Knowledge leads to growth, suggests a World Bank report
CAN knowledge make you richer, materially? The Indian's firm belief in the incompatibility of Lakshmi and Saraswati notwithstanding, material gains do accrue from the expanding frontiers of knowledge. For individuals, an MBA degree can perhaps yield a better salary package, but for a nation, and ultimately for the world, spreading knowledge and information can contribute handsomely to growth.
For evidence, take two examples from the World Bank's World Development Report (WDR) 1998. The first: a survey in southern India found that between '73 and '94, thanks to high-yielding varieties of grains needing labour-intensive cultivation, the average real income of small farmers went up by 90 per cent; that of the landless by 125 per cent. In Bangladesh, the highly successful Grameen Banks promote social development by fostering the opening of schools. As lending crossed 8 billion takas in '94, 15,000 schools were opened. The banks also run a nationwide mobile telephony company, which allows poor rural women to purchase phones and sell services to whole villages or individual clients.
As communication becomes the most valuable tool in spreading knowledge, developing nations are bypassed by the revolution. Worldwide, about 28 million people are on the waiting list for phones. These countries, including India, suffer from inefficient yet profit-earning monopolies in telecom which make little effort to meet the demand. They'd do well to emulate Ghana and Chile which have achieved breathtaking results through partial and complete privatisation. In Ghana, in one year of reforms, fixed lines increased by 30 per cent, and Chile hopes to give 98 per cent of its people a phone by the turn of the century.
In fact, the WDR suggests, one reason why market failures can't be handled adequately by countries is the lack of efficient information gathering and processing systems. East Asia's financial crash may have been aggravated by opaque corporate accounting, inadequate supervision of bank balancesheets, and lack of knowledge of private exposure to short-term debt.
It's time therefore that governments accept that knowledge is public good. And markets alone are inadequate; societies must design and foster policies to promote knowledge growth. Basically, governments must formulate a national strategy to narrow knowledge gaps—tap global knowledge and create local knowledge.
One of the best success stories is Korea, which achieved universal primary education by '60. By '95, more than half were enrolled in a college or university. The nation industrialised with the help of a growing pool of educated and trained labourforce. Result: in '97, Korea was ranked 24th in terms of per capita GNP, it had 430 phone mainlines and 132 PCs per 1,000 people, and 2,636 engineers and scientists in R&D per million people. Patent application filed by residents were almost double those filed by nonresidents—60,000 vs 37,000.
The figures for India make dismal reading. Enough to quote the patent applications filed by residents—1,545 and the phone density—15. Two poor examples of the lowest common denominators of an information economy—communications and research. When will the leaders wake up?