Transcript Nessun titolo diapositiva

Knowledge in the Network:
Economic and Social Effects
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Carlos Alberto Primo Braga
Senior Adviser, International Trade Department
The World Bank
Turin, 17-18 November 2003
Outline
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Knowledge and Development
The Expansion of Networks
The Economics of “Information Goods”
IPRs Protection and Networks
Implications for Developing Countries
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Knowledge Makes the Difference Between
Poverty and Wealth
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Thousands of constant 1995 US dollars
Rep. of Korea
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Difference
attributed to
knowledge
10
8
6
4
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Ghana
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1960 1965 1970 1975 1980 1985 1990 1995 2000
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Source: World Development Report, 98/99
Difference due
to physical and
human capital
Average Years of Schooling of the Total Population
Aged 15 and Over
Countries
1980
1990
2000
(Projection)
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Low Income
3.9
4.7
5.4
Middle Income
5.5
6.8
7.3
High Income
9.3
9.6
10.2
World
5.9
6.7
7.2
Global Distribution of R&D Expenditures (1997)
Upper middle
income
4.1 %
Lower middle
income
2.4 %
Low income
0.8 %
High income
92.7 %
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Source: Calculated based on data from the World Bank SIMA Database, 2002
Distribution of Patents Registered in the U.S.
(2001)
Upper middle
income
0.4 %
Lower middle
income
0.4 %
Low income
0.1 %
High income
99.2 %
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Source: Calculated based on data from the US Patent & Trademark Office (USPTO), 2001
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The Expansion of Networks
Income Divide
User distribution, by income group, 2001
6.1
billion
986
million
741
million
361
million
100%
90%
High
Income
80%
70%
Upper-mid
Income
60%
50%
Lower-mid
Income
40%
30%
Low Income
20%
10%
0%
Population
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Telephone
lines
Mobile
users
Source: ITU World Telecommunication Indicators Database
Internet
users
Worldwide Growth of Internet Hosts
1995-2002
Number of hosts
1995
1996
1997
1998
1999
2000
2001
2002
Source: Network Wisard, 2002
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8,200,000
16,729,000
26,053,000
36,739,000
56,218,000
93,047,000
125,888,000
162,128,000
Yearly growth
107%
104%
56%
41%
53%
66%
35%
29%
How Many People Online?
Online population – January 2000 vs. September 2002
January-00
September-02
Africa
2.1 Million
6.31 Million
Asia/Pacific
40 Million
187.24 Million
Europe
70 Million
190.91 Million
Middle East
1.9 Million
5.12 Million
Canada & USA
120 Million
182.67 Million
Central and South America
World Total
8 Million
242 Million
33.35 Million
Source: Nua Internet Surveys
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605.6 Million
Telecoms and Internet:
the cost of being connected
300%
Monthly internet access
charge as a percent of
monthly average income
Nepal
250%
Bangladesh
200%
150%
100%
278%
191%
Bhutan
Sri Lanka
Sri Lanka
50%
0%
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80%
60%
United
States
1.20%
Denmark
0.135%
Source: Human Development Report Office calculations based on data ITU 2000 and World Bank 2001
The “Knowledge” Society
• Communication networks and digital devices are becoming
ever more pervasive in day-to-day activities, as their costs
continue to decline and their quality improves.
• In a networked environment, the incentives for
specialization and outsourcing are multiplied. This puts a
premium on flexibility and responsiveness as business
cycles shorten and interactions with clients multiply.
• Electronic commerce – that is, the use of electronic
networks to support business transactions – expands
rapidly. This process, in turn, further contributes to the
internationalization of service activities as the feasibility
and competitiveness of cross-border provision increases.
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Knowledge and Networks
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IT (and related communication networks) is changing the terms
under which knowledge can be created and disseminated:
- IT facilitates the process of codification and transmission of knowledge
about technology;
- IT enhances the positive learning externalities of knowledge generation
by magnifying the possibilities for recombination of ideas and
information;
- IT dilutes the “tyranny” of geography by providing new ways for
researchers to escape national boundaries. The rate of international
co-authorship of scientific and technical papers, for example, has
increased significantly over the last decade;
- IT increases the “distribution power” of innovation systems, diminishing
the time to market of new products and services, while enhancing the
dissemination, application, and use of “mature” technologies.
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The Economics of “Information Goods”
• Data: anything that can be digitized…
• Information: data with a purpose (data embedded
in a context of relevance to the recipient…)
• Knowledge: information acted upon by human
beings (what we know…)
Characteristics of “information goods”: costly to
produce, but cheap to reproduce (high fixed
costs/low marginal costs); non-rival; value can be
significantly influenced by network effects.
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Some Common Questions
• How to balance incentives for production
(via intellectual property rights) and the
social costs of non-competitive provision?
• How to minimize anti-competitive lock-in
effects (associated, for example, with
branding and interoperability issues)?
• How to explore network effects in a socially
productive manner?
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The Case of Software
• Background: Networks and digital technology
dramatically reduce the costs of reproduction and
distribution of software. At the same time, they
facilitate decentralized cooperation.
• Polar views:
– IPRs laws can be used to “organize” the economics of
software production and consumption without any
major adjustment. Problems currently faced by the
industry can be dealt with by enforcement, technology
(encryption…) and change in consumer culture.
– To apply conventional IPRs laws to “information
goods” is doomed to fail, given the high costs of
enforcement and the dynamics of network effects.
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Software: The Orthodox View
• There is nothing new in the challenge posed by
technology/networks. Copyright law, for example,
can accommