Searching for the linkages to economic development.
Mario R. López
National Autonomous University of Nicaragua UNAN Agriculture Economic School ESECA
Ph.D. Student Aalborg University
Email at Aalborg University [email protected] Email in Nicaragua [email protected]
First draft chapter
October 6, 2000
Abstracts
The present paper is part of a draft chapter for my Ph.D., thesis as such it is observed in the paper that currently it has been recognised the interdependency between innovation, competitiveness and economic growth within the framework of national system of innovation. However it seems that the connections to economic development is assumed to be directly. Since the last two World Bank development reports, one in knowledge for
development 1998/99 and the other Entering the 21st Century 1999/2000, however it has
been now addressed the role of knowledge and the search form a “comprehensive development framework”. Certainly, there are some “arrow” and “feedback loops” connected among these issues which put them in a developmental vein means an interactive learning process for development. Through the elaboration of this theoretical chapter we have envisioned that learning as a process could be fundamental for grasping insight related to the search for linkages to economic development.
Key words: Innovation; competitiveness; social capital; learning; development.
---Paper prepared for IKE internal seminar, October 25th 2000 Aalborg University Denmark
Theoretical perspectives
Chapter I. Innovation, competitiveness and development Introduction.
The objective of this chapter is to establish the theoretical perspective, which will be related to the facts of the research study. As Myrdal said [a] "pure factual" study observation of a segment of a social reality with no preconception is not possible (Myrdal, 1968:24). The importance of these three notion linkages for my research study has to do with the way our society can confront the globalising learning economy. If one observes the traditional indicator about growth accounting, for instance, in the country where the research is proceeded it portrays a low economic performance. We can cite here all the country statistics available, but this data will allow a partially understanding of the ongoing situation. In this research our point of entry is the local innovation system, in this social setting where the research is performed. But first at all, we must place the local system of innovation in the wider discussion of economic development. We will develop our conceptual perspective from the notion of organisational innovation to the extent that it seems that developing countries are trying to organise its system of innovation. Nevertheless they have at the same time a particular techno-economic paradigm under way and to some degree that determine the way they can be able to set a particular route in order to go out of the low co-evolving trap. We recognise, as it will be state below that there are other forms of innovation as well as other system angle. In any case, the complement among them must be recognised. There is a lot of critique upon neo-classical economic limitation to deal with innovation and there is a need of other perspective or viewpoint. In that regards system of innovation approach is prominent. The paper is structured as follows: In section 1.1 the notion of innovation is addressed in very general way and reaching a schematic representation of a local system of innovation. In section 1.2 links are established between innovation and institution. In section 1.3 it is discussed attributive aspects of social capital related to innovation. In section 1.4 it is stated ideas regarding to competitiveness. Section 1.5 considers ideas regarding development and again a scheme is develop for related the notions of "plethora of capital and interactive learning and we conclude by means of a summary.
1.1 INNOVATION
The process of innovation is now considered to be the driven force for competitiveness. Innovation is a process that is accumulative and it is surrounded by uncertainty (Lundvall, 1992). The definition of the concept of innovation is diverse. Edquist, 1997 discuss very broadly the concept of innovation. By analysing several authors he pointed up from the narrow to the most broadly definition. He also establishes the existence of technical innovation, organisational innovation, as well as social innovation and institutional innovation. In the discussion about innovation it is also important to considered product innovation as well as process of innovation. The relevant point stressed by Edquist is that "the object of study should influence the conceptual specification"(Edquist,1997:10).
Having said that, we are sympathetic with the use of innovation notion that take into account, new forms of organisation, "new creation of economic significance"(ibid:1). But we also will use the notion of innovation as Nelson and Rosenberg said "to encompass the process by which firms master and get into practice product designs and manufacturing
process that are new to them, whether or no they are new to the universe" (Ibid:10). We held that it is important this last notion for less develop countries. It is so, because they are striving in getting access to innovation from abroad. This has to do with new techniques and new procedures that have been produced outside the national borders and what is more important is to be organised, and to be capable to master, unpack, transform and to adapt this technological knowledge. One has to take into account that some part of the innovation has been done outside of the realm of firms, sector or even a country. The same argument is hold by Mitelka 2000. She states that an extended notion of innovation allow us to considered the “continuous improvement in product design and quality, changes in organisation and management, creativity in marketing and modifications to production process that bring cost down, increase efficiency and ensure environmental sustainability”(Mitelka, 2000). Particularly she goes saying that “(a)dopting such a definition will thus encourage policy-makers to take a broader perspective on the opportunities for learning and innovation and to pay greater attention to innovation in SMEs and in the so-called traditional industries” (ibid; our emphasis added).
