Scan Globally, Reinvent Locally:
Knowledge
Infrastructure and the Localization of Knowledge
Keynote Address First Global Development Network
Conference December 1999; Bonn, Germany
Joseph Stiglitz, Chief Economist,
World Bank
Table of Contents
I. The Importance of the Global
Development Network
Towards a New Relationship between the Developing and
Developed Countries
II. Epistomological Foundations
Knowledge Infrastructure and the GDN
Types of Development Knowledge
General versus Local Knowledge
Codified versus Tacit Knowledge
Summary of Knowledge Dimensions
III. Active Social Learning
Negative Effects of Passive Learning
IV. Social Learning, Consensus-Building,
and Other Democratic Processes
Learning How to Learn
Beyond Technocratic Development Models
Consensus-Building and Democracy
Concluding Remarks
Bibliography
»Every
alleged example of local implementation of central policy, if it results in
significant social transformation, is in fact a process of local social
discovery.« [Donald Schön]
It is a great pleasure for me
to be here to help inaugurate the Global Development Network. In my remarks
this evening, I want to do two things: First, to explain why I think the Global
Development Network is so important, and why it is that the World Bank has
taken such an active role in acting as a catalytic agent in promoting it; and
second, to develop some of the underlying epistemology that lies behind the
creation of this new institution.
I. The Importance of the Global
Development Network
Towards a New Relationship
between the Developing and Developed Countries It has been just over fifty years
since the beginning of the end of colonialism, and just a decade after the end
of the Cold War. Yet old ways of interacting persist, and it takes time for the
evolution of new modes of behavior, new bases for relationships based on
equality and respect.
I realize that it has become
unfashionable to refer back to the dark days of colonialism, and yet, as we end
this century and attempt to develop institutions to meet the challenges of the
next, our success in doing so will depend, I believe, in understanding the
histories, how we – both the developed and developing countries and the
economies in transition – came to where they are today. Colonialism served to
eviscerate existing institutions in the affected countries – which embraced
almost all of the developing world. It tried to graft on to existing cultures
foreign institutions and ideas, but in a process of imposition, in which
control and authority lay outside and not within, it is not surprising that the
graft did not take hold. What was left in its place was a void – the old was
destroyed, but nothing really viable had been created in its stead. Worse
still, in all too many countries, they were left without the human capital
required to create an alternative, let alone to adapt to the rapid changes that
have marked the latter half of the twentieth century. And too many countries
were robbed of the dignity and self-confidence with which to address these
imposing challenges that would have put strains on societies even in a far
better position.
The colonial mentality has
evolved. While no one today speaks, like Kipling, of the White Man’s Burden – I
have too often sensed a paternalism that is but a close cousin. Gone are the
days of gunboat diplomacy, forced signing of unfair trade treaties, the Opium
Wars, forcing Egypt into being a protectorate because of bad debts. But no one
would claim that the playing field – in the international trade negotiations,
debt restructuring, and any of the other multitude of arenas in which the
developed and developing countries interact – is a level one. Economic power
relationships play out with potentially no less disastrous consequences for the
developing countries. This point was brought home forcefully by the terms and
conditions imposed on the countries receiving bail-outs in the East Asia
crisis, which, as Martin Feldstein pointed out, went far beyond what was
required for addressing the concerns of the crisis. Democratic processes were
undermined, as countries were forced to sign agreements changing the basic mandates
of central banks and previously negotiated trade agreements were overturned, as
new founded bargaining powers based on the weakened positions of the affected
countries were exploited.
So long as the Cold War
persisted, there was neither time nor opportunity to address these fundamental
issues. That conflict – a battle of competing ideologies, values, economic
systems – was all-consuming. And the impact of that conflict on the developing
countries was profound. Too often, they took the view the enemy of their
colonial enemy was their friend, and embraced their socialist ideology. They
saw some of the successes of Russia, its rapid emergence from feudalism to a
world superpower, and underestimated the costs it had imposed and overestimated
the underlying strengths. The end of the Cold War, the failure of the Communist
system, thus forced the developing world to re-examine fundamental beliefs.
In the meanwhile, the world
was changing rapidly. A new generation of leaders was emerging in the
developing world, partially freed from the scars of colonialism, highly
trained, with a new sense of self-confidence. Globalization brought prospects
of integration into the world economy – with access to technology, markets, and
capital. Global competition offered the prospect of a new relationship between
developing countries and multi-nationals, with more of the surplus accruing to
the developing world.But many of the ways of interacting between the developed
and developing world did not take full cognizance of these changes.
Conditionality – while ostensibly based on freely negotiated terms of agreement
– went far beyond what could be justified by fiduciary responsibility and
democratic accountability on the part of the developed countries and the
international financial institutions. With the end of the all-consuming Cold
War, there ensued a new emphasis on democracy and democratic processes, and it
came to be recognized that the way conditionality in practice worked often
undermined these democratic processes and institutions. New perspectives on
development focused on development as a transformation of society, a change in
minds and mindsets, and it came to be recognized that such transformations
could not be imposed, and indeed, the attempt to do so could often be counterproductive.
