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close this book Laying the foundation - The institution of knowledge in developing countries
close this folder Part I The institution of knowledge
View the document Chapter 1 Institutions and their context
View the document Chapter 2 Institutions of knowledge as formal organizations: an initial balance

Chapter 1 Institutions and their context

Benjamin Alvarez


Knowledge and Development


The recent history of international conflict and the growth of influential new centres of science and technology have shown knowledge to be a far more powerful instrument of social transformation and control than ever predicted by philosophers and historians. Aristotle, for one, never imagined the boundless possibilities of practical knowledge for a society. In contrast to speculative knowledge (De Anima III, 433 a. 13), which values knowledge for its own sake, practical knowledge strives for a concrete and useful result such as a technology or the testing of a policy.

According to Aristotle, the creation of practical knowledge required far more than intellectual faculties. It also demanded creative ability, the capacity to innovate, the ability to produce and organize, and the desire to act. The purpose of practical knowledge is not only to confirm theory but also to act with efficacy on people and things. The concept of practical knowledge is perhaps better than that of applied research to explain the role of science in society. The first step in any complex problem-solving process, such as developing a new technology, vaccine, or policy is usually basic research.

Thinkers have long studied the relationship between knowledge and action, and that relationship is now a permanent part of human consciousness. The economic value of practical knowledge has increased as it has become increasingly essential to progress, as well as to individual and collective survival.

Standard economic theory describes a product as a function of two basic factors of production: capital and labour. Land, or natural resources, is sometimes added as a third factor. Although this theory may hold true for a single enterprise, a set of industries, or even a country, it does little to explain long-term changes in a country's economic growth, or income differences between rich and poor countries. Capital, labour, and natural resource endowment typically account for half or less of the difference in total domestic product within a country or between countries. The rest of the variation, called the "total productivity of factors," results from technological change, that is, from using a certain amount of capital, labour, and natural resources in concert with a productive technology.

Applied knowledge has always been central to economic development. The performance of many recently industrialized countries suggests that a country's geographic position, size, and natural resource base play a far less important role in its development than do political stability, flexibility, institutional adaptability, and human efficiency. It appears that institutional and human capability, along with appropriate macroeconomic policies, are the basic ingredients for progress (Naya et al. 1989).

It is clear that economic policy by itself is no panacea. Adopting a new economic model guarantees neither stable growth nor improved living standards. Nor does it assure a place on the complex map of world power. Government, industry, and education must also make a competent contribution to economic development. In other words, they must possess the capacity to absorb, produce, and use knowledge and have the institutional capacity to adapt to attain collective goals. One writer has gone so far as to claim that "Minerals, oil or capital are irrelevant; infrastructure for production matters very little; the only essential is knowledge" (de Closets 1967).

The international situation may help or hinder a country's development. Latin American and Caribbean countries can ill afford to ignore the process of global restructuring currently underway. Indeed, that process is providing countries in the region with new opportunities in the global marketplace. But while the wind of change may bring some countries access to advanced technology, financial resources, and wider markets, it may also serve as a cold reminder of the crucial need to increase discipline, capabilities, and knowledge.

Given the move away from agriculture and the changes to terms of trade, most economies in the region will find themselves relying increasingly on industry and services. Because this type of economy leans heavily on information networks and the intensive use of knowledge, scientific and technological capacity will be a critical determinant of its success

The adaptation of the means of production has been called technological change, a term that includes workforce training, the application of new knowledge, as well as changes in the production process. Research, innovation, and education are all key elements of technological change.

Technological change accounts for more than half the growth of both developed countries and those that have adopted open commercial strategies. Comparative studies (such as Chenery et al. 1986) have found that technological change contributes somewhat less - about 30% - to the growth of inward-looking economies. Evidence also suggests that inward-looking trade policies tend to curb the productivity of developing countries. Given the same parameters of investment and employment, these countries tend to grow more slowly than developed countries and those with more open economies (Jaramillo 1991).

Knowledge is the driving force behind the fourth technological revolution now in progress, just as it was in the previous three revolutions. Knowledge has overtaken factors such as natural resources in importance and has radically changed the way in which goods are produced, labour is organized, trade is managed, and wealth is distributed.

The factors that most inhibit a country's technological development are the scarcity of trained human resources and a difficulty staying at the forefront of innovation. Latin American entrepreneurs often complain of being blocked in this way, facing as they do a new kind of international competition that requires flexible models for organizing production. Mass production models no longer satisfy the needs of postmodern enterprise. Products and processes as well as distribution and sale all require increased knowledge and capacity to innovate as well as more extensive use of technology.