The theory of innovation has evolved since the linear approach to the systemic approach1. It is impossible to separate innovation from evolutionary economics as well as from theories of technical change and institutional change. Innovation is related to the dynamic of the economy, which means the performance of the national economy, the firms and the industrial structure that form the national economy. The interaction between innovation and economic change is an evolving terrain. The consequences of innovation are several. However, in the first place, it has been signalled the following one, employment generation, economic growth, for government policies and firm strategies (Edquist,1997:xxi). There is an argument that innovation can create employment and also can destroy employment. It means that there is something to be said about good and bad thing about innovation.
The theme about innovation and its consequences for a less develop country relates to the preconception for small economies and less development countries that they have to be more open to the market international competition. They cannot dedicate its mayor endeavours to one point. Because they have a relative economy of scale and it will be expensive and not prudent to put all the eggs in one basket. They will have many areas to confront in a globalising learning economy2. Innovation is good and bad for small countries as well as for a large one however the consequences are dissimilar. Structural pattern of production as well as the historical and the social development of this structure can be one part of the explanation. Innovation is a social endeavour. Lundvall 1992 has maid the point that innovation is fundamental and inherent phenomena of modern capitalism. The conception of innovation has evolved from the belief that "individual calculus" and individual decision making towards an "interactive process" where learning is the fundamental process (Lundvall 1992: Edquist, 1997) and knowledge the must fundamental strategic resource (Lundvall, 1998:33). So that, the entrepreneur in isolation heroically doing innovation is not any more the angle of entry in the analysis and the explanation.
1
See Kline and Rosemberg which have a critique to the linear innovation approach and they have put forward the chain linked model (Stephen J. kline and Nathan Rosenberg (1986). “An Overview of innovation” in Ralph Landau and Nathan Rosenberg (eds) The positive Sum Strategy: Harnessing Technology for Economic Growth, Washington, DC: National Academy Press, 275-305. For a good resume of the linear approach for innovation also see to Edquist and Hommen 1999.
Freeman has created a taxonomy for describing innovation the first one being incremental innovation which “occurs more or less continually, in any industry or service activity, although at varying rate in different industries and at different times. They may be stimulated by continuing pressures to reduce costs as well as to improve quality, design, performance and adaptability”. (Freeman, 1992:194). For Freeman incremental innovation does not have dramatically effects but it can be unnoticed and unrecorded. The distinction with radical innovation reside in that this is more connected to deliberate research, in his gestation is entering the role of universities and government department. The more important it is that it leads to create discontinuity in the production system that is what Freeman call a “radical departure form previous production practices”. There will appear inconveniences and skill shortages. The actors engaging in a radical innovation will experience a fall or low productivity gain, however the relation with incremental innovation rest in the fact that of a learning curve and experience accumulate the appearance of virtuous circles and productivity increases can came up. Another innovation described by Freeman is the changes in technological system, this encompass a kind of technological change that affect “several branches” of the economy, it leads to across the board effects and transforming and allowing the emergency of new sector. There is a relation of this kind of innovation with the spur of complementary innovation in accordance with organisation of production in many industries. The further and more pervasive innovation kind is what Freeman call “changes in techno-economic paradigm or technological revolution. According to the author, it goes beyond the technological system at works and due to its overall effect upon the economy it changes the stile of production and management. However the techno-economic paradigm can leave alongside the existence technologies until it becomes dominant.
The notion of learning and knowledge connected to innovation has been put forward in the Aalborg version for discussion of innovation, that is the National System of Innovation3. The definition of National System of Innovation is the following one;
"[A]ll parts and aspects of the economic structure and the institutional set-up affecting learning as well as searching and exploring- the production system, the marketing system and the system of finance present themselves as sub-systems in which learning takes place" [Lundvall, 1992:12].
But a more workable definition can include the institutional set-up, Production structure, Firms and Policy. The figure below depicts the interrelation of the globalising learning economy, the national system of innovation and the local system of innovation. In the figure it is represented three levels. The upper ellipse expresses the globalising learning economy, the internal ellipses represent the National System of Innovation and the local system of innovation respectively. However, the inner ellipses also represent the idea that a local system of innovation is or could be to some degree connected to the national system of innovation. In general way, in the figure we recognise that there are explicit or implicit connection involved in the symbolic system conceptualisation for analysing innovation at the local level. Moreover, there is the arguments that for making more implicit or explicit a system “it is very difficult or almost impossible to establish limits or dividing lines” (see Edquist, 1997:8).
