Learning skills is crucial to economic development

16Apr 2018
The Guardian
Learning skills is crucial to economic development

In order to understand the importance of learning, it is useful to start from this definition of welfare as ‘freedoms’ and capabilities to realize what you regard as valuable.

Learning skills is crucial to economic development. PHOTO/WEB

This is, in general, a valuable approach because it takes into account that the aspirations of people may be different in different countries and regions.

We would nonetheless, in this context, like to emphasize ‘access to learning’ as perhaps the most fundamental freedom – especially in a society characterized by rapid change in people's private and professional lives.

The two concepts learning and development are crucially interconnected, both at the individual level and at other levels of the economy – learning organizations, learning regions and the learning economy at the aggregate level.

There are two reasons why we should focus upon learning. First, a crucial prerequisite for any kind of economic transformation is a speed-up of learning as competence building, both among individuals and within organizations. Structural change is a process where people are confronted with new tasks.

Second, we would argue that learning is not only of instrumental value, enhancing the productivity of the individual worker. It is also of substantive value for individuals.

This is obvious for the child's development into adulthood. To block the child's process of learning to communicate and act in society would be cruel. For most adults a life without any learning would constitute monotony.

This perspective does not rule out that the speed of learning imposed by circumstances may become disturbingly high and create stress and suffering, especially when the individuals have no capabilities to understand and manage the processes involved.

Neither does it mean that all forms of learning represent progress. And learning new things implies that old knowledge becomes obsolete.

Learning as well as development will always involve creative destruction. As new patterns take form, old ones tend to be destroyed. Often the old patterns are seen as positive by some of those living in the society.

In worst cases, destruction takes place without much creation. While some form of creative destruction is necessary to lift indigenous people out of poverty, the involvement of ordinary citizens in the management of change would make the processes of change and learning less painful.

It is argued that there is another kind of link from a learning economy perspective to inclusive development. The argument is the correct observation that the learning society will be most successful when learning is broad based and knowledge is widely spread in the economy.

In a series of lessons on the learning economy we have presented a somewhat different perspective where we have showed that, if left to itself, the learning economy tends to become increasingly polarized.

Only with strong and systematic government intervention aiming at strengthening the capacity of weak learners and offering them better access to learning is it possible to build strong learning societies.

In a context of global competition, national economies as well as firms are exposed to a more or less intense ‘transformation pressure’. For instance, the strong competition from China has put a very intense transformation pressure on manufacturing firms in the continent.

The transformation pressure at the level of the manufacturing firm can be reduced in different ways. For instance, workers may accept lower wages, the currency may be devalued or government may introduce trade barriers to protect the domestic firms in order to promote import substitution.

An alternative is that the firms are left to themselves to cope with the intensification of the transformation pressure. They might do so by downscaling or bankruptcy.

Alternatively they may respond by engaging in organizational and technological learning, resulting in a stronger competitiveness based upon higher productivity and incremental product and process innovations.

When the transformation pressure is growing, it speeds up structural change in the national innovation system. Low productivity activities will be closed down.

With a sufficient population of firms with a capacity to innovate and adapt, the resources that are freed up from the firms closing down will be absorbed by these new or growing high productivity activities.

But with a weak learning capacity at the level of firms, the result will be further increase in underemployment in informal activities and unemployment.

How the costs and benefits of the transformation are distributed affects how willing people will be to contribute actively to the process of transformation within the firms. The response at the national level will reflect the strength of the national innovation and competence building system.

Why we need to broaden the innovation system concept; one major difference between neoclassical economics and evolutionary economics is that in the evolutionary perspective, history and institutions matter.

The ‘national system of innovation’ concept signals that the economic structure and the current institutional setup, both with historical roots, need to be analyzed and understood in order to set policy priorities.

However, it is obvious that different authors mean different things when referring to a national system of innovation. Some major differences have to do with the focus of the analysis and with how broad the definition is in relation to institutions and markets.

Authors with a background in studying science and technology policy tend to focus the analysis on ‘the innovation system in the narrow sense’.

They tend to regard the “National System of Innovation-concept” as a follow-up and broadening of earlier analyses of national science systems and national technology policies. The focus is upon the systemic relationships between Research &Development efforts in firms, science and technology organizations including universities, and public policy.

Another expert, for example, developed a broader concept that took into account national specificities in how firms organize innovative activities – he emphasized, for example, how Japanese firms increasingly used ‘the factory as laboratory’.

Researchers also developed a concept of innovation systems where there are other major sources of innovation than science. Innovation is seen as reflecting interactive learning taking place in connection with on-going activities in production and sales.

Therefore the analysis takes its starting point in the process of production and the process of product development, assuming, for instance, that the interaction with users is fundamental for product innovation.

None of these approaches, however, gave sufficient attention to the broader set of institutions shaping competence building in the economy, such as labour markets, the education and training system, and their relation to systems of corporate governance.

Nor did they consider the broader connections between these institutional subsystems and national political cultures and welfare regimes.

In order to capture this wider set of interactions in a dynamic perspective, we introduce an evolutionary framework for analyzing how economies learn under the pressure of globalization.

Mediating transformation pressure; the starting premise is that a range of factors have resulted in an acceleration of economic change.

These factors include economic globalization, policies and demands of international institutions such as deregulation of finance, population growth, technological change, etc.

In many African countries the boom in commodities exports adds to these factors. When the transformation pressure becomes more intense it means that firms will have to engage in change in terms of organization, technology and capability if they want to survive and grow.

At the level of the labour market, this process will be reflected in dynamics where workers will gain, lose or change jobs while learning new (and forgetting old) skills and competences.

A crucial characteristic of a national system is how it responds to an increase in transformative pressure. The capability to innovate and to adapt will reflect systemic features having to do with how easy it is to establish interactive learning within and across organizational borders (social capital) and with the preparedness to take risks (entrepreneurship).

Organizational capabilities and the competence structure of the workforce play an important role. Social cohesion may be an important factor behind social capital while it might get in the way of entrepreneurship.

The mechanism for redistribution of costs and benefits emanating from change differs between national systemsto link transformation pressure to the capacity to innovate and to the distribution of cost and benefits of change.

The view developed is that capabilities to innovate and to adapt reflect systematic differences in national institutional arrangements at the levels of the science and technology system, labour markets, education and training, and finance.

These institutional subsystems will impact on how knowledge is developed and used within organizations and these organizational differences in turn will have a bearing on innovation pace (fast or slow) and innovation style (incremental or radical).

But national differences in innovation systems need to be seen in an even broader perspective and take into account feedbacks from the distribution of costs and benefits to the capacity to innovate and to adapt.

An uneven distribution may create a negative attitude to change among those who mainly register the costs and if there are high degrees of insecurity among individuals they will tend to oppose change.

A second kind of feedback mechanism goes from the ability to innovate to transformation pressure. Increasing the ability to innovate involves stimulation of entrepreneurship and the building of more flexible organizations.

This implies a selection of people and institutions that are more change oriented and this further increases transformation pressure.

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