Flexible production models require five essential ingredients: the automation of machinery to support product diversification; a reorganization of labour to make the best use of trained personnel and new approaches to technology management; improved competitive strategies to penetrate increasingly segmented and sophisticated markets; increased local and international subcontracting; and new relationships with suppliers.

New production models will call for better trained and more critical workers, qualities that were previously required only by top management. They will also dictate changes in the organization of labour, in relationships between workers, in institutions, and, indeed, in society as a whole.

Today, as in the past, industrial productivity is linked to economic policy. It is also closely related to the two factors mentioned earlier: scientific and technological research and the knowledge and abilities of the labour force. Some, such as Kellaghan (1991), would put research first; from this standpoint, the training of top management and its relationship to research warrants greater attention than in the past. The infrastructure of scientific institutions and their relationship to production, policy, and education are also decisive factors in international competitiveness.

Competitiveness is the ultimate expression of the capabilities of a firm, an industry, a firm, or a country. Comparative analyses of industrialized countries (OECD 1987; Porter 1990) suggest that success in international competition is related to the interaction of capabilities, incentives, and institutions.

Capabilities (which include human resources, capital, and organizational and technical skills) define what is possible to achieve; incentives drive capabilities by introducing a dynamic element; and institutions provide the general frame in which the other two factors operate. Institutions establish the rules of the game and modify both capabilities and incentives. Economic results cannot be separated from the life of institutions and the cultural factors supporting them.

In contrast, most recent research on industrial competitiveness in developing countries has focused on the export orientation of various economic models. It has taken only a slight interest in the way that critical variables such as human resources, industrial strategies, institutions, and science and technology contribute to the mastery of technological change (tall 1990). The ability to learn is clearly a nation's most valuable resource in adapting to new global conditions, one that is absolutely essential to countries seeking to join the mainstream quickly. Ballesteros (1991) states unequivocally that:

In every case of internationalization and industrialization, today as in the past, human capital has played the leading part. There is no other explanation for the good performance of an economy, its industry, its business in both public and private sector and indeed in all sectors of that economy ....

Human competence and institutional capacity have become more closely linked than ever before. The ability to assimilate and adapt, which depends so much on the quality of human resources and the efficiency of institutional infrastructure, may in future mark the difference between countries that learn slowly and those that learn quickly.


Institutions of Knowledge in Developing Countries

Institutions of knowledge make a useful contribution to society, creating a demand for advanced knowledge and laying a permanent foundation for the maintenance of a nation's position on the world stage. The Museum (or Temple of the Muses) of Alexandria was one of the best known institutions of knowledge in the ancient world. Western culture has borrowed the word "museum" with enthusiasm, but its modern meaning does not do justice to the spirit of the original organization, which was a forerunner of today's scientific and academic research centre. There, the quest for knowledge and the training of new generations of researchers went hand in hand.

The tradition of institutions that promote speculative and practical knowledge has continued down through the ages and has become enriched by the growing importance of science. Today, these institutions are the visible face of science in society, and they are vital to understanding the nature of the scientific endeavour. Research activity needs to be housed in institutions for several reasons. It has become increasingly complex and time consuming, requiring ever increasing levels of technology and the contribution of many disciplines, methods, and approaches for solving problems.

Although research organizations are now using the instruments and procedures of industry more than ever before, they still tend to view themselves as complex learning operations rather than rational productive structures. At the same time, there is a growing social awareness that knowledge is a basic tool for improving production, sales, and service. The activities and culture of science have seeped into the world of business, profoundly affecting its concepts, practices, and relationships.

Although the university is still the prototype of an institution of learning, it no longer has a monopoly over research or teaching. Research centres, government bodies, and modern businesses have all joined the university as important components of a society's scientific, technological, and development capital, along with the society's overall capacity to make use of scientific discoveries, procedures, and tools.

Institutions of knowledge can be analyzed in two ways. First, they can be analyzed as a complex of units, or social system that creates, experiments, communicates, and uses knowledge. The second way is to look at them as organizations with specific missions. The former, or macro view, focuses on the institutionalization process and looks generally at the establishment, introduction, and influence of science in society. The latter, or micro view, looks at the types of institutions that have grown up around knowledge and examines their evolution, productivity, and social impact.

Scientific expeditions, learned societies, schools, museums, observatories, universities, and arts academies are all institutions that have played host to the development of knowledge for centuries. The process of consolidating and institutionalizing scientific activity has been under way for less than 100 years. Universities have expanded, research centres have mushroomed, and industry and trade have created a multitude of research units. In addition, social and economic needs have intensified an exchange of knowledge, which has grown with increased interdisciplinary activity. We no longer talk simply of expanding information networks between researchers and research centres, but of expanding information networks between research systems, productive enterprises, and society as a whole.