Lundvall argues that the inclusion of exclusion of either a sub-system or a social institution is a matter of historical analysis as well as theoretical consideration (Ibid:12). The attractively of the approach is for policy analysis, research studies as well as for understanding the economic and technological change.
Almost all the scholars, addressing innovation issues and using the system perspective agree in one way or another that innovation is important for economic growth and for employment creation. It is also a common ground to hold that interactive learning pave the way for innovation. In that regard the National System of Innovation approach is promissory for less develop countries to the extent that one of its main focus is to understand the process of learning in every aspect of the society. From the most traditional workshop to the most modern and industrialised enterprise there is learning taking place. However the vision that innovation is a collective process does not assure that the fruit of innovation is collective too. Innovation has distributive effects and consequence upon social classes in every society. The very process of learning is uneven into the society and the redistribute power of the system must be taken into account (Foray, 1997).
Gu, 1999 has maid a point about the use of national system of innovation approach in context of less develop economies. The question is how to initiate the process and to continue. This question is important for economies that have a low level of industrialisation. But complementary to this question there is the other one how to organise (the country, the region the locality and the industry and the actors and firms) for starting to climb into the learning ladder. But for most of the Latin American countries is to avoid the low learning
trap that characterised and experienced during the import substitution strategies undertaken
in the 60s. It is important to bear in mind those questions. Particularly now when it is being discussed the catch-up up process of laggard countries and there is a discussion about convergence and divergence about economic growth into countries around the world.
firms
firms
firms
Production Structure
Local System of Innovation National System of Innovation
Knowledge infrastructure
Institutional Framework
Policies
Globalising Learning Economy
In the debate about catching up, falling behind and forging ahead in contemporary world there is innovation at the core as well as the technological advances in the industrialised countries. This technological advances that has been shaped by many societal arrangements. The way by which countries are arranging its technological organisation, its universities, education systems, producer association, and the non-government organisation is a key aspect. In that respect we found the National System of Innovation approach to be fruitful, that is that it allowed us to consider these and others elements of the system in its interrelationship.
A system of innovation can be national analysed as well as regional o local, the point of entry depend on the object of study chosen. The interrelation of the elements compounding the system must be analysed from the institutional perspective. Johnson 1997 has made the point that the proposition that innovation process depend on institutions and production structure is more lie a research program than a testable element of theory (Johnson, 1997:37). In that regards my commitment is to search for the pattern of interaction and explaining them in the local milieu. Then in the following part we are going to sketch a rather general overview of the debate about innovation connected to institution.
1.2 INNOVATION AND INSTITUTIONS.
Systems of innovation approaches rest in institutions (Johnson,1997:38). So there seen to be reasonable to state the local system of innovation too. The definitions of institutions notion are several. It also has a very wide meaning. Johnson has named a definition that separate institution from organisation notion. This methodological separation is quite important as Edquist & Johnson argues that the concept of institution “can goes from complex to more heterogeneous. It can be acknowledge that the government offices, as well as the bank and inclusive the universities will be named “institutions”. This kind of thinking avoids the unilateral idea that “market” is everything and that “the sociology items” can be placed in the notion of “cetaris paribus”. Non market features are important for innovation. The social interaction involves market relationship as well as non-market relationship. In addition the market as a social relations is organised. This is Lundvall´s argument when he analyses the source of innovation proposing that pure market notion does not provide a field for innovation to emerge being this product innovation. It is the institutional setting up that provide the space for innovation to emerge however, not in a deterministically way and once for all. This is because it is a ever-changing relationship (Johnson,1992:23). The relationship between institution supporting learning and the process of learning being a kind of propel for knowledge creation, diffusion and even allowing the conditions remembering and for forgetting is the main argument behind the national system of innovation approach for analysing innovation.
The institutional set-up influences the human interaction and the human interaction is under a set of rule, code of communication, language and culture. The institutional patterns varied country to country and even within countries. Edquist and Johnson defined institutions and organisation in the following way:
[I]institutions are a sect of common habits, routines, established practices, rules, or laws that regulate the relations and interactions between individuals and groups (Edquist &Johnson 1997:46).
