World Bank Knowledge Economy Products and Strategy: Emerging Lessons Carl Dahlman



World Bank Knowledge Economy Products and Strategy: Emerging Lessons Carl Dahlman
World Bank Knowledge Economy
Products and Strategy:
Emerging Lessons
Carl Dahlman
PREM Learning Week
April 9, 2003
Washington DC
Structure of Presentation
Why Focus on Knowledge Economy?
Knowledge Economy Definition
Is KE Agenda Relevant for Diversity of Bank Clients?
Knowledge Economy Framework and ESW
Knowledge Economy Work Across the Bank
Two WBI Tools: KAM and K4D Community
Emerging Lessons from Knowledge Assessment
Possible Follow-Up projects
Annex: SWOT Analysis of Russia
©© Knowledge for Development, WBI
Why focus on Knowledge Economy?
Knowledge has always been important for
Are giving it more attention because we are in period
of speed-up in creation and dissemination of
Bottom line is constant restructuring and upgrading in
an increasingly competitive international environment
While this opens up opportunities for leapfrogging, it
also raises risks that developing countries may fall
behind because of an increasing knowledge divide.
©© Knowledge for Development, WBI
The Knowledge Economy Definition
The aim of the Knowledge Economy Program of t
is to help countries develop these strategies to
reduce the risk and increase the benefits.
There are many definitions of the “Knowledge
Economy”, many emphasizing just information
technology and high technology
We take a broader definition:
“An economy that makes effective use of
knowledge for its economic and social
development. This includes tapping foreign
knowledge as well as adapting and creating
knowledge for its specific needs.”
©© Knowledge for Development, WBI
Is KE Relevant for Diversity of Bank Clients?
Yes, it is about making effective use of
knowledge across all sectors, and any country
can do better.
Middle income countries are more aware of
the need to keep up, and can do more to
take advantage of new global knowledge as
well as to develop their own knowledge
But even very poor countries need to make
more effective use existing local knowledge
and global knowledge.
Key issues and policy agenda will be different
according to the capabilities and needs of
each country.
KE Framework and ESW
To Analyze the KE we have developed a
framework which cut across different
Economic incentive and institutional regime
that provides incentives for the efficient use
of existing and new knowledge and the
flourishing of entrepreneurship
Educated, creative and skilled people
Dynamic information infrastructure
Effective national innovation system
©© Knowledge for Development, WBI
Challenge for ESW in this Area
In Bank (as in client governments) efforts are too
compartmentalized into different sectoral silos
It is hard to work in more coherent and synergistic
way across different functional areas, although this is
required to develop effective strategies
In many ways PREM is best placed to play the lead
coordinating role as it is the most cross sectoral
But it is hard to accomplish in practice. Most work
being done by FPSI and HD
Ideal is to have cross sectoral team expertise to
undertake this kind of work
Functionally, the Country Director is the most
appropriate internal client as effective approach
requires systemic integration as part of broad
World Bank KE Program to Date
World Bank Institute started program in 1999. Consists of:
Intense one week policy forums for high level policy makers, as
well as training for Bank staff Regional policy conferences and
seminars on KE
Detailed country knowledge assessment (Korea, China, Russia)
KAM Web-based tool on country knowledge assessments
A K4D Community of practice
Regions of the Bank have been carrying the work further:
The Latin America and Caribbean region has produced two major
regional reports and is undertaking country specific reports in
Argentina, Chile, and Mexico
The EAP Region has been developing analytical tools for economy
wide as well as firm based assessments,
The Middle East and North Africa Region organized a conference
in September, is supporting country specific work on: Jordan,
Morocco, Algeria
The Europe and Central Asia Region has organized two regional
conferences and set up a KE unit to do detailed country specific
knowledge assessments: Lithuania, ©©
Development, WBI
A community of practice focused on K4D issues, and
was launched October, 2002 to provide:
Cross thematic dialogue and exchange of experiences
as there is too much compartmentalization.
A platform for cross regional exchange of experience
as colleagues in various regions are doing work in this
Links to work done outside Bank by other institutions
and countries through link to Knowledge Economy
page on the Global Development Gateway and a
growing global network of persons working in this
©© Knowledge for Development, WBI
A KE Benchmarking Methodology
KAM: 69 structural/qualitative variables to
benchmark performance on 4 pillars
Variables normalized from 0 (worst) to 10
(best) for 100 countries
Basic scorecard for 14 variables at two
points in time, 1995 and 2002
Aggregate knowledge economy index (KE)
©© Knowledge for Development, WBI
Knowledge Economy Index
-Tariff & Non-tariff barriers
-Property Rights
Econ. Incentive RegimeINNOVATION:
-Researchers in R&D
- Manuf. Trade as % of GDP
- Scient. & Tech. Pub. per
million people
Information Infrastructure
-Tel. Lines per 1000 people
- Computers per 1000 people
- Internet hosts per 10,000 people
- Adult literacy rate
- Secondary Enrollment
- Tertiary Enrollment
most recent
Knowledge Economy Index
Emerging Lessons from
Knowledge Assessments
Benchmarking is just first step, but it helps to put
country in global context
Need to deepen analysis with more detailed country
Greatest value of approach is systems integration.
