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Leveraging the Knowledge Economy Carlos A. P. Braga Senior Manager, Informatics Program Information Solutions Group The World Bank ACURIL XXXIII June 1-7, 2003 San Juan, Puerto Rico

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OUTLINE Knowledge and the World Economy Networks and the Knowledge Revolution The Knowledge and Digital Divides The Caribbean and the Knowledge Revolution Knowledge at the Firm Level: the World Banks experience Concluding Remarks

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Knowledge is a key resource for the global economy Throughout history, relative economic performance has been closely associated with the capacity of countries to participate in successive technology/knowledge revolutions (agriculture, manufacturing, services, knowledge societies); Knowledge has played a critical role in differentiating the long run economic performance of countries; In the last 50 years, economic growth has been closely associated with urbanization, emergence of new organizational forms, and regional and global tradeall these trends, in turn, are closely linked to agglomeration of people and ideas

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China and the World Economy

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Development and Poverty

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Knowledge makes the Difference between Poverty and Wealth

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OUTLINE Knowledge and the World Economy Networks and the Knowledge Revolution The Knowledge and Digital Divides The Caribbean and the Knowledge Revolution Knowledge at the Firm Level: the World Banks experience Concluding Remarks

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Increasing Importance of Knowledge Seven key elements of Knowledge Revolution: Increased generation/codification of knowledge (e.g., patents granted in the US: from 49,971 in 1963 to 175,983 in 2000); Closer links with science base/increased rate of innovation/shorter product life cycles; Increased importance of education, up-skilling of labor force, and life long learning; Growing investment in intangibles (R&D, education, brands) OECD countries spend more than $520 billion per year in R&D; Value added increasingly associated with investment in intangibles such as branding, marketing, logistics/information management; Innovation and productivity increase more important in competitiveness & GDP growth; Increased Globalization and Competition Trade/GDP from 38% in 1990 to 52% in 1999 Value added by TNCs 27% of global GDP Bottom Line Constant change and competition implies need of constant restructuring and upgrading; ability to create, access and use knowledge is becoming the fundamental determinant of global competitiveness

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Knowledge Changes the Development Process Knowledge makes the difference between poverty and wealth Creation and effective use of knowledge is key to rapid economic growth ICT is changing the terms under which knowledge can be created and disseminated: ICT facilitates the process of codification and transmission of knowledge about technology; ICT enhances the positive learning externalities of knowledge generation by magnifying the possibilities for recombination of ideas and information; ICT dilutes the tyranny of geography by providing new ways for researchers to escape national boundaries. The rate of international co-authorship of scientific and technical papers, for example, has increased significantly over the last decade. ICT increases the distribution power of innovation systems, diminishing the time to market of new products and services, while enhancing the dissemination, application, and use of mature technologies

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OUTLINE Knowledge and the World Economy Networks and the Knowledge Revolution The Knowledge and Digital Divides The Caribbean and the Knowledge Revolution Knowledge at the Firm Level: the World Banks experience Concluding Remarks

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The World Divided by Income Level (2000 GNI per capita) Source: World Bank SIMA Database

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High income 21% Low income 35% Lower middle income 36% Upper middle income 8% Global Distribution of Population & GDP Source: World Bank SIMA Database 1970 (Population)1970 (GDP) Upper middle income 6% High income 84 % Lower middle income 7 % Low income 3 %

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Global Distribution of Population & GDP Source: World Bank SIMA Database 2001 (Population)2001 (GDP) Low income 41% Lower middle income 35 % Upper middle income 8 % High income 16% High income 81% Low income 3% Lower Middle income 9 % Upper middle income 7 %

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Higher Education Enrollment Ratio (1997) Source: World Bank SIMA Database

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Countries 198019902000 (projection) Low Income3.94.75.4 Middle Income5.56.87.3 High Income9.39.610.2 World5.96.77.2 Average Years of Schooling of the Total Population Aged 15 and Over

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198019902000 High Income Middle Income3.82.8 (26.3%)2.9 (- 3.6%) High Income Low Income5.44.9 (9.3%)4.8 (2.1%) (unit: years; % indicates reduction of the gap in comparison to the previous decade.) Difference in Average Years of Schooling between Income Groups

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Global Distribution of R&D Expenditures (1997) Source: Calculated based on data from the World Bank SIMA Database, 2002 Low income 0.8 % Lower middle income 2.4 % Upper middle income 4.1 % High income 92.7 %