[O]rganizations are formal structures with an explicit purpose and they are consciously created. They are players or actors (Edquist & Johnson; 1997:47).
It is rather difficult to transfer, technology this is because the underlying institutional set-up perform a kind of platform for knowledge embedded in its concrete form i.e. machinery, artefact and the abstract form, methods, practices and procedures.
From this theoretical perspective, it has been a lot of proposition and avenues for knowledge creation within the approach. For instances just naming one the approach of Knowledge system, other authors call for “institutional learning” and others for to come. Nevertheless, the main point is the so-called new resource. This new resource is “knowledge” which has many attributes, being the principal to be non-rival goods despise the tendency to trap it and converted in “commodity”. For many years in economic theory, was thought that the resources that lead to growth were the very famous trinity: capital, labour and land. But now it is knowledge embedded in artefacts or better to named man-made physical capital, the cognition, ideas, in workers head and even the intrinsic property of nature to be unravelled is the new frontier in economics and social sciences.
The recognition that knowledge is a recourse is not new, Lam 1999 refers to Alfred Marshall who considered knowledge as an “engine of production” (Lam, 1999; 1). The point is that it is in the industrialised countries were the so-called knowledge base economy is more dynamic and it is characterising those countries economies. On the other spectrum, lay the less innovative economies, or less industrialised countries, with an institutional set-up not enough prone and flexible for fostering innovation. The notion of flexibility is quite important for those countries that are confronting the techno-economic paradigm4. It is the economic and social change from the so-called fordist system5 of production to a more flexible system of production where technologies are being elaborated with a cheap factor and with more knowledge embedded. Developing countries are facing two dilemmas; on the one hand they pose obsolete technologies and on the other hand, its institutional set up has been supporting these technologies. In this double dilemma it seems to be a kind of low co-evolving trap. It seems no to be a unique solution or recipe for addressing the question how to go out of this path of development. For some authors it is no a problem of mismatch or lack of correspondence between technologies and institutions which retard or hamper innovation (Johnson & Nielsen 1998). It is a matter of innovation and change (ibid:xv). The double dilemma does not imply a technological determinism as such. Rather than it indeed implies that some but not all kind of institutions are becoming obsolete alongside a particular techno-economic paradigm. But as our definition of institution encompass procedure, routines, and practices, leaving in actor mind. These routines are or have been, through the time, becoming in institutions. Some of them resemble a particular technological paradigm.
Above we have stressed the point that organisational innovation is more prone to be characterised in less develop countries. In parts our a priori explanations built in the arguments that developing countries, are more prone to create incremental innovation.
4
This concept has been coined by Carlota Perez for a review of the concept see Freeman, 1992.
Edquist et al, 1998 stress the point around the interdependency between technological change and organizacional change in order to understand organisational innovation. He define organizacional innovation in the following manner:
“Organisational process of innovation: New way to organise production…. They have to do with coordination of human resources… they are normally develop through process of trial-and-error, learning-by-doing within the innovative firms.
The point that we found important is the link between organisational process of innovation at the level of the firms (i.e. the management systems and the way it is organised the production), and the “link to adaptation or transformation of the institutions. This adaptation and transformation of institutions is important because this is related to the role of theses institutions for coordination activity in regional, national and international economies (Edquist, el., al, 1998:107-104) or to be a kind of building block as well as to perform a kind of bridging role. Here it is necessary to qualify more this role at the local level.
1.3 Innovation and Social Capital
Perhaps one way to qualify the role of institution at the local level is through the understanding of the notion of social capital. As a clear point emerges that institutions play a major role in shaping human interaction and human interaction to its natural environment. The concept of institutions seems to share some attribute with the concept of social capital. As innovation rest in institutions and institutions has the attribute to of a kind of “building block” for society. The social capital concept has the attribute for creating social cohesion. There is an argument for the need to broad the notion of capital beyond the very traditional notion of three factors of production. The point is about the increasing recognition of the social notion. In that regards social capital is considered to contribute to growth and development of any society. Johnson and Lundvall 2000 argues that institutional learning and social capital are “tend to become the key elements in development strategy (Johnson & Lundvall; 2000). The concept of social capital has been recently popularised. It encompasses the ideas about norms, networks, and trust, (Putnam 1993). There are others subset of concept that the search for definition of social capital shares with the discussion about institutions definition. In both cases for us the central point is their linkage to the innovation systems approach and to innovation policy for fostering the development of the innovativeness capability.