Thus, the subsequent econometric results suggesting that conditionality was
ineffective in promoting development came as no surprise.[1] In
response to these changes, the World Bank evolved a new framework for thinking
about development, which was both more comprehensive in its approach and more
inclusive in its involvement. At its center was, as President Wolfensohn
expressed it, »putting the country in the driver’s seat.«[2]
This brings me to why I think
the Global Development Network is so important. If the developing countries are
really to be »in the driver`s seat« they have to have the capacity to analyze
the often difficult economic issues which they face. Local researchers,
combining the knowledge of local conditions – including knowledge of local
political and social structures-- with the learning derived from global
experiences, provides the best prospects for deriving policies which are both
effective and engender broad-based support. That is why locally-based research
institutions are so important.
I have, on several occasions,
also spoken of the importance of democratic institutions for successful
development. To be sure, we should value democratic institutions as an end in
themselves, not just as a means to more successful development. But the lessons
of this century have been clear: authoritarian regimes have caused untold human
suffering. Amartya Sen has argued forcefully that famines themselves can be
checked by democratic processes; it is not the shortage of food, but its distribution,
and democratic processes would simply not tolerate such outcomes. Think tanks,
policy institutes, play a vital role in promoting the informed public
discussion that is absolutely essential for meaningful democratic processes and
the generation of a political consensus. These institutions, and the associated
institutions of a free and vibrant press and independent universities, provide
an important check on the abuse of power –
including abuses of majorities against minorities and the widespread
corruption which has been shown to have not only a corrosive effect on society,
but to undermine development efforts themselves.[3]
This century has seen the
battle between two ideologies; but the end of the Cold War does not mark the
end of ideology. Ideological battles continue to be fought, sometimes on a
grand scale, more often on a minor scale. Recent discussions of capital market
liberalization is illustrative of the former. Many strongly advocated this, in
spite of the absense of evidence suggesting that, for most developing
countries, it would promote their growth or investment; indeed there was some
evidence suggesting that it would not do so, and that it would in fact increase
the risks which they faced – risks which they were ill-prepared to undertake and
which would inevitably increase the extent of poverty in their countries.
Unfortunately, the predictions of the critics of capital market liberalization
have been more than borne out. How can we explain the strong advocacy of a
major change in the international economic architecture – other than by
ideology, and/or capture by certain special interests? But the strongest
antidote to both is science – theory and evidence. »Science« –at least the word
– can, of course be abused; as the word has undertaken positive overtones,
ideologies claimed to find justification for their tenets in »science«. Yet the
foundations of the scientific methodology have managed to withstand such
abuses, whatever form they take.
We in the ideas business
should never forget the power of ideas. Keynes put this forcefully when he said
that: »Practical men, who believe themselves to be quite exempt from any
intellectual influences, are usually the slaves of some defunct economist.
Madmen in authority, who hear voices in the air, are distilling their frenzy
from some academic scribbler of a few years back.«[4] The
scribblers of America’s Declaration of Independence themselves surely did not
know either the power or the reach of their ideas when they wrote, »All men are
created equal….« They may have had in mind »all property-owning white males are
created equal….« But the force of the idea came from its appeal to deep
principles, and once articulated, they took on a life of their own – a life
which brought within its embrace first blacks, then women. And that same force
lives on: It does not stop at America’s border. The same force of argument that
led the American colonialists to declare their independence from Britain doomed
the end of colonialism more generally. And today, its reach is broadened, to
attack neo-colonialist mentalities and economic imperialism. Indeed, as an
economist, I find it remarkable how often the force of the arguments can
overcome the logic of self-interest and become an important agent for reform
and change.
Recent discussions of
transparency arising from the East Asia crisis help illustrate what is at
issue. Originally, Western bankers and their governments contended that the
underlying problem giving rise to the crisis was a lack of transparency – in a
thinly veiled attempt to explain how the Western banks could have engaged in
such bad lending practices themselves (every loan needs both a borrower and a
lender, and the lender is fully as much at fault for a bad loan as the
borrower) and, for the international institutions and western governments which
had pushed premature financial and capital market liberalization, to evade
responsibility for their misguided policy advice. But the concept of
transparency took on a life of its own, spreading its potentially disinfecting
sunlight to areas that were far from the original intentions – a demand for
transparency on the part of the hedge funds and the off-shore banks, and
ultimately on governments, central banks, and the international financial
institutions themselves. This demand for transparency is now joining forces
with basic concepts of equality, in demands for a re-examination of the very
process of governance of the international institutions.
I have lauded the virtues of
the kind of think tanks and research institutions which are gathered here
today. It is my hope, and the World Bank’s hope, that by bringing these
institutions together into a global development network, they will add strength
to each other, not only through the exchange of knowledge, but through a common
understanding of the importance that they play in promoting sustainable,
democratic, and equitable development. Let me be clear: in many parts of the
world, there are substantial obstacles confronting these institutions – from
the ubiquitous financial constraints, to the shortage of those with the
requisite skills, both in research and in articulating key ideas in ways which
allow their widespread dissemination and facilitates public debate. But in too
many countries, there are further, artificially created barriers – hostile
governments, trying to suppress democratic debate, worried about the
consequences of public scrutiny of their actions. And here, I believe, is one
arena where, standing together, we can exert international social pressure:
there are basic core standards which all countries need to adhere,
institutional principles that constitute the sine qua non of meaningful
democratic debate. The basic human rights of a free press and free speech can
be undermined by the exertion of economic pressures, which is why these
institutions need to be independent of the government with assured independent
sources of funding, and why the individuals within the institutions need to be
protected by academic freedom.