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Global Distribution of Patenting (registered in the U.S., 2001) Source: Calculated based on data from the US Patent & Trademark Office (USPTO), 2001 High income 99.2 % Low income 0.1 % Lower middle income 0.4 % Upper middle income 0.4 %

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Royalty and License Fees, Payments, and Receipts (BoP, current US$, Millions) payments 1975 payments 2001 receipts 1975 receipts 2001 Source: Calculated based on data from the World Bank SIMA Database High income Low income Lower middle income Upper middle income 0.05

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E-Development: Challenging Development Theory Conventional wisdom Distance matters (geography, economic distance: regulatory, trade barriers) Knowledge-based development (building upon human capital) is more rewarding over the long- term than resource-based development There is a natural sequence in stages of development

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E-Development: Challenging Development Theory Impact of ICT Economic distance becomes even more relevant, but the role of geography diminishes Additional advantage for human-resources rich societies Opportunities for leapfrogging expand (e- government experiences in developing countries illustrate these opportunities)

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ICT and Poverty Reduction ICT and Economic Growth - enhanced competitiveness - increased business opportunities - access to market for rural communities ICT and Improved Delivery of Social Services - better health/education/environmental services - reducing vulnerability to natural disasters ICT for Greater Transparency - improved efficiency on government procurement - reduced corruption - increased civil society participation ICT for Empowerment of the Poor - allowing the poor to better communicate their concerns

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The more transparency, the less corruption. The less corruption, the more private sector investment Transparency & Private Sector Investment

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Income Divide Digital Divide Source: ITU World Telecommunication Indicators Database User distribution, by income group, 2001

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Telecoms and Internet the cost of being connected Sri Lanka Monthly internet access charge as a percent of monthly average income Sri Lanka Nepal Bangladesh Bhutan United States Denmark Source: Human Development Report Office calculations based on data ITU 2000 and World Bank 2001

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The good news... Source: Human Development Report, 2001

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Information Holds Major Opportunities For Development Business connectivity Access to international information for small and large business Logistic support; e-com Health Preventive health care Curative health care Less isolation in remote and poor areas Community communication centers Wireless technologies Government Electronic payments systems Electronic government (tax, customs) Land titling, registries Access to information, democratization Environmental and natural resource management Teledetection Computerized databases Ecologically-balanced agricultural management Financial sector International payment systems Bulk and high value transaction systems Significant Opportunities for Development Education Basic Higher Professional

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OUTLINE Knowledge and the World Economy Networks and the Knowledge Revolution The Knowledge and Digital Divides The Caribbean and the Knowledge Revolution Knowledge at the Firm Level: the World Banks experience Concluding Remarks

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Source: World Economic Forum, The Global Information Technology Report 2002-2003 Network Readiness Index 02/03 (rankings of 82 countries)

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Source: World Economic Forum, The Global Information Technology Report 2002-2003 Public Spending on Education (% of GDP) (market environment) Source: World Economic Forum, The Global Information Technology Report 2002-2003 MEAN: 4.74

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Source: World Economic Forum, The Global Information Technology Report 2002-2003 Availability of Scientists and Engineers (market environment) 01234567 Haiti Bolivia Honduras Mexico Dominican Republic Jamaica South Africa China Venezuela Thailand Colombia Trinidad and Tobago Brazil Russia Korea Singapore Sweden United States Finland India MEAN: 4.88 1=non existent or rare; 7=widely available

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Source: World Economic Forum, The Global Information Technology Report 2002-2003 Brain Drain (market environment) MEAN: 3.76

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Source: World Economic Forum, The Global Information Technology Report 2002-2003 Legal Framework for ICT Development (political/regulatory environment) MEAN: 4.48

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Local Availability of Specialized IT Services (infrastructure environment) Source: World Economic Forum, The Global Information Technology Report 2002-2003 1= not available in the country; 7= available from world-class local institutions MEAN: 4. 85

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MEAN:3.8 Source: World Economic Forum, The Global Information Technology Report 2002-2003 Public Access to the Internet (individual readiness) MEAN: 3.82

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Government Prioritization of ICT (government readiness) Source: World Economic Forum, The Global Information Technology Report 2002-2003 MEAN: 4.43

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Cost of Business Telephone Subscription (business readiness) Source: World Economic Forum, The Global Information Technology Report 2002-2003 MEAN: 0.16

