Turning information into knowledge – and money

OECD Observer

OECD Forum, 14th May, 2001: Fostering knowledge-based enterprises; moderator Daniel Franklin 

International business and economic leaders tried to get their heads around a difficult puzzle on Monday: how to develop a knowledge-based economy in a world of glaring inequalities and self-interest.

Daniel Franklin, editorial director of the U.K.’s Economist Intelligence Unit, summed up the challenge at the beginning of the discussion, saying there were three main reasons why using information and knowledge to generate money “is not as easy as it may sound.”

“One is the technology barrier,” said Mr Franklin. “Although the Internet creates the opportunity, the systems are often incompatible with one another. The front office and the back office – that can be a barrier.

“Secondly, understanding what knowledge you need is, if you like, an insight barrier… and thirdly, the human barrier. Knowledge is to a certain extent power. People aren’t always willing to share it.”

How to move away from resource-generated income towards a more sustainable model based on knowledge and harnessing information and communications technology (ICT) was the core of the problem discussed. During the hour and a half discussion, a group of five panelists addressed the gaps that continue to plague all countries in the global village – including the undisputed leader of the pack, the United States.

These include the gender gap in business, the gap between domestic human capital and employment opportunity, and the sizeable gap between ICT creation in the US and in the rest of the world.

Several questioners from the floor raised the problem of knowledge sharing and the barrier to wider use of innovative ICT posed by aggressive patenting in some countries.

Akira Goto, innovation research professor at Japan’s Hitotsubashi University, argued technological progress requires a less restrictive patent system. The issue is especially pertinent to Japan, Mr Goto noted, with the country facing a rapid decrease in population and its labour force. By 2007, Mr Goto said, capitalising on knowledge will be crucial to his home country’s economic development.

“Knowledge is easy to copy,” said Mr Goto, “but properly managed, it provides incentives to innovate. Under the pro-patent system, scientific knowledge that used to be published in journals and texts, has now become proprietary knowledge. The international community needs to support shared research and ideas.”

All the panelists agreed that throughout the 1980s and 1990s, the United States played the patent game best. The country used the system to assert ownership of potentially money-generating ideas; it then established a dedicated court of appeals in Washington to cement internal patent claims.

It is no coincidence that over the 1990s, the United States forged the strongest direct link between scientific research and development and new technology, said Italian professor and government economic adviser Andrea Bonaccorsi. Mr Bonaccorsi pointed out that the U.S. “made a spectacular increase, with Europe and Japan lagging behind.” Meanwhile, his data suggested the Far East, Canada and Australia have poorly translated science into technology. Examples of science and technology at work together, said Mr Bonaccorsi, are the biotech industry, GMO foods, pharmaceuticals and telecommunications.

But Dr John Bell, senior associate with the Allen Consulting Group of Australia argued that a developed ICT sector was not needed to benefit from technology. How to use it was important. Australian farmers, Dr Bell noted, have used new global positioning tools to allow them to harvest crops 24 hours a day, maximising land area – and minimising labour costs.

“Governments need to use the products of knowledge-based enterprises,” said Dr Bell. “And you don’t have to be the generator of patents. It is true that the Americans have one set of rules and the rest of us try to do something different, but I’m a bit relaxed about it. Some of these patents aren’t worth the paper they’re printed on.”

Danièle Rousseau, the president of France’s Dirigeantes Association and the only woman on the panel, argued that a healthy knowledge-based economy needs to make use of the resources it has – that is its potential work force or human capital.

“New technologies require new economic agents, and companies don’t always make use of women” said Ms Rousseau. With women entrepreneurs increasing, Ms Rousseau warned that a waste of women’s talent is a waste of assets.

Russian panelist Iliya Yuzhanov, Minister for AntiMonopoly Policy and Support of Entrepreneurship, said that despite a growth rate of 8% last year, his country remains hungry. “Our growth rate was largely resource-based, and our government wants to move ahead on fostering knowledge-based enterprises,” said Mr Yuzhanov. “That’s why our government has begun to subsidise businesses with the potential to make the knowledge-based industry work.”

©OECD Observer May 2001




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