We should not be surprised at
either the vehemence or the subtlety with which these institutions and the
individuals within them may be attacked, or at attempts to undermine their
credibility, especially so by governments whose political legitimacy is
questioned. And the same holds true at the international level, and perhaps
more so. For we must recognize that while international institutions can take
or promote actions which have huge effects on the economic fortunes of millions
and the political fortunes of many, their governance has a certain lack of
representativeness along numerous dimensions – the developing countries and
their billions of people are underrepresented; while the voice of financial
interests is heard loudly and with clarity, it is not clear that other voices –
the workers, who risk losing their jobs or seeing real wages plummet as a
result of misguided policies, or the small businesses forced into bankruptcy by
what in any other context would be viewed as usurious interest rates – are
heard at all.
Within nation states, there are
some governments who derive their legitimacy not only by the electoral process
but also by their ability to build a national consensus – a consensus based on
trying to find a shared sense of values, a broad sense of equity, and a common
understanding of the underlying economic processes. In such cases, the success
of the policies adopted –including the sense of equitable sharing of the fruits
of growth or the pain of contraction – is often a prerequisite for the
maintenance of that legitimacy. By contrast, policies based on ideologies not
widely shared, especially when those ideologies are seen to serve the
self-interests of special interests and to result in inequitable burden
sharing, undermine the creditability of the institution, and when the institution’s
effectiveness in part depends on its credibility, then there is a downward
viscous cycle. No wonder then that such institutions find open discussion and
public debate about the appropriateness of policies – even months or years
later – an anathema.
Today, no one is upset at the
debate over whether Roosevelt’s New Deal policies had much impact in bringing
the U.S. economy out of its depression; such understanding is essential if we
are to craft policies designed to address economic downturns in the future. But
within the international community today, there are still many who are greatly
upset at revisiting the question of the appropriate response in the global
financial crises of 1997 and 1998. The argument seems to be: The emperor may
have no clothes – but mentioning that fact risks global economic instability!
I, at least, have greater faith in our global economic architecture than that.
But this does raise some
fundamental issues: when the governance process of any public institution is
subject to questioning, when there is a lack of representativeness, a failure
to establish consensus, a reliance on ideology rather than science, and
especially an ideology closely linked to the interests which are
disproportionately represented in its governance; a clear evidence of lack of
equitable burden sharing, and a record of failure – it is time to rethink basic
premises. Many institutions are learning to become learning institutions,
adapting to changing circumstances. At the World Bank, this is precisely the course
that President Wolfensohn set five years ago. I raise these issues here, not
because this is necessarily the appropriate forum for their discussion, but
because I believe that you and your institutions have a vital role in raising
these questions and demanding answers that are responsive to the perspectives
and concerns of the developing world.
More generally, the world is
embarking on an experiment – a closely integrated global economy which is
striving for global governance without global government. If this experiment is
to be successful, it will be based on a process of global consensus building,
in which institutions and individuals that are coming here this week for the
first time, in the Global Development Network, will be pivotal.
II. Epistemological Foundations
Knowledge Infrastructure and the GDN
Let me now to the second topic
of my talk this evening, concerning the nature of knowledge and the role of
knowledge in development. The World Bank‹s initiative in fostering the Global
Development Network is part of the idea of the Bank as a »Knowledge Bank.« We
have come to appreciate the transformative power of knowledge in development
[World Bank 1998]. Yet we must be wary of simple analogies between a »knowledge
bank« and a »money bank.«
Disembodied knowledge has the
characteristics of a public good (non-rivalrous and, once public,
non-excludable)[5] while
money is the quintessential private good. Thomas Jefferson, the third President
of the United States, described knowledge in the following way: »He who
receives an idea from me, receives instruction himself without lessening mine;
as he who lights his taper at mine, receives light without darkening me.«[6] In
doing so, Jefferson anticipated the modern concept of a public good.[7] Thus
disembodied knowledge for development is indeed a global public good and, like
other public goods, it would be undersupplied if left entirely to private
initiative.
The internet has in practice
brought knowledge access closer to the ideal of a global public good. The communication
revolution has made great strides in facilitating communication within
countries and has also enhanced the ability of developing and transitional
countries to tap into the global pool of (codified) knowledge. The internet
should prove to be a tool of immense power in sharing knowledge within our
network of GDN institutes.
Today, developing countries
face both great risks and great opportunities. Internet growth has been most
rapid in the United States, and not surprisingly, slowest in the less developed
countries. The enhanced ability to share and acquire knowledge in the advanced
industrialized countries may increase the knowledge gap, resulting in the less
developed countries becoming even more disadvantaged.
At the same time, they can tap
into a larger knowledge pool than they ever had access to before. Today, a
child anywhere in the world who has access to the internet has a modern
»Alexandria Library« at her fingertips. It is too soon to see how these
opportunities and forces – for convergence or divergence – will play out,
whether the knowledge gap between developed and developing countries will be
widened or narrowed. But it is clear that it is incumbent upon the developing
and transitional countries to do everything they can to enhance their ability
to tap into the reservoir of global knowledge. The GDN partners are local nodes
in that emerging global knowledge infrastructure.
Knowledge has a number of
characteristics which differentiate it from ordinary goods. We have already noted
several of these – including the global public goods nature of knowledge. The
peculiar characteristics of knowledge makes it incumbent on us to think anew
about how we can effectively promote the transformative power of knowledge. In
particular, what is the role of local knowledge institutions such as the policy
and research institutes of the GDN in the broad process of democratic social
learning?