The Table below shows us that the concept of institution shares some common notion with social capital notion.
Subset Concrete thing Sociological
meaning: Thing that pattern behaviour Institutional economic + mainstream economics Converging with evolutionary economic Routines Habits Taboos Formal law Common law Economic behaviour Norms Practices Organisation R&D: Universities Industrial research institutes
R&D departments in large firms Consulting agencies Patent offices Technological service institution Other bridging organisations Etc. Routines Norms Shared expectations Morals, Etc. Property rights Markets Firms, as basic economic institutions of capitalism. Property rights Forming a selection environment, selection units in evolutionary processes
Nevertheless recognising that our table above is quite informative in the sense that show how several way it has been addressed what goes into the terms institution. There are authors that describe several subsets such as routines, habits, taboos, formal law and common law. In other case it is distinguishable institutions as concrete think as Johnson 1997 does and in that sense it is methodologically separated organisation from institution. It is also described that the notion of institution has been or it is being discusses from a sociological point of view. In addition, we can also observe that institutional economic and mainstream economic approach talk about institutions but in a more reduced way, naming markets, firms as the main institutions of the capitalism and property rights. Finally in the evolutionary economics institution form the basis mechanism for selection.
1.4 Competitiveness.
In the national system of innovation competitiveness is related to the innovativeness capacity that a country has. The notion of competitiveness goes back to the theory of international trade and the model of Heckscher-Ohlin-Samuelson and his new variant or New trade theory (Dalum, 1992:192). Nowadays, this model has been defiant from several weaknesses related to implausible assumptions. Among the critiques it is the unilateral supposition of unit wage cost that explains the country trade performance and trade share in international market. In that approach it is assumed that the basis of competitiveness is the so-called resources endowment or stock of resources. This determines the comparative advantage of the country, which in turn causes specialisation to revolve around the most abundant resource. In the region of Latin America to some extent it prevails the approach of competitiveness develop by Michael Porter. This is the diamond model, but there has been some criticism (of the cluster approach), in spite of the fact that Lundvall (1992) suggests that Porter’s book (1990), The Competitive Advantage of the Nation, can be understood as an application of national systems of innovation (Lundvall, 1992:17). The determining aspects include the strategy of the firm or business, conditioning factors, demand conditions and supporting industries.
The NSI approach considers learning and innovation as the main points to be explained. When reading Lundvall (1992), it is noticeable how he differs with respect to the diamond coined by Porter. This refers to differences in aspects such as how the creation of qualitatively new factor conditions should be named. Since many agents are involved in the innovation system, the way they learn is important, creating qualitatively new factors. Here experience is also important as well as interaction by means of the learning by doing or learning by using process; that is, learning to interact (see Lundvall, 1992) is another important element. The economic structure (including demand conditions and supporting industries) is an important determining factor affecting both processes—learning and innovation. The second determining factor in the learning process is the institutional set-up, including the firm’s strategy along with its types of cooperation and competition. In Aalborg, Porter is criticised for not to be clear to what extent how his analysis goes from the level of case studies to the level of industry, and from there to his conclusions referring to the national system as a whole (Lundvall, 1992:19; endnote 11). In any case, its approach has been overwhelming used and diffused in several countries at the north and the south. The Porter most handily concept is the notion of cluster6. It can be understood as a concept backed and related to a junction of point that sticks together. It also can be understood from the statistic discipline. However, this theoretical devise gives us an impression that the actors in any economy, sector, region or locality can be agglomerated. From the Porter’s diamond it follows the perspective of cluster analysis for discovering how to agglomerated actors. The perspective must be substantiated with historical perspective and taking into account the political and social context in which those actor are or can be together in order to understand the competitiveness of the nation.
It is important to bring in mind that the notion of competitiveness is related to specific and bounded7 capability that a country, firms and region can have. The point is that in contemporary thinking whatever the level taken to consider competitiveness is a matter of knowledge production, distribution and acquisition and the combination of knowledge as a key resources to create competitiveness. The competitiveness is a process rather than a static point or outcome and we must considered that there are dynamic features at work in reaching a competitive stage.
In that regard here it is useful to related the concept of competitiveness to evolutionary economic theory. In this part we must clarify what do we mean by evolutionary concept and how it relates to competitiveness. From that also how it related to the “facts at the local level that we are researching.
