Prospectus for National Knowledge Assessment (1996)

This prospectus was prepared by a committee of the National Research Council in response to a request from the World Bank. The concept of a knowledge assessment arose during the course of a symposium on the topic Marshaling Technology for Development, sponsored jointly by the World Bank and the National Research Council in November 1994. In order to explore the justification and usefulness of a knowledge assessment, the committee held one meeting in April 1996, and this prospectus describes the conclusions and recommendations of that meeting. It was not possible in this short time to review the vast literature that exists on this topic, and the committee makes no claim to originality or comprehensiveness. It recommends that knowledge assessment will be a useful addition to the toolbox of the donor agencies and developing country governments for designing interventions to improve the use of knowledge for social and economic development. However, before a knowledge assessment can be carried out, a pilot project will first be necessary in order to prepare the templates, interview guides and indicators, and refine the methodology.

The last few years have seen radical changes in the way the world conducts its business, driven mainly by technological innovation. The falling price of telecommunications, the ubiquitousness of desktop computers, the existence of world-wide networks like Internet, and advances in biotechnology, in materials science, and in electronic engineering have created new products and services, new businesses and new opportunities unknown a decade ago. This is called by some the knowledge revolution, because many of the new opportunities are in industries and institutions dependent upon scientific and technical knowledge and instant knowledge of world markets, and reliant on advanced organizational theory and financial systems, and on timely acquisition and use of information.

Some nations that were considered developing countries a few years ago have prospered in this new environment. These include the Newly Industrialized Countries (NICs) of Asia and certain countries of Latin America. Others are attempting to transform their science and technology infrastructure and improve their capabilities in informatics, telecommunications, and other fields, in the hope of finding profitable niches in the global economy. Still other countries, perhaps the majority, have only begun to respond to the happenings around them, and have rapidly fallen behind.

The World Bank and other donor organizations are prepared to assist these latter two groups of countries. But technological and market developments are progressing so rapidly that it is far from clear where the points of leverage lie, what sort of help is needed, and how it should be provided.

Knowledge assessment is a tool for assisting countries to analyze their capabilities for participating in the knowledge revolution. It focuses on those areas of the economy and society that directly benefit from knowledge and learning. The knowledge assessment process itself will be a learning experience for the country, for the World Bank, and for the team that carries it out. In fact, the experience gained in the process and the commitment to the necessary changes that it both generates and requires in all participants is potentially the most valuable outcome of the process.

Knowledge assessment draws upon a well developed technique used in industry for analyzing a national or regional economy or business sector, the venture capital investment model. It is a useful tool for investors or for industrial entities seeking entry into markets or searching for potential partners.

The knowledge assessment methodology has three components:

1. a national symposium aimed at constructing a National Knowledge System model as a representation of the institutions with responsibilities for motivating investors and entrepreneurs for knowledge-based activities, creating knowl-

edge, providing access to information, assimilating the knowledge, diffusing knowledge throughout the economy and society, and using knowledge for social benefit and productive enterprises. The weaknesses of the National Knowledge System are probed through

2. virtual case studies of “sentinel enterprises,” an exercise for local stakeholders and international experts that is designed to search out opportunities and identify barriers to the creation or expansion of knowledge-based enterprises. The ideas generated through such virtual case studies are elucidated through

3. limited data compilation and interviews with experts and potential actors or stakeholders. The data comes mainly from local and published sources, and the interviews are with key players in government, academia, and the private sector. The data and interviews will clarify and quantify the problems that may be encountered and help to validate the recommendations that emerge from the process.

The process begins with a national symposium of leaders of the academic community, government, and elements of the private sector concerned with promoting or exploiting knowledge-based activities. It will help create a constituency for the knowledge assessment and receptivity for the recommendations that arise from it. It will familiarize the local knowledge community and the World Bank staff with the elements of knowledge assessment, and provide a forum for Bank-led discussion to identify the elements of the knowledge economy. At this symposium, the outlines of the National Knowledge System will be developed, and the participants will assist in the selection of candidate sentinel enterprises and virtual case study team members, as described below.

The National Knowledge System of a country comprises those institutions that control and regulate the flow and use of knowledge in the economy and society, together with the linkages among them and with the outside world. A map of the knowledge system includes the stocks and flows of knowledge, its sources and uses, and identifies leverage points —those institutions whose creation or strengthening is likely to promote the wider diffusion of knowledge in the population and lower barriers to its assimilation and use.

It must be kept in mind that, while the emphasis here is on national knowledge systems, problems of knowledge assessment are increasingly transnational, sectoral, and regional, rather than being confined within politically defined boundaries. Models of knowledge flow, even within a national knowledge system, must represent a system of interrelated enterprises, institutions, and government agencies, whose reach extends across national boundaries and often is worldwide. Thus knowledge assessment must elucidate how the national system is embedded in and interacts with systems defined by other than political boundaries—national, multinational, and global—of which it is a part.

The organization of the National Knowledge System is based upon six fundamental functions:

1. motivation for engaging in knowledge-based activities,

2. creation of knowledge, both fundamental and applied,

3. access to knowledge, the physical means available within the country for obtaining knowledge from sources inside and outside the country,

4. the capacity for assimilation of knowledge, its selection and understanding,

5. the diffusion of knowledge to those who can make use of it, and

6. the capacity for its productive use for both economic and social benefit.

If elucidation of the National Knowledge System can be considered as exploration of the supply side of the knowledge equation, a complementary element of knowledge assessment arises from the demand side. It is this element that the virtual case study of sentinel enterprises is designed to illuminate.