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Source: World Economic Forum, The Global Information Technology Report 2002-2003 Number of Internet Users (per 100 people) (individual usage) MEAN: 38.44

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Source: World Economic Forum, The Global Information Technology Report 2002-2003 Readiness of Government On-line Services (government usage) MEAN: 3.72

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Source: World Economic Forum, The Global Information Technology Report 2002-2003 Use of Internet for Coordination with Customers and Suppliers (business usage) MEAN: 3.7

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OUTLINE Knowledge and the World Economy Networks and the Knowledge Revolution The Knowledge and Digital Divides The Caribbean and the Knowledge Revolution Knowledge at the Firm Level: the World Banks experience Concluding Remarks

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The World Bank: A Brief Profile Primary focus of helping the poorest people and the poorest countries US$19.5 billion in loans to its client countries in Fiscal Year 2002 Works in more than 100 developing economies About 10,000 staff working across the globe

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The Vision of the Knowledge Bank Our vision is to become a Knowledge Bank that spurs the knowledge revolution in developing countries and acts as a global catalyst for creating, sharing, and applying the cutting-edge knowledge necessary for poverty reduction and economic development. (Knowledge For All, 2000 Annual Meetings) The Knowledge Bank concept was introduced in 1996 as a way of taking a more strategic approach to improving our development impact via knowledge a thrust formalized in the Strategic Compact. We recognized that to achieve our mission of poverty reduction and growth including reaching the Millenium Development Goals we will need to contribute effectively to closing the knowledge and digital divides that separate developed and developing countries.

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Vision of the Knowledge Bank through learning from the outside world through Economic and Sector Work research evaluation with our clients, partners and outside world with staff in the organization through products and services and learning our successes from failures and

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Knowledge manager Present Help Desk Staff Clients Relevant knowledge is made available just-in-time Relevant best practice Relevant bibliography reference materials Relevant polices, guidelines, procedures Most frequently asked questions Country conditions, correspondence personae, issues Most frequently made mistakes in the past Relevant country, sector data Text of previous similar task outputs Most knowledgeable gurus on key issues Best analytical tools, e.g. economic, financial analyses Past Sea of paper Electronic Knowledge Tacit Knowledge Information is often low quality and hard to find The Knowledge Bank

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The IT Environment at the World Bank Then (1995) & Now Almost entirely paper-based Large gaps in official business records Information only in peoples heads Photocopying is a major industry Libraries-traditional services only No concept of knowledge management Manual updating of the few electronic documents No Bank Report delivered online Primitive intranet and Bank web page Hardcopy publications only for clients No collaborative information solutions Electronic capture, storage and retrieval Business records captured in electronic forms Enterprise electronic information warehouse Electronic shared access to documents Electronic library sources widely available Knowledge communities developed Central cataloguing of all kinds of information 40,000 Bank Reports online Lending/partnership leveraged with online knowledge sharing networks (GDLN) and information dissemination (Development Gateway) External web; 7 million page views per month; 1300 visits/hour; 120,000 content pages

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The Knowledge Bank 1.Improving the Bank s operational quality and effectiveness through enhancing our own capacity. 2.Enhancing the sharing of knowledge with our clients and partners. 3.Enhancing client capacity to access and make effective use of knowledge, whatever the source. The Knowledge Bank has three main objectives:

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What we have learned Communities are the heart and soul of Knowledge Sharing Building on informal networks Identifying the right leaders Supporting and nurturing communities Integrating with core business processes Balancing creativity and accountability

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Challenges: the gap in adapting knowledge to client needs in Africa Adaptation gap Source: Africa client surveys

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Objectives and Status of the Knowledge Initiatives ObjectiveRelevant InitiativesStatus Enhancing the sharing of knowledge with our clients and partners. Development Gateway (information and services portal) Global Development Learning Network (distance learning network) Development Forum (online discussion forum) Global Knowledge Partnership (inter-agency collaboration) Newly independent Foundation with numerous partners and donors. WBG engaged as a service provider. Mainstreamed within Bank Regional ownership. Multiple partners and donors for content and facilities. Managed within WBI as service to WBG used for WDR, project consultations etc. Exited from Secretariat function in FY00; continued participation as member. Enhancing client capacity to access and make effective use of knowledge, whatever the source. Global Development Network (builds research capacity) info Dev (provides start-up funds for relevant ICT innovation) African Virtual University (helps deliver content via partners) World Links for Development (connects schools via internet) Established independently to facilitate ownership by participants & partners. Donor partnership managed by WBG. In planned transition to NGO established in Nairobi. NGO established, with continued Bank support.