According to evolutionary economic, innovation look like mutation as a metaphor taken from biology8. However, in the production of innovation, “purpose” of the human being takes part. There is a selection mechanism at work when an innovation is produced and diffused into the economic system. In that regard institutions acts as a selection mechanism.
6 For a review of the underpinning fundament of the cluster notion see Andersen, 1992 and Dalum 1992. 7 Here when we say that the actors either individually or in a collective manner have a imperfect understanding
of his environment and what the future will deliver. This is one among the other characteristic that evolutionary theories posse. See Coriat and Dosi 1998 for a review
8 It has been stressed that biological metaphor must be handled with caution when it comes to analyses human
evolution. As Dalum et al, 1992 has pointed out “in social evolution human beings are creating and shaping their own conditions in a way which has no immediate counterpart in biological evolution (Dalum,
1.5 Development.
Definitely, there are some arrow connected between innovation and competitiveness, and between innovation and development. The relation between innovation, competitive and development is an evolving terrain. The notion of economic development as well as the theory of development has now under reconsideration and subject to change the notion of human capital and intellectual capital as factor for development is gaining more prominence due to the debate that is stressing that knowledge is the most strategic resource. For developing countries however, the interaction between the “plethora of capital “ differ with respect develop countries.
It is indubitable that economic development is more that economic growth. No less questionable it is the fact that developing countries are confronting the classical problem of prioritisation of economic development and environmental conservation. The thinking about economic development now has reached a point where national, regional and even the sub-national levels have its unique features. Unequal development among and within nations is being analysing more in vogue by rejecting the neo-classical growth theory.
The notion of Capital and its level of reproduction Easily reproducible
resources
Less easily
reproductive resources Tangible resources 1. Production capital 2. Natural capital Intangible resources 3. Intellectual capital 4. Social capital Source: Johnson & Lundvall 2000.
In the most general level economic development, involve, the well being of the society. Now the consideration of social and economic trajectories that are path dependent and that history matters has to do with the connection of evolutionary thinking and the recognition of knowledge as a resource. Economic growth is just one part of the history when it comes to analyse the way by which human society deploys its “plethora of capital9. For Johnson and Lundvall 2000 the national agenda for development are becoming more complex. The “plethora of capital” is so ingrained that formal formulas for capturing a single factor explaining the economic performance are not a sufficient condition. Woolcock 1993 has call for the incorporation of social capital in development theory and policy. For him there are two levels to take into account, that is the "top-down" and "bottom-up organisational dilemmas of development. In that discussion there are different types of social relationship as well as different dimension of social capital that lives in several “entities” such as trust, norms of reciprocity fairness and cooperation. The relevant point is to be aware that there is a kind of cumulative causation between the entities that Woolcock refers to and the effects on institutional outcomes or institutional performance. In addition to the cumulative causation awareness it is also important to be aware that social capital can enhance, maintain or destroy physical capital and natural capital. This cumulative causation can be illustrated in the figure below. The idea is to show that as development proceeds social capital may
9
This terminology is taken from Woolcock, who has mentioned that Baron and Hannan have criticised the indiscriminate use of the term (Woolcock, 1998:155).
shift as well as the other capital representation10. Likewise as economic development implies that economic exchange gets more complex then the sources of social capital are more demanding. We can also depict in this circular causation that learning is a fundamental process to the extend that it represent the way in which any particular society produce, reproduce and allow to forget a particular techno-economic paradigm resident to the moment that another techno-economic paradigm is taking shape. We must take into account that the notion of techno-economic paradigm entail "a process of economic selection form the range of the technically feasible combinations of innovations, and indeed it takes a relatively long time (a decade or more) for a new paradigm to crystallise and still longer for it to diffuse right through the systems" (Freeman,1988:74).
Let illustrate our point, according to Perez in Latin America has persisted in a particular time of his socio-economic development a kind of industrialisation pessimism embedded in the dependency theory that it allow to conceptualise a "permanent structural gap between developing and develop countries" (Perez, 1988:85). That theory has created and reproduced a kind of thinking, principles and guidelines that still are leaving in actor minds. It is not striking to find out this “thinking” in some knowledge infrastructures i.e. in some Latin American universities. The fact is that the pending signature in most Latin American countries is education.