A virtual case study entails a feasibility study for a hypothetical, “sentinel” enterprise by a team composed of local entrepreneurs and managers, foreign experts drawn from or familiar with global industries, and persons knowledgeable about the government and legal structure of the country. The sentinel enterprise could be one which might be founded in a new knowledge-based industry or a hypothetical existing firm developing a new product or process, or expanding into a new market, domestic or export. The team should be led by an experienced facilitator able to draw from this diverse group of experts the essential information that will reveal the existence of barriers to the flow and use of knowledge within the National Knowledge System and from external sources.

The elements of the sentinel enterprise plan may include information about knowledgeable and experienced entrepreneurs, access to capital, siting, licenses, available equipment and manufacturing processes, importation of equipment, skilled labor, training opportunities, market information, information on best practices and quality management, communications, and transport. For each item or class of items, baseline data would be provided by local participants, and benchmarks would be furnished by the international participants on the team, based in part on standards found in global data bases. The difference between what seems currently achievable in the country and best practice will be considered a gap, and the causes of this gap, as they relate to the knowledge system, will be identified.

The selection of the sentinel enterprises is one of the critical determinants of the success of the knowledge assessment methodology. They should be chosen so as to probe the National Knowledge System from below—i.e. from the perspective of the individual enterprise. The selection must be based on an assessment of the comparative advantages of the country. Although it should try to avoid directly prescribing actions for the country, the attempt to evaluate comparative advantage in a virtual case study could well turn up potential new opportunities for collaboration among the study participants, which could turn out to be the most significant benefit of the whole exercise. However, the idea is not to plant the seed; it is only to prepare and fertilize the field so that a suitable entrepreneur can plant his or her own crop, whatever it may be. The number of sentinel enterprise analyses carried out should be large enough to reveal the systematic barriers and the patterns of institutional, cultural, or human resource constraints. Depending upon the scope of the knowledge assessment, sentinel enterprises from the service sector, small or medium enterprises, and commodity-related industries would need to be included to insure representativeness. Examples might include a high-technology financial service or a venture capital company, a computer software company, a modern food processing plant, a plant to process a local natural product, a precision foundry, and an engineering consulting company. Health and education providers might also be considered. If the object of the knowledge assessment is to be restricted to strengthening one particular industry or one sector of the economy, the sentinel enterprises could be selected from a more limited sample.

It is sometimes said that the plural of anecdote is not data, and a virtual case study is a form of anecdote, albeit fictitious. The conclusions of the virtual case studies must be verified with reference to data before concrete recommendations can be made. The data take the form of statistical indicators, drawn mostly from published documents, and expert views elicited through a series of structured interviews. If the data confirm the observations arising from the virtual case studies, then the knowledge assessment team, supplemented by local expert members of the virtual case study teams, will convert the conclusions of the virtual case studies and the suggestions generated through the interviews into concrete recommendations and formulate an implementation plan for carrying them out.

To serve as a working tool of the World Bank and national governments, knowledge assessment would be developed in two steps—a series of briefings and simulations among participants followed by a pilot project to test out the general ideas and understandings in a specific country.

If knowledge assessment is to be effective for planning technical assistance to developing countries, it is important that the concept be introduced at an early stage to World Bank and regional bank staff and others who will eventually be involved in its implementation. A series of briefings should be organized to present the general methodology and provide a vehicle for eliciting comments and questions. Once a country is selected for the initial trial, it may be useful to invite Bank staff to participate in a simulation of a virtual case study along with country participants. This would help refine the methodology and give country Bank officers themselves a new perspective on knowledge-based enterprises, much as it is expected to do for the national members of the assessment team.

The knowledge assessment methodology involves both the elaboration of the concept of a National Knowledge System and its application in the virtual case studies. It is not possible to develop the methodology fully without carrying out a pilot project to develop and test the template for the National Knowledge System, identify the metrics and benchmarks for the virtual case studies, design the indicators and interview guides, and explore the receptivity of country participants to all phases of the process. A pilot project to “tune up the system ” should result in more realistic cost, time, and effort estimates and a field manual, perhaps in the form of a data base accessible through the Internet, that would enable the method to be used by the Bank in the future in introducing the concept to other countries. The pilot project would differ from “normal” knowledge assessments because a second, follow-up workshop would be held to evaluate the procedures.

The motivation for knowledge assessment is to enable countries to participate more fully in newly developing global markets and value chains based on emerging technologies, and to improve social conditions by better use of knowledge in delivery of services. The specific aims are to close gaps in the knowledge flow and reduce impediments to utilization, and, through the virtual case studies, to call the attention of national leaders in the public and private sectors to opportunities for finding new niches for local producers.

An important characteristic of the knowledge revolution is the possibility it offers for leapfrogging, i.e. adopting advanced technologies in such a way as to bypass costly stages of development that had to be passed through earlier by the industrialized countries. This is particularly important in the environmental area, where polluting technologies can be avoided and more efficient, and often lower cost, technolo-

gies can be adopted directly. Efficient, modular, combinedcycle turbine technology for energy generation and computer numerically controlled machine tools for high quality manufacturing are good examples of potential leapfrogging technologies. The national symposium will be encouraged to select sentinel enterprises where the potential for leapfrogging exists and thus point the way to appropriate opportunities.

Adoption of a standard knowledge assessment methodology will also enable the World Bank to make comparisons among countries emphasizing the knowledge factor important to modern commerce and industry. A method for displaying the elements of the National Knowledge System which lends itself to international comparisons is presented in this report.

Perhaps the greatest benefit from a participatory process like knowledge assessment is the creation or strengthening of a national constituency for innovation, for better access to information, stronger institutions that promote assimilation of knowledge, and a climate that promotes diffusion and expanded utilization of knowledge for industry and society.