GRADE

Knowledge has acquired a crucial relevance at the dawn of the 21st century. The acceleration of scientific and technological advances and their explosive diffusion have changed the way economies and societies work. We do not rely anymore on cheap inputs to increase and improve production processes and economic growth. Nowadays, we rely on cheap information.

Two factors have contributed to the reduced price of information. On the one hand, the release of information transforms it into a public good, at least in principle. It is a non-rival good, because no matter how much we use a specific piece of information, it will not be reduced. It will still be available for another person to use it. Information is also a non-excludable good, because two agents can use the same piece of information at the same time. Even when the mechanisms to protect information are tight -for example, patents- information always leaks. On the other hand, the advances information and communication technologies (ICT) have permitted low-cost storage and widespread access to information in almost all areas of human activities. The Organization for Economic Co-operation and Development (OECD) refers to ICT as «…a key technology to speeding up the innovation process and reducing cycle times—it has fostered greater networking in the economy, it makes possible faster diffusion of codified knowledge and ideas, and it has played an important role in making science more efficient and linking it more closely with business» (Dodgson et al., 2001; citing OECD, 2000). Although cheap information creates huge opportunities for economic development, only a few countries, are taking advantage of it.

A minimum level of capacity is required in educational, research, government and productive institutions to transform information into useful knowledge, and also to discern which pieces of information are useful to solve a country’s specific problems. Knowledge, as opposed to information, is created in a specific context shaped by geographic, economic, social or political factors. Knowledge creation is not automatic; it requires a process of learning. When individuals learn, they usually build theories and conceptual frameworks that provide coherence to, and allow them to reflect on, their experiences. Theories are tested in the realm of action, and reflection on the results of these actions leads to additional knowledge and to improved theoretical understanding. Thus, knowledge creation requires systematic gathering of information and feedback in response to specific needs (Albu, 1997). It is also a cumulative and endogenous process, which continuously builds on previous pieces of absorbed and adapted information. This is why it is so difficult to transfer knowledge successfully from one location to another. Knowledge contributes to economic development by giving people the capacities to solve the specific problems they face, satisfy their needs and further increase their capabilities. In particular, knowledge contributes to generating the technologies that are used in the production of goods and services that improve the quality of life.

A country’s capacity to devise effective solutions is supported by an institutional setting that promotes the creation, absorption, adoption and diffusion of knowledge, and which also matches such knowledge with the needs and preferences of the population. In developing countries, this problem-solving ability and the supporting institutional arrangements must take into account the solutions that have been devised in local settings and in response to rather specific problems. This implies paying attention to indigenous knowledge and technologies, which usually have been accumulating slowly over a long time and through trial and error. The recognition that knowledge plays an important role in development has led, particularly during the last century, to a variety of initiatives for development cooperation and to transfers of knowledge from developed to developing countries (Sagasti and Alcalde, 1999). To a large extent, many of these initiatives were inspired by the Marshall Plan, which provided financial and technical assistance to Europe after World War II. Between 1947 and 1951, the United States injected the 1997 equivalent of US $88 billion in balance-of-payments support and soft loans to most countries in Western Europe, and also provided technical assistance and access to US managerial and manufacturing know-how. Five decades later, the Marshall Plan’s key features make it highly regarded as a model for international cooperation programmes. These include the cooperative and multilateral nature of the plan, which involved both donor and recipients in its design and implementation, and the incorporation of training programmes for European businesspeople, which transferred valuable technical and management know- how to the private sector.

The limited and temporary nature of the plan has also been considered a desirable feature. In sum, the Marshall Plan has been deemed the most successful international cooperation programme in history (Jenkins, 1997; Rostow, 1997; Holt, 1997). However, as other contributions to this volume indicate, the international cooperation and technical assistance schemes devised and put in practice to help developing countries have had, for the most part, a rather limited impact. To a large extent, this is because they have relied on the transference of generic information, without addressing the organizational, economic, financial and political constraints that shape and condition the use of cooperation and assistance in the recipient countries.

As a result, conventional technical assistance programmes have often eroded ownership, commitment and independent action at the national and local levels in developing countries (Morgan, 2001). In many cases, countries became dependent on such programmes to support significant parts of their production systems, and faced the loss of their own indigenous knowledge in their efforts to adopt he foreign versions.

As a result, developing countries have not been able to create an endogenous knowledge base. This paper presents a conceptual framework to examine the ways knowledge and technology creation contribute economic development. If then explores how indigenous and local knowledge can be integrated into production systems.

The paper concludes with some suggestions on the way technical cooperation could help in making better use of traditional knowledge and technologies.