Arocena and Sutz 2000 has made the point about to “interactive learning space” defining the notion as learning opportunities to strength actors capacities to learn while interacting (Arocena & Sutz,2000). They formulate the idea that the generation of the “space for opportunities” arisen due to different types of economic growth. They have perceived the cumulative circle by stressing that “the learning space greatly influence” the economic growth. While this seems to be logic we cannot give the only prominence to economic growth by itself to provide that learning “spaces”. In this notion it is still living the idea of a “trickle down” effect or putting it in another way it is like the idea of first makes the cake and then distributes it. Development for us is a process that has to do with socio-economic and institutional changes and the very linkages of those changes with the capability to master through historical time an techno-economic paradigm (TEP). The way this TEP is mastered is strongly related to the way as society organised his national system of innovation and what is more important, its learning capabilities. As Sornn-Friese, 2000 has pointed out from the perspective of national innovation systems “the emphasis of the approach is thus on both virtuous and vicious circles in national specialisation and economic development”. (Sornn-Friese, 2000:9).
In those countries that ha had a late industrialisation this issue has a double aspect. Not only there is a problem the incompleteness of the ripe of the old paradigm embodied in fordist type mass production in less develop countries but also the confrontation of the new paradigm embodied in the form of ITC technologies. In the case of Latin America and the Caribbean basin it seems to be a difference between the large countries such as Brazil, Argentina and Chile with respect to small countries in the Central American Isthmus. In Central America countries import substitution model and ideas of industrialisation has
10
This idea is related to the Woolcock concerns regarding to consider a dynamic approach in qualitative terms and the classical sociological concerns addressed by the author. In that respect he has enumerate the following ones: (a) the nature and extend of social relationships vary within and among different institutional sectors, (b) the task performed by these relationship necessarily change as economic exchange becomes more sophisticated and (c) that both “too little” and “too much” social capital an any given institutional level can impede
created in the 1950 and 1960s a kind of industry establishment of “final touch product”. While this industrial setting allowed for some dynamism it never allowed for the creation of internal learning process beyond the mere capital acquisition. Bell and Albu 1999 have said that in this transitional phase technical change was understood in a narrow sense. At that time economic growth thinking had predicted the capital accumulation as “machine”. This has generated a quite passive process of learning. Bell and Albu have said that “from the this stylised “1960” perspective, any locally generated industrial technological change in developing countries was seen as essentially minor and adaptive, involving little or no technological creativity” (Bell&Albu 1999:1717). Few firms were engaged in this international relationship. They were converted in "technological island" surrounded by a sea of small enterprises in cities and peasant producer in rural areas with few linkages. That was the ideas of development pole that were exerted in the rural and metropolitan areas in some countries. This phase then has created a kind of learning process reflected in actor's mind with respect to a set of habits and practices Mytelka & Farinelli 2000. From the 1970s and the 1980s, in Latin American countries industrial ideas and development has faded. The critique to the import substitution model and the "dependency theory" was substantiated with the low economic performance and dreadful competitiveness (Alcorta and Peres 1998). The 1980s was coined as the "lost decade" by the United Nation Economics Commission for Latin America (ECLA).
The above figure has briefly pictured the dynamic of a less developing country reflecting the need for forgetting the old paradigm and the confrontation of the new techno-economic paradigm. In this dynamic the need for speeding out the "learning capability" at three level: Macro, Meso and Micro are important are portrayed. We also have depicted in the figure the role of interactive learning in the process of economic development at the national or local level. When it comes to the local development it relates to a particular social constructed space (geographically, politically and cultural), and the way in this space it is being utilised tangible and intangible resources from the easily reproductively to the less reproducible one. That is a kin as Johnson and Lundvall 2000, conceptualised of “resources” for development.
Social
Economic Cost and benefit.
Developmental or Destructive Interactive learning Interactive learning Techno-paradigms Natural Phisical intelectual Institutional impact Institutional impact Macro Meso Micro
Conclusion:
In resume, we can said that economic development is becoming an institutionalised learning process. This process nurtures the capability that nations and countries can have for creating innovation and competitiveness. The way they mobilise the so called and contest definition of “plethora of capital” is paramount in the sense that is becoming widely recognised that knowledge is the most strategic resources. However this process is context bounded and history and national and societal configuration plays a mayor role. Because the recognition of context bounded therefore the organisational dilemma "top-down" and "bottom-up is quite important to developing countries. It is particular important how to go out of the low evolving learning trap that it is reproduced in a specific techno-economic paradigm that developing countries can have while other paradigm is taking shape. In this regard the only available receipt is to activate a learning process, however there is not warranted that development will be even neither that learning process proceed unbiased. There are vicious and virtuous circles in economic development.
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