Knowledge and Development

The stories of low-income economies that have “caught up” with those of Western Europe and the US during the last half-century revolve largely around transfers of relevant knowledge, nurturing “receptors” for the knowledge so transferred, and creating organizations that translate knowledge into improvements “on-the-ground”. A great deal of the knowledge required in order to raise living standards in SSA already exists, and hence social returns to transfer and adaptation to local conditions are much higher than to new research. The trick is to “know what to look for” in the world’s immense store of knowledge. Universities could act as knowledge receptors, but all too-often African universities teach “knowledge” that is fairly irrelevant to local conditions.

In a reasonably competitive environment, private firms, including subsidiaries of foreign companies, act as knowledge receptors. Successful developing countries are open to foreign ideas; they nurture “receptors” capable of absorbing those strands of knowledge that can take root in their local environment. Throughout the world, private enterprises act as knowledge receptors. Where competitive conditions prevail, leading enterprises will constantly seek out information that has practical uses locally. To remain competitive, other firms, in turn, will emulate their behavior. In this process, executives and employees upgrade their human capital, their productivity, and their incomes. The role of private firms in absorbing knowledge and putting it to use is especially important in the processes of technology generation and diffusion is fundamental to development.

Indeed, a focus on effective knowledge receptors brings to light one of the most hopeful development in recent decades: the gradual replacement of an aid-seeking African middle class by a much broader and more dynamic market-driven middle-class. This middle class consists largely of private sector leaders and managers, as well as a new breed of start-up entrepreneurs whose sights are trained on the global economy. Two factors have facilitated this rise enormously. First, local middle-classes are closely linked to diaspora relatives living abroad, and this makes it easy for them to adapt relevant global know-how to local circumstances. Second, of course, is the mobile phone revolution, which occurred quite independently of national development plans, and which has in effect taken whole swathes of SSA’s population out of isolation, reduced transaction costs and so opened up space for new and expanded economic activities. This growing middle-class embodies what Marx reviled as “bourgeois cosmopolitanism”, which is exactly what SSA needs. Breaking away from cultures rooted in state-dominated colonial legacies, the “new bourgeoisie” value critical thinking, teamwork, and pragmatic “problem-solving” approaches.

Network organizations have played a highly useful role in capturing and disseminating relevant knowledge (both between Africa and the rest of the world and within Africa). The African Economic Research Consortium (AERC) for example is a highly successful network institution established 20 years ago, whose mission is to strengthen local capacity for conducting independent, rigorous inquiry into problems pertinent to the management of economies in SSA. The success of this program is also demonstrated by the increased adoption of the networking concept in other disciplines as a cost-effective approach to attaining a critical mass of professional activity in the region and applying peer review for professional excellence. A spin-off of sub-networks, often in collaboration with professionals outside the region, has further widened research opportunities and firmed up interest in African research. AERC’s web site lists 1,160 alumni, who, together, have contributed significantly to the region’s macroeconomic improvements noted earlier .