I see a role far more subtle
than just the technology-driven visions of »downloading« global knowledge–as
useful as that may be. I want to argue three main theses:
1. the overwhelming variety
and complexity of human societies requires the localization of knowledge,
2. practical know-how is
largely tacit knowledge that needs to be learned by horizontal methods of
twinning, apprenticeship, and seconding, and
3. each society, through its
knowledge institutions, should take the active role (»in the driver`s seat«) in the local learning process.
That is, one size of
»clothing« does not fit all societies, a society learns to be a »tailor« partly
by apprenticeship – it is hard to write down all that needs to be known about
tailoring in a book, and even were it possible to do so, it may not be the most
efficient way by which information can be transmitted from one individual to
another – and a society should be its own »tailor« to find the best fit.
Types of Development Knowledge
General versus Local Knowledge
We will analyze knowledge
along two dimensions, the general-local dimension and the explicit-implicit
dimension. Global public knowledge exemplifies knowledge that is general and
explicit. As we move along these dimensions, we will see the different roles of
central as well as local knowledge institutions. We start with the
general-local dimension.
Money »travels« better than
knowledge. General knowledge is knowledge that holds across countries,
cultures, and times; local knowledge takes account of the specifics of place,
people, and time. »Every man is mortal« is general knowledge, while »Drive on
the left« is a best practice in London but not in New York. A »best practice«
might work well in some countries but fail miserably when recommended in other
contexts.
In questions of institutional
development, it is very difficult to know a priori just how general is a »best
practice.« Robert Cole studied the diffusion in industry of quality circles and
Japanese-style quality methods. The process of local adaptation was so
extensive and creative that it amounted to a local reinvention of the »global
best practice.«
The significance of this point
of view is that contrary to the simplistic use of the term by many economists,
there is, in principle, no such thing as diffusion of best practice. At best,
there is only the diffusion of best practices, practices that evolve in the
course of their diffusion. Contrary to popular wisdom, there are times when it
pays to reinvent the wheel! [Cole 1989, 117]
Donald Schön in a study of
social learning concluded that »Every alleged example of local implementation
of central policy, if it results in significant social transformation, is in
fact a process of local social discovery.« [1971, 161] Prudent counsel is to
scan globally for best practices but to test them locally since local
adaptation often amounts to reinventing the »best practice« in the new context.
The Knowledge Bank can »scan globally«; the GDN partners have to »reinvent
locally.«
Many »visiting economists«[8] have
painfully discovered that the »devil is in the (local) details.« It is the
local component of knowledge that requires adaptation–which in turn requires
the active participation of those who know and understand the institutional
environment. Local adaptation cannot be done by the passive recipients of
»development knowledge«; it must be done by the »doers of development«[9] in the
course of their activities.
There are two points here: the
necessity that knowledge be made locally applicable and that the adaptation be
done by the local »doers of development« (not given as a gift or imposed as a
conditionality from the outside). It is by the local selection, assimilation,
and adaptation of knowledge that local doers »make it their own.« Even by
taking a machine or device apart and putting it back together again, one can
more »make it one‹s own« even if there is little adaptation or redesign. Those
of us who have been teachers are familiar with this principle: successful
teaching requires active learning.
In the context of development,
where what is involved is »social learning« and adaptation, more is entailed:
it is not just a matter of being »open« or »closed« to outside knowledge; it is
a matter of being open to outside knowledge in a way that reaffirms one‹s
autonomy. For Gandhi, this was intellectual swaraj (self-rule or autonomy).
I do not want my house to be
walled in on all sides and my windows to be stuffed. I want the cultures of all
lands to be blown about my house as freely as possible. But I refuse to be
blown off my feet. [Gandhi, quoted in Datta 1961, 120]
Only by remaining »on one‹s
feet« from an intellectual standpoint can the local doers have the
self-confidence to select, assimilate, and adapt the external knowledge–instead
of being overwhelmed and rendered intellectually dependent and subservient.
Considerable effort is
required to adapt development knowledge to local conditions and culture. The
research institutes and policy institutes (»think tanks«) of the GDN are
examples of local knowledge institutions that can play that important role. In
the developed countries and increasingly in developing countries, think tanks
have proliferated and have become important agents to introduce and adapt new
policy initiatives.[10] Think
tanks or research institutions are no less needed to transplant social innovations
to new contexts. The Japanese use a metaphor based on the gardening technique
called nemawashi of slowly preparing and wrapping each root of a tree in order
to transplant it.[11] The
chances of a successful transplant are much larger than if the tree is simply
pulled up in one place and planted in another.
Development institutions have
sometimes tried a »quicker« transplant method. After a quick trip to a country,
the standard wisdom (in earlier days, typically the Washington consensus), is
conveyed, often with little attempt even to nuance it to the economic,
political and social situations of the country. The policy advice would
frequently be backed up by conditionalities on policy-based lending to motivate
the country to implement the best-practice recipes – indeed given the lack of
broad-based buy-in, and often the unsuitability of the advice to the country’s
situation, conditionality was the only way of having the advice followed.
Occasionally, in an attempt to achieve broader based support, experts might
come in to give a longer senior policy seminar to local government officials;
the experts then return home hoping that their sound advice will take root.
Yet, this policy reform process is designed to promote neither active learning
nor lasting institutional change. As these reforms were externally imposed
rather than actively appropriated by the country, there was often little
»ownership« of the reforms. Compliance might be only perfunctory; the »quick«
transplant might soon wither and die.