Helps to develop stakeholder awareness
If analysis is done together with key stakeholders,
can help develop stakeholder buy in and help
facilitate consensus for concerted action
Hardest but most important part is reform of the
economic and institutional regime
Implementation of plans needs to be continuously
monitored and adjusted to changing circumstances
(Korea example)
Possible Follow Up Projects
Knowledge Economy Competitiveness Project
Hasn’t been done yet, but highly desirable because of the
need to integrate actions across sectors
Sectoral Projects, but keeping links to policies and
actions needed in other sectors
Economic restructuring projects (financial sector, trade and
competition policy, labor market reform, etc)
Institutional reform projects, especially judicial and
government reform in order to strengthen rule of law and
improve government effectiveness
Levering Knowledge for basic needs project for low income
countries (preventive medicine, basic education, upgrading
local knowledge to improve agricultural productivity)
Life Long Learning Strategy-concrete follow up in China,
possible for various ECA countries
Restructuring R&D Infrastructure and Improving the
Innovation System-natural follow-up for most ECA countries
ICT: telecom policy reform, e-government, e-commerce, eeducation, projects to reduce digital divide
-Russia SWOT Analysis
Russia: Current Situation and Risks
Russia’s growth is acknowledged as unsustainable
Russia is too dependent on natural resource sector
(only sector growing, accounts for 80% of exports)
Industrial sector is technologically outmoded and not
Russian economy suffers from overvalued exchange
rate because of strong natural resource exports
Only dynamic actors are natural resource based
industrial groups
High human capital and strong science base are
Russia risks becoming just a natural resource
exporting economy
Russia needs to diversify and upgrade its economy to
improve international competitiveness
Russia: Summary of Strengths
Reform oriented govt.
Strong trade balance
Strong natural resource
based groups
Poor investment climate
Poor rule of law
Weak financial system
Dutch disease
High S&T manpower
Strong basic research
High S&T capability
Poor linkages with
productive sector
Insufficient use of global
Weak diffusion systems
High average
educational levels
High number of S&T
and technical workers
Poor link to labor market
Weak Life Long Learning
Lack of flexibility of
educational system
Software development
Strong ICT capability
Low penetration ratios
High prices
Poor application and use
Russia: Summary of Opportunities & Threats
Reverse capital flight
and tap FDI by improving
investment climate
Develop financial system
Continued capital flight
Big industrial groups
may capture
Tap global knowledge to
increase value added in
natural resources and
diversify economy
Harness potential of
strong S&T base
Falling behind global
advances in knowledge
Continued loss of
scientific talent
Launch major re-skilling
Institute LL learning
Reform higher education
to market needs
Continued brain drain
Resistance from
established institutions
Rigid university curriculums
Expand penetration
INFRASTRUCTURE Focus on applications
Risk of digital divide
Difficulty of changing
processes to use ICT
Russia: Tentative Recommendations
Economic and
Improve investment climate by strengthening rule and
application of law, reducing administrative barriers
Strengthen financial system (banks and stock market)
Improve labor mobility across industries and regions
Increase tax on natural resources and strengthen
economic competition
Support development of new SMEs
Tap global knowledge more effectively through capital
goods imports, technology licensing, strategic FDI
Link S&T base to economy’s needs through better S&T
policy, technology forecasting, matching grants, stronger
intellectual property rights
Support technology parks, incubators, university spinoffs, venture capital; promote technology dissemination
Education &
Launch major program to re-skill working population to
needs of labor market and restructuring economy
Improve teaching methods in secondary schools to
nurture critical thinking and problem solving
Move towards establishment of Life Long Learning
Information &
Establish more competitive telecom regulatory regime
Address risk of digital divide by expanding access for
low income and rural population
Strengthen application, especially in e-government, ebusiness and e-education
Russia: Emerging Lessons
Radically improving international competitiveness
requires explicit government strategy for building a
knowledge economy in Russia
Important to find the most advantageous ways of
participating in globalization
Labor intensive export strategies are being preempted by size and strength of some of the new
developing country players such as China
Now critical to engage and move up in global value
This requires strengthening ability to create, acquire,
adapt, disseminate, and use knowledge
Knowledge strategy has to include measures to build
a favorable economic and institutional regime

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