Laboratories, research centres, scientific associations, foundations promoting science and technology, universities, industrial research departments, consulting groups, museums, and specialized government agencies share many characteristics of a typical institution of knowledge. The most traditional of them - the universities and research centres - are currently being forced by circumstances to reconsider their missions, methods of work, and relations with the outside world. Other institutions less closely related to the creation of knowledge, such as business, are also being faced with the challenge of making increasingly complex goods that require more intensive use of technology and knowledge.

There are at least three good reasons for taking a fresh look at the institutions of knowledge in developing countries. The first is ethical, in that development depends on the capacity for stable and independent management. The second is that international changes are forcing countries to learn how to compete in highly uncertain situations. Lastly, countries without a science and technology infrastructure will find themselves deprived of the most important resource of the future: knowledge.

It is well known that scientific activity is an important indicator of productivity in industrialized countries. Despite institutional traditions dating back to colonial times, Latin America has still fallen behind the rest of the developed world with respect to scientific capacity. The region does, however, possess a basic, if limited, scientific infrastructure of graduate programs and research units.

Although Latin America has more than 500 universities and an ever-increasing number of research and postgraduate programs, it produces few scientific articles. According to estimates based on university publishing catalogues for Latin America and the Caribbean (CERLALC 1991), university publishers produced 3 248 works in 1990. Of these, 42% were general or in the humanities, 34% were in the social sciences (including law), 7% were in the basic sciences, 11% were in technology, and 6% were in health. Between them, these 500 universities publish only 88 journals; 68 of which come from Brazil, Colombia, and Mexico.

The intellectual life and scientific environment of countries such as France, the United Kingdom, and the United States are closely linked to their postgraduate education programs. In France, for example, roughly 4 500 doctoral theses are produced annually, accounting for about 50% of its new knowledge (Dollfuss 1991). In contrast, the influence of postgraduate schools in Latin America is minimal, partly because of their small number but more so because of their poor quality.

Most postgraduate programs in Latin American countries (with the exception of those in Brazil) did not emerge during the second half of this century as the result of strategic thinking, explicit government policies or research dynamics. Instead, programs developed rather spontaneously out of an interplay between national and international education systems through fellowships, visiting scholars, and contact with the international literature on education. Other contributing factors were the rapid expansion of school levels and the growing demand for educational credentials.

Several Latin American countries offer postgraduate programs at the master's level but very few offer doctoral programs. In 1989, there were 1 324 postgraduate programs in Brazil (399 at the doctoral level), 1 594 in Mexico, 616 in Colombia, and 123 in Chile. The majority are weak in research, information systems, and teaching. These weaknesses hamper the development of established schools of thought and research, which, in turn, negatively affects other levels of education.

The seven countries most active in research are Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico, and Venezuela. Their 6 000 or so research centres are engaged in 42 000 studies (Sagasti and Cook 1985). National Science and Technology centres classify 674 of these centres as high quality, with a potential for training new generations of researchers (Aguiar 1991). It should be noted, however, that there are serious doubts about the coverage, validity, and reliability of information collected by international and national bodies (Filgueira 1991).

Aguiar proposes a strategy to improve communications and cooperation between research centres in Latin America and the Caribbean. The plan entails exchange programs run by specific disciplines rather than by national policy bodies, subregional integration, and increased cooperation around institutional development. He also advocates more research based on a case-study approach, which would allow in-depth examinations of factors related to institutional structure in general and the recruitment and motivation of scientists and relationships between research units and their local environment in particular.

It is more important than ever to put an end to the stagnation now evident in many research centres and universities in Latin America. If the region is to succeed in joining the mainstream of world activity, its institutions of knowledge will have to play a major role in these efforts.

Many developing countries have begun to develop a research infrastructure. The universities are home to the basic sciences. Health research takes place in a more diffuse institutional context: spread between national centres, private foundations, health service organizations, and universities. Agricultural research is conducted mainly in national and international centres. Private centres have provided significant support for social and educational research in Latin America. Increasingly, industry is turning to universities, private institutes, and government centres for research on technology and industrial processes.

With few exceptions, international cooperation has played a crucial role in the development of institutions of knowledge in developing countries. International assistance was responsible for training thousands of agricultural researchers in Latin America in the 1970s. These professionals formed a critical mass that led to the establishment of national agricultural research centres. The Ford Foundation and United States Agency for International Development (USAID) in the United States, along with IDRC in Canada, have provided essential support to social research in general and educational research in particular. A similar pattern can be observed in the basic sciences.