Here is an illustration.
Foreign advisors would never have the power of an occupying army. Yet the
American Army in post-war Japan showed the limitations of trying to change
institutions by imposing new laws and statutes.
When SCAP [Supreme Commander
for the Allied Powers] broke up the Mitsui and Mitsubishi trading companies
into hundreds of fragments–213 successor companies in all–..., the employees
loyally rallied round the new fragments formed by their old section or
subsection chiefs..., who in turn adhered to the companies organized by their
old division chiefs... and director, and all of them recombined as soon as they
could. Within five years, like droplets of mercury coalescing into ever bigger
drops on contact with each other, both the Mitsubishi and the Mitsui trading
companies were substantially reconstituted as before. Two hundred thirteen
became two again. Their staffs had been held together by personal relations in
the meantime. [Cohen 1987, 358]
Those personal relationship
and social habits are part of the »invisible root structure«–the social
embeddedness of institutions–that requires more subtle methods of
transformation than just issuing decrees or passing new laws.
By the same token, Japan was
»given« anti-trust laws that were similar to those that have worked so
effectively in the United States; yet these laws never really took root, with
an evolving competitive structure far different from that of the U.S.
Local policy and research
institutes can be seen as nemawashi organizations who carefully adapt and
prepare a transplanted policy initiative to survive and perhaps thrive in the
local environment. It takes longer, but the roots are better prepared for the
local soil. The political process of changing policies and implementing new
ideas is usually rather messy and in need of »high maintenance« support. The
officials or parliamentarians constantly need more information and advice–more
»backup,« more thinking about how best to adapt the policies to local
circumstances–in order to carry out the policy reforms. As a result of this
process of adaptation, which often involves virtually reinventing the idea
perhaps by finding and emphasizing local antecedents, the government officials
see the policy reform not as a foreign imposition but as a local product which
addresses their needs and which they can sponsor.
Advisors from developed
countries or international organizations may not always fully appreciate these
problems. The »knowledge business« has its own political economy. Those who are
legitimated in their expertise, prestige, and privileges by the »universality«
of their messages are disinclined to recognize limitations or subtleties in the
local applicability of their technical expertise.[12] Novel
complexity, genuine uncertainty, conflict of values, unique circumstances, and
structural instabilities are all down played or ignored since they might
diminish the perceived potency of the expertise and undercut the client‹s faith
in that potency. On the other side, the client may want the security and comfort
of being in the hands of the professional expert who will solve the perplexing
problems.[13] These
are some of the strong institutional forces to under-appreciate the subtleties
of local knowledge, to hamper the growth of autonomous client ownership, and to
stymie the development of indigenous local knowledge institutions.
Codified versus Tacit Knowledge
Now we move to the
explicit-implicit or codified-tacit dimension of knowledge. Explicit or codified
knowledge is knowledge that can be spoken, written, and codified to be saved on
a computer disk or transmitted over a telephone line. But we know more than we
can say. We know how to ride a bike, to recognize a face, or to tell a
grammatical sentence in our native language, but we would be hard put to turn
this knowledge into explicit or codified knowledge to archive in a database for
dissemination over the internet. Michael Polanyi [1962] pioneered the
distinction between tacit (or personal) and explicit knowledge in the
philosophy of science, and the distinction has since proven important to
understand problems in the transfer of technologies, not to mention the
»transfer« of institutions.[14]
A technology is sometimes
identified with blueprints and instruction books. But in fact technology
consists of complex »bundles« of information – both codified and tacit – as
well as physical capital. Because tacit information is not readily transferable
among firms and countries, technological blueprints do not contain inherent
performance characteristics (such as set productivity levels). Instead, these
blueprints have to be translated into specifications and procedures that are
specific to particular applications – an uncertain creative process that can
result in highly variable levels of performance. [Bell and Pavitt 1995, 74].
The same holds a fortiori for
»social technologies« or institutions. In a codified description of a »best
practice« case study, the uncodified tacit knowledge is often »the rest of the iceberg.«[15] Some
tacit knowledge might be transformed into codified knowledge [see Nonaka and
Takeuchi 1995] so that it could be transferred by conventional methods. But the
remaining tacit knowledge needs to be transmitted by special methods such as
apprenticeship, secondments, imitation, study tours, cross-training, twinning
relations, and guided learning-by-doing. These methods of transferring tacit
knowledge will be called »horizontal« methods of knowledge transfer–in contrast
to »vertical« methods where knowledge can be codified, transmitted to a central
repository or library, and then accessed by interested parties.
We have seen two reasons why
the theory of »downloading the best practice« fails: the best practice needs to
be localized and much of the best practice may be in the form of practical
know-how that cannot be »downloaded.« But there is still an important role for
international development agencies (global knowledge): Even concerning that
tacit dimension of the best practice, the central agency may know who knows X
without knowing X itself. It is »second-order« knowledge of where the practical
knowledge is; it is a »pointer« to the practical knowledge. A central agency
can fruitfully play a match-making, facilitating, and brokering role in horizontal
learning–not a direct training role. In particular, the Knowledge Bank is in a
good position to »scan globally« to identify good practices, and then it can
play a brokerage role to facilitate a horizontal learning process between the
developing countries facing certain problems and the countries with successful
practices.[16] It can
perform another role: certifying the quality of the messengers and messages; in
a noisy world, with many alternative theories vying for center stage, there
needs to be some ways of sorting through the cacophony, establishing
credibility.
