Uneven Paths of Development: Insights from Case Studies

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Uneven Paths of Development Insights from Case
Studies

• Banji Oyeyinka PhD
• Professorial Fellow, UNU-MERIT
• Director, Global Monitoring and Research
  Division, UN-HABITAT

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Questions

• What is the precise mechanics of overcoming
  economic development challenges in different
  contexts?
• At the heart of it all is about how economies at
  different levels deploy the unending streams of
  information and knowledge to developmental ends.
• The notion of income convergence between the
  poorer South and the wealthy North has proved a
  mirage

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Settings

• A new economic divide is evident within the South
  itself, and as well, between regions and within
  regions
• The debate relating to latecomers is thus framed
  in discussions about regions and countries that
  arrive late to mastering industrialization in
  achieving economic prosperity through the use of
  knowledge

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Knowledge Domains and Capabilities

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Catching Up in Capability

• Economic history shows that whereas countries
  move relatively easily from the lowest knowledge
  domain to the next higher one, moving further up
  into knowledge domains that focus on incremental
  design and innovation and then to frontier
  innovation is ridden with significant
  difficulties and widespread lack of success.

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Catching Up in Capability

• Several countries on a supposedly sound catch-up
  path often do not move as predicted or regress
  along this path mainly due to the inability of
  these countries to manage the coordination
  efforts required in setting up a sound basis to
  move to the next knowledge domain.

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Catching Up in Capability

• Not enough to focus just on industrial policy
  that does not take into account the scale
  effects, thresholds of scientists of engineers
  and minimal standards of domestic knowledge
  infrastructure
• Poor policy environment for domestic innovation
  are common gaps in latecomer countries.

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Learning to innovate

• Innovation is important because learning in the
  course of producing certain goods are finite and
  in the end will approach a limiting value and
  stops altogether in the absence of the
  introduction of new technical processes.
• An industry, system of production or firm could
  not hope to rely indefinitely and exclusively on
  particular knowledge of production without new
  knowledge injected through innovation, within or
  outside of the firm.

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Learning to innovate

• The sources of knowledge growth are not unique to
  any country and are often determined by an array
  of historical factors
• Much of the modern knowledge in forms of
  technical expertise and machinery would be
  imported from abroad
• Successful assimilation and subsequent knowledge
  creation occur over time and
• The rise in knowledge stock depends on the
  combined use of imported technology and domestic
  autonomous technical change efforts.

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Learning to innovate

• The wealth of a country is directly related to
  the creation, validation and use of knowledge
• See next figure advance industrial nations have
  acquired high levels of knowledge

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Model of latecomers
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Ranking on Innovation CI
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Insights from Our Research

• We advance the notion of knowledge domains,
  technological capabilities and learning
• It makes a contribution to our understanding of
  levels of development (domains indicate a country
  stage in the catch-up ladder) and the processes
  that links knowledge domains to learning and
  accumulation of technological capabilities.

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Insights from Our Research

• Modes of learning are different for each stage of
  technological capabilities building, and these
  are intricately linked to knowledge domains

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Insights from Our Research

• Frontier economies belong to the group domain
  characterized by high science- intensive and
  technology-intensive activities, with relatively
  high levels of domestic investment in RD
• Second, the frontier and fast learning group have
  developed the design engineering capabilities to
  relatively high level while late learners are
  largely engaged in mastering production

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Insights from Our Research

• Third, the frontier and fast learners have also
  developed through explicit investment in training
  high levels of skilled manpower, although a large
  number of countries classified in the catch-up
  group are still intensifying investments in
  building their scientific base.
• The technological knowledge typologies have three
  major implications for development.

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Insights from Our Research

• First, there are apparent risks in comparing
  countries at different levels of industrial
  maturation and equally different industrial
  structures.
• Advanced latecomer countries such as Taiwan,
  China and Malaysia that have built strong export
  sectors in electronics and telecommunication
  equipment have raised the levels of GDP/capita in
  quite significant fashions

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Insights from Our Research

• Second, knowledge growth in the form of rapid
  technological progress has led to deep going
  structural changes in the global economy that has
  profound implications for developing countries.
• It has led to the growth of technology-intensive
  sectors, which in terms of wealth creation
  contribute far more to GDP than traditional and
  resource-based sectors on a unit basis

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Insights from Our Research

• Third, comparisons between countries - even those
  that are simply based on the lines of developed
  versus developing countries assume similar
  endowments and hence the ability to capture
  similar benefits from knowledge creation,
  dissemination and growth - are too simplistic.

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Insights from Our Research

• An analytical framework that seeks to look at
  these from a development perspective needs to
  create a nomenclature of institutions,
  capabilities and learning implications in order
  to be able to draw conclusions regarding the role
  of local knowledge institutions in promoting
  development

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Insights from Our Research

• Differences in nature of tacit and codified
  knowledge bring to the fore several issues of
  relevance to the design of local knowledge
  institutions.
• Are there differences in the kinds of
  institutions (formal and non-formal) that promote
  the accumulation and growth of tacit and codified
  forms of knowledge? Is one a pre-condition for
  the accumulation of another?

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Insights from Our Research

• How do the two forms of knowledge interact with
  institutions for economic growth in varied
  contexts? Such a framework should also help
  resolve the linkages between tacit and codified
  knowledge

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Insights from Our Research

• For instance most of the current work focus on
  the success cases of East Asia advanced
  latecomers to understand the reasons and
  different pathways to success while much less has
  been done on the lagging (falling behind) firms
  and countries.
• In studying these countries learning has come to
  be conceptualized on the strength of RD carried
  out and patents taken just as in the case of
  industrialized countries.

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Insights from Our Research

• In the lagging latecomers, learning is difficult
  to quantify, measure or even observe because much
  of the activity, including incremental technical
  change is experiential and tacit in nature.
• At a conceptual level, RD is not equal to
  innovation as it is as an instrument of learning.
  Non-RD activities (prototype building, design
  and quality testing for instance) tend to consume
  a much higher proportion of firm-level level
  investment in new products and processes and this
  is highly disconnected from the limited RD
  taking place in the local contexts

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Insights from Our Research

• In essence, orthodox measures create a misleading
  impression of the learning processes in latecomer
  countries

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END

• Thank You