovation happens at the local levelTherefore governments also have to stimulate development of regional innovation clusters.This involves developing stronger interactions among firms, universities and research institutions through formal and informal processes

Not just among local actors But increasingly with foreign firms and institutions

Also involves regional development policies, infrastructure and logistics

Conclusion

Greater attention needs to be paid to creating domestic capability to make more effective use of knowledge

S&T strategies appropriate to country’s level of developmentPolicies to help firms and organization to tap into global knowledge more effectivelyInvestments in human resources, especially higher education Development of local R&D capability to

• scan , acquire and adapt relevant global• improve and create appropriate new knowledge

Need to make more convincing case to ministries of finance and to business sector that investing in knowledge is necessary and can yield high economic and social returns


END

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Advancing Knowledge in the Public Sector: A World Bank Perspective ©Knowledge for Development, WBI Carl Dahlman World Bank Advancing Knowledge and the