The various methods of
horizontal learning differ substantially from those employed in traditional
classroom settings, where what goes on is »vertical« teaching and training in
explicit codified knowledge.
· Study tours arranged by
local knowledge institutes allow people to »see how it is done« in nearby
societies. The Marshall Plan for the postwar reconstruction of Europe involved
many horizontal techniques such as study tours of business leaders (»business
to business«) and government officials.
· Cross-training is being
»shown how to do it« by those who have already »done it« particularly in nearby
societies. It is the implicit knowledge alternative to being explicitly »told
how to do it« by an international expert.
· Twinning or secondments pair
together similar organizations or institutions for a horizontal transfer of
know-how.
· Foreign direct investment
might also be viewed as a method of horizontal learning. For instance, a major
source of learning about lean production methods and their adaptation to
American culture was Japanese direct investment in production facilities in the
United States.
Due to the tacit component in
the practical development knowledge, few of the real reasons for the success
might be captured in the codified knowledge of the »best practice« case study.
In addition there would be much variation due to Rashomon effects, academic
predilections, and ideological precepts in the best-practice case studies.[17]
The architect of social change
can never have a reliable blueprint. Not only is each house he builds different
from any other that was built before, but it necessarily uses new construction
materials and even experiments with untested principles of stress and structure.
Therefore what can be most usefully conveyed by the builders of one house is an
understanding of the experience that made it at all possible to build under
these trying circumstances. [Hirschman 1970, 243; quoted in Scott 1998, 328]
For instance in one World Bank
Institute program, local institutes arranged for government officials,
law-makers, and business people from an African country to learn directly and
horizontally from a nearby East Asian country which faced similar economic and
ethnic problems not too long ago–all of which was undoubtedly more effective
than seminars based on codified case studies taken as blueprints.
Summary of Knowledge Dimensions
The general versus local
dimension and the codified versus tacit dimension can be used to generate a 2 x
2 table.
|
Codified
Knowledge |
Tacit
Knowledge |
General
Knowledge |
Global
public goods. Generally applicable and »downloadable,« i.e., can be
transferred by conventional vertical teaching methods--but »rediscovery«
improves ownership. |
General
tacit knowledge (e.g., implicit grammatical rules of English) could be
learned by horizontal methods (e.g., natural language learning) or might be
(partly) codified and taught. |
Local
Knowledge |
Localized
explicit knowledge. Even if hypothetically available from center, should be
locally »reinvented« to have ownership. |
»The
hard stuff.« Combines horizontal learning and local reinvention. |
III. Active Social Learning
Negative Effects of Passive Learning
My third thesis is that the knowledge
institutes and policy-makers of developing countries should play an active role
in reappropriating and adapting knowledge for development (even if the center
could through some sort of »flexible specialization« make a local adaptation
and transmit it to the locality).
The contrasting »standard
view« (usually held implicitly rather than espoused explicitly) sees a central
authority transmitting universal messages and best practices formulas along a
transmission belt to passive clients who are encouraged by aid and constrained
by conditionalities to »get the message.« Rather than encouraging clients to
develop their analytical and research capacities, the process of imposing
conditionalities undermines both the incentives to acquire those capacities and
clients‹ confidence in their ability to use them. Rather than involving large
segments of society in a process of discussing change – thereby changing their
ways of thinking – excessive conditionality reinforces traditional hierarchical
relationships. Rather than empowering those who could serve as catalysts for
change within these society, it demonstrates their impotence. Rather than
promoting the kind of open dialogue that is central to democracy, it argues at
best that such dialogue is unnecessary, at worst that it is counterproductive.
That standard view of
delivering knowledge for development leads to an impairment in the
self-confidence, self-esteem, and self-efficacy of the clients.[18] The
message behind the »main messages« is that the clients are unable to take
charge of their own learning process and to find out these things in their own
way. They need to be »helped« – to be shown the way. New forms of intellectual
colonialism are masked as »quality control.« But these ways in which the
standard methodology »shows them the way« only reinforces the clients‹
passivity and perceived lack of self-efficacy.
In addition to lacking
self-confidence about the efficacy of their actions, a party might lack
self-confidence in their own intelligence, judgment, and other cognitive
skills. In an extreme state of dependency, they might be like a marionette not
only in their »actions« but also in their opinions, views, and »knowledge.«
This cognitive aspect of dependence is clearly very relevant to understanding
the detrimental effects of passive learning and tutelage.
The cognitively dependent
recipients of the main messages will also often play a role in perpetuating the
dynamics of stifling critical reason in favor of bureaucratic »reason« in the
development agencies. As such countries have become cognitively dependent, they
might be distressed if they should hear the »authorities« arguing among
themselves about »development knowledge« and development strategies. They are
accustomed to being told the »best practices« to follow, so it weakens their
faith in the prestigious authorities if there is any public disagreement. How
can the patient have faith in »warring doctors«? Thus the complaints (real or
imagined) of the cognitively dependent clients are used as arguments within the
international agencies to keep any real debate about development strategies
well behind the closed doors of the major development organizations. (To be
sure, there may be other reasons for the international agencies wishing to
stifle open discussion: public scrutiny of failed policies within the developed
countries could not only undermine the support for these agencies, but induce
more accountability and improved governance, weakening their current sense of
autonomy. And there is a real risk that such public scrutiny could force
changes in their policies and practices.)