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The Development Gateway Foundation

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The Development Gateway Portal

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Diverse resources, viewpoints, and practical knowledge - - contributed by users around the world Access to comprehensive and updated resources on more than 30 development topics with over 22,000 content items; Increased collaboration and dialogue among a range of different development stakeholders through a network of with nearly 25,000 members from 180 countries. The bottom line: shared information, communities of practice, partnerships Knowledge and Ideas Exchange knowledge on development with virtual communities

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Development Gateway Topic Communities *

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The Challenge of Knowledge Sharing

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Largest source of public information on development activities Offers access to 420,000 current and past development activities from a range of donors (10% of which are current) Information organized by country, sector, funding organization, activity status, or date Potential to reduce duplication of efforts and enables better-informed decisions by offering a picture of past, previous, and upcoming projects in a country or sector The bottom line: better coordination, standards for information sharing,more effective aid AiDA Accessible information on Development Activities

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OECS Aid Coordination

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Transparency and efficiency in government procurement Unprecedented access to procurement opportunities for businesses around the world Provides procurement solutions as a free service Sets tender information exchange standards To date, carries about 30,000 current tender notices, with a total contract volume of $200 billion View summaries in English, French, German, Indonesian, Italian, Japanese, Portuguese, Romanian, Russian, Spanish, and Turkish The bottom line: increased transparency and access, more economic opportunities dgMarket

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National initiatives that focus on local development issues Independently owned and operated partners of the Development Gateway Built on broad public-private partnerships Facilitate the effective use of ICT for sustainable development and poverty reduction at the local level A country-level portal and other online and offline initiatives To date, 44 Country Gateways in different stages of planning and implementation The bottom line: local knowledge, global reach, shared solutions Country Gateways

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Country Gateways Present Status RegionPlanning Phase (9 countries) Completed Planning Phase (9 countries) Implementation Phase (26 countries) E. Europe/ Central Asia CroatiaArmenia, Azerbaijan, Georgia, Bulgaria, Kyrgyz Republic, Moldova, Poland, Romania, Russia, Tajikistan, Ukraine, Kazakhstan, Uzbekistan Latin America/ Caribbean Bolivia, Brazil, Nicaragua, Costa Rica, Argentina, Guatemala, Dominican Republic, Jamaica El Salvador, Uruguay, Venezuela, Colombia, Peru AfricaMauritania, Mozambique, Rwanda, Uganda Namibia, Tanzania, Middle East/N. Africa MoroccoWest Bank and Gaza Strip East Asia/ Pacific VietnamIndonesiaChina, Mongolia, Australia, South Asia Pakistan, IndiaSri Lanka. Bangladesh

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Jamaica Development Gateway

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OUTLINE Knowledge and the World Economy Networks and the Knowledge Revolution The Knowledge and Digital Divides The Caribbean and the Knowledge Revolution Knowledge at the Firm Level: the World Banks experience Concluding Remarks

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Knowledge can make a critical difference in the development process; The risks of a growing knowledge divide, require special attention from policy-makers. In this context, one needs to focus on: The importance of an effective institutional and economic regime that fosters the creation, dissemination and use of knowledge; Investments in education so that the population can use knowledge effectively; The operation of the innovation system (involving R&D centers, universities, libraries, private firms, etc.); The implementation of a dynamic ICT infrastructure that fosters information dissemination, transparency and digital literacy. Concluding Remarks

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In the process of knowledge generation, dissemination and use in a networked environment, special attention needs to be given to: The balance between protection of intellectual property rights and the preservation of fair use and access to resources in the commons; The challenges of promoting digital literacy; The potential of public-private partnerships; The growing demand for transparency; The importance of context/localization; and The role of leadership. Concluding Remarks (cont.)

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T.S. Eliot, The Rock (Chorus) Where is the life We have lost in living? Where is the wisdom We have lost in knowledge? Where is the knowledge We have lost in information? Collected Poems (1909-1919) Beyond the knowledge revolution

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More information The World Bank www.worldbank.org Development Gateway Portal www.developmentgateway.org