It was the international donor agencies who coined the term "institution-building." When the agencies first started providing technical assistance after World War 11, they attempted to transplant solutions from industrialized countries to developing ones, applying them by trial and error. It soon became evident that more knowledge was needed on how institutions develop if interventions were to stand a better chance of success. The metaphorical reference to "building" was used as a starting point for the planning and development of institutions. Existing research on complex organizations served as the basis for a new literature on institution-building, one primarily designed to respond to the specific needs of donor agencies. This material usually took the form of notes or documents with limited circulation.


Analyzing Successful Institution - Building

According to Blase (1986), the literature on institution-building takes a micro and macro approach. The former focuses on individual institutions and deals with theories and explanations drawn from an analysis of organizational behaviour. The latter examines the role of institutions in society.

With respect to the institutions of knowledge, the micro approach looks at the capacity of each institution to adapt and change. It analyzes the internal and external factors that influence its evolution, as well as the similarities and differences with other organizations. It also considers an institution's relationships with others in society, especially those that give it technical or financial support and provide it with legitimacy, along with those that use the knowledge it produces. The term "institution-building" refers to the conscious process of creating a new institution or changing an existing one to achieve a specific set of goals.

The factors identified by research on complex organizations as essential to an institution's success have been used as the starting point for framing intervention strategies. For institutions of knowledge, these variables tend to be related to internal structure and incentives; they have a different configuration and relative importance than for other organizations.

The macro approach to institution-building analyzes the way in which systems of institutions support development in broad social and economic sectors. For institutions of knowledge, this could take into account how different sciences become institutionalized in society. Obviously, as science penetrates further into society, institution-building will become less accurate as a metaphor for describing the development of knowledge institutions.

There is a wealth of literature on the most important characteristics of successful or efficient organizations (Gómez 1990). Israel (1987) has made a significant contribution to the knowledge base by identifying important sources of motivation for good institutional performance. An analysis of 159 cases in developing countries uncovered three in particular: specificity, competition, and management.

Specificity has two aspects: first, an institution's capacity to specify and achieve its objectives and control results; second, its system of rewards. Competition refers to the institution's relationship with its environment and with the various pressures applied to its members. Some institutions are highly specific about their work internally, experience substantial competition, and have a motivating management. However, most institutions of knowledge in the "soft" sciences in developing countries are less specific and evolve in a less than competitive environment.

Other features of institutions of knowledge tend to vary with organizational climate and performance. Examples include an organization's values, which characterize institutions that seek knowledge for its own sake (such as Plato's Academy and the universities); the type of staff employed, their autonomy and relationship with international networks; and working style.

Institutions of knowledge differ from one another based on the following factors: the type of knowledge produced (agriculture, sociology, physics...); the strategy adopted to produce it (basic research, technology, interdisciplinary work...); the source of authority and funds (the state, private interests, religious institutions, business...); and the decision-making system (hierarchical lines of authority, a net pyramid, or something in between).

The environments of research organizations in developed and developing countries are also quite dissimilar. The industrialized world has an established scientific community, a regular system of peer review, channels through which scientific activity is shared, higher levels of education, and easy access to information. The market for researchers is larger and more varied, and a career as a researcher is an attractive one. In the developing world, variations between institutions seem to depend more on a country's size, degree of development, and prevailing view of the state's role.

The climate of complex organizations described in the classical literature differs markedly from that of research centres. The creation of knowledge is not an activity that can be contracted and supervised by independent entities in a bureaucratic way. It is a unique, highly absorbing process, not easily controlled from outside, that requires the intense dedication of the researcher (see Chapter 2). This raises the question of how to motivate personal efficiency and organizational success in an institution of knowledge. What are the key factors or tools that will promote the creation and development of institutions of knowledge in a developing region such as Latin America? The main purpose of this book is to help find answers to these questions. This is also the book's contribution to "theoretical or speculative knowledge."

There are many reasons why countries in Latin America and the Caribbean should review and modernize their policies on science and technology, and restructure, reorganize, reform, and integrate their institutions of knowledge. Here are six.

The success of economic liberalization programs now being introduced in most countries will depend heavily on the local availability of human and institutional resources.

· The adaptation and modernization of production cannot be achieved without a solid foundation in scientific and technological research and efficient communication between research and production.

· The current rethinking of the relationship between the state and society will force a review of the nature and role of government research institutions.

· Rising costs and stretched budgets in universities and private research centres will increase the pressure to find alternatives.

· Solutions to pressing social problems can no longer be delayed and require the combined efforts of business and academia.

· The redistribution of wealth - the goal of many social policies - will never be achieved without the redistribution of knowledge, and this can only occur with the active participation of the institutions of knowledge.