The obvious corollary of the
traditional mode of operation is that there will be very little learning in the
sense of correcting mistakes at the level of the development agency. Once there
is a public commitment of the agency to a certain view, then the agency‹s
prestige and »brand name« is on the line. Any untoward consequences of the
policies must be due to flawed implementation on the part of the clients.
Criticism from outside the agency can usually be ignored, and criticism from
within the agency must be suppressed because it would weaken the franchise
value of the brand name and »confuse« the clients. But note that in defending
their own autonomy, they undermine the autonomy of the very countries they are
supposed to help; even the language they use to defend the »no debate« position
is one which connotes an aura of benevolent paternalism – but one which
demonstrates a complete lack of faith in the country to make its own decisions.
IV. Social Learning,
Consensus-Building, and Other Democratic Processes
Learning How to Learn
We now turn to the positive
virtues of active learning, and to the broader vision of democratic processes
as active social learning writ large.
George Bernard Shaw
insightfully quipped: »if you teach a man anything he will never learn it.«
[1962, 174] Ortega y Gasset wisely suggested: »He who wants to teach a truth
should place us in the position to discover it ourselves.« [1961, 67] Thus if a
global knowledge-based institution wants a country to learn a »truth« about
development, then it should help the local knowledge institutes and
policy-makers to carry out the requisite research, experimentation, and social
dialogue to learn it themselves–to make it a »local social discovery.« Creating
this local knowledge infrastructure and practice entails »learning how to
learn,«[19] that
is, creating the capacity to close the knowledge gap, an essential part of a
successful development strategy. This process of autonomous social learning is
not a »feel-good frill«; it is a key part of developing local democracy.
Social learning and effective
change cannot be imposed from outside. Indeed, the attempt to impose change
from the outside is as likely to engender resistance and barriers to change as
it is to facilitate change. At the heart of development is a transformation in
ways of thinking, and individuals cannot be forced to change how they think.
They can be induced to take certain actions, or even to utter certain words;
but they cannot be forced to change their hearts and minds. To impose a model
without a self-directed local learning process would be to »short circuit« and
bypass the active learning capacity of the local policy-makers and to promote a
state of passivity, dependence, and tutelage.
This process of encouraging
autonomous local social learning is closely connected with the whole process of
promoting democracy. Some social thinkers – with John Dewey perhaps foremost
among them – have emphasized that active social learning writ large provides a
social philosophy for democracy as government by discussion and
consensus-building.
To foster conditions that
widen the horizon of others and give them command of their own powers, so that
they can find their own happiness in their own fashion, is the way of »social«
action. [Dewey 1957, 270]
For all alike, in short, the
chief thing is the discovery and promotion of those activities and active
relationships in which the capacity of all concerned are effectively evoked,
exercised, and put to the test. ...This cooperation must be the root principle
of the morals of democracy. [Dewey and Tufts 1908, 303-4]
Beyond Technocratic Development Models
Predominant currents of
development thinking in the past have usually been more narrowly technical – at
least in economics. It has been almost an article of faith that if certain
technical allocation issues were solved, economic development would inevitably
follow. The problem of development was seen as a technocratic problem of
increasing capital investment and allocating resources more efficiently–not as
a process of democratic social learning.
As an illustration, consider
two of my predecessors as Chief Economist: Hollis Chenery in the 1970s and Anne
Krueger in the 1980s. The two came at the development problem from very
different perspectives: Chenery from the planning perspective, Krueger
emphasizing the need to »get prices right« and to leave markets to work their
magic. But both approaches saw develop-ment as a technical problem requiring
technical solutions: better planning algorithms, better trade and pricing
policies, better macroeconomic frameworks. Neither approach reached deep down
into society, nor did either one emphasize the participatory nature of the
development transformation.
Poland has in recent years
implemented particularly effective policies for their post-socialist
transition, and India has likewise found an effective development path. In
spite of many changes in government, those countries have stayed their course.
The reason for their effectiveness is not just some technical »correctness« of
the policies but the ownership the countries have for policies arrived at
through their own participative processes of democratic discussion,
consensus-building, and swaraj. Outside agents, including donors, can encourage
ownership through persuasion – that is, through presenting evidence, both
theoretical and empirical, that particular strategies and policies are more
likely to bring success than other approaches. But the degree of ownership is
likely to be even greater when the strategies and policies are developed by
those within the country itself, when the country itself is in the driver`s
seat.
Consensus-Building and Democracy
Inside a country, the ability
to resolve disputes in a »democracy friendly«[20] manner
is an important part of social and organizational capital. Reforms often bring
advantage to some groups while disadvantaging others. There is likely to be
greater acceptance of reforms – a greater participation in the transformation
process – if there is a sense of equity, of fairness, about the development
process, a sense of ownership derived from participation, and if there has been
an effort at consensus formation. Numerous examples (such as Ghana) have showed
the importance for instance of consensus formation in achieving macroeconomic
stability. By contrast, a decision to, say, eliminate food subsidies that is
imposed from the outside, through an agreement between the ruling elite and an
international agency, is not likely be helpful in achieving a consensus – and
thus in promoting a successful transformation.
Charles Lindblom [1990]
contrasts the technocratic model for governing society with the alternative
model of a self-guiding democratic society based on the use of »reflective
intelligence« (Dewey), the competition of ideas, and government by discussion.
To quickly see the distinction, Lindblom suggests to »compare Marx with
Franklin Roosevelt or Jan Tinbergen with Saul Alinsky.« [216] In the technocratic
(Marx-Tinbergen) model, the »correct solutions« are already defined but may be
unknown. If »scientific« techniques could uncover those answers–even localized
answers–independent of any political process then the answers could be
whispered into the ear of the Prince and disseminated from the central
authority to passive citizens. After severely criticizing technocratic
development paradigms, Hirschman counsels »a little more ›reverence for life,‹
a little less strait-jacketing of the future, a little more allowance for the
unexpected–and a little less wishful thinking.«[21]
In the model of a self-guiding
democratic society, preferences and self-determined actions are endogenously
transformed in the social/political process. Social »democracy friendly« dialogue
– lead by local knowledge institutions as in the GDN – builds consensus; it
does not »discover« or »impose« consensus. Those who participate in the
consensus-building process then have an »ownership« of the resulting policies,
and thus that policy knowledge will be transformative.
Concluding Remarks
We are embarking here on an
enterprise of potentially immense importance – creating a new global
institution, the Global Development Network, devoted to enhancing democratic
governance at the local, national, regional, and global levels, to promoting
dialogue, and to strengthening the processes of consensus-building. Underlying
all of these efforts is the pursuit of knowledge – global knowledge about
general principles, local knowledge about how those general principles play out
in the multitude of local contexts over our vast globe – knowledge based on
well-constructed theories and meticulous analysis of the empirical evidence. I
believe it is only through such open discussion and active research that we shall
break free from the chains of ignorance, the traps of poverty, the grip of
elites, and the blinders of ideology and self-interest – in our quest for a more democratic,
equitable, and sustainable transformation of societies.
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[1] See World Bank 1998b.
[2] The »country in the driver`s seat« theme is one of the central themes in the Comprehensive Development Framework (CDF) outlined in Wolfensohn 1997, 1998, and 1999a,b and in Stiglitz 1998.
[3] See World Bank 1997 or Transparency International and IBRD 1998.
[4] Keynes 1936, 383. In the same vein, the early 19 th century poet Heinrich Heine (1797-1856) pointedly remarked: »mark this, ye proud men of action: ye are nothing but unconscious hodmen of the men of thought who, often in humblest stillness, have appointed you your inevitable work.« [Heine 1959, 106] (A »hodman« carries bricks or mortar for a mason.)
[5] See Stiglitz [1995], Economic Report of the President [1997]. While the public good properties of knowledge had long been noted [Arrow, 1962], early articulations of knowledge as a public good (in the sense defined by Samuelson [1954]) include that of Stiglitz [1977] and Romer [1986]. For an early textbook discussion, see Stiglitz [1986].
[6] See Jefferson 1984 (1813).
[7] As did Augustine (354-430) who said in one of his sermons: »The words I am uttering penetrate your senses, so that every hearer holds them, yet withholds them from no other.... All of you hear all of it, though each takes all individually. I have no worry that, by giving all to one, the others are deprived. I hope, instead, that everyone will consume everything; so that, denying no other ear or mind, you take all to yourselves, yet leave all to all others.« [Augustine quoted in Wills 1999, 145]
[8] See the classic article by Dudley Seers 1962.
[9] Quoted from President Mkapa of Tanzania in Wolfensohn 1999.
[10] See Smith 1991, Langford and Brownsey 1991, Ostry 1991, Telgarsky and Ueno 1996, Stone et al. 1998, and Struyk 1999.
[11] »It is a time-honored Japanese gardening technique to prepare a tree for transplanting by slowly and carefully binding the roots over a period of time, bit by bit, to prepare the tree for the shock of the change it is about to experience. This process, called nemawashi, takes time and patience, but it rewards you, if it is done properly, with a healthy transplanted tree.« [Morita 1986, 158]
[12] James Scott [1998, 339] quotes an illustrative passage from Sinclair Lewis< Arrowsmith: »They said ... that he was so devoted to Pure Science...that he would rather have people die by the right therapy than be cured by the wrong.«
[13] See Schön`s treatment [1983] of the technical expert in contrast with reflective practitioner.
[14] See Ryle 1945-6 for the earlier distinction between knowing how and knowing that, Oakeshott 1991 for a treatment of practical knowledge versus technical knowledge, Schön 1983 for a related treatment of professional versus instrumental knowledge, and Scott 1998 on metis versus episteme/techne. The tacit/codified distinction looms large in Nonaka and Takeuchi 1995, and they note that Larry Squire 1987 gives a dozen labels for similar distinctions.
[15] Even the codified part may suffer from the »Rashomon effect« (different people giving very different descriptions
[16] That is the brokerage model of the Knowledge Bank [see Sundquist 1978] which is sometimes juxtaposed to the storehouse or library model. Since explicit knowledge of the best practices (and of the pointers to tacit know-how) can be »downloaded,« each model has some applicability. It is a question of emphasis.
[17] For instance, if the chief policy-maker of the IMF and I each wrote up a case study of the Malaysian capital controls, the cases would probably look rather different.
[18] See Lane 1991 and Bandura 1995.
[19] I developed the concept of »learning to learn« and its implications for economic growth in Stiglitz 1987.
[20] See Hirschman 1991, p. 168 for a contrast of consensus-building dialogue with the adversarial »rhetorics of intransigence.«
[21] See Hirschman 1970, p. 239; quoted in Scott 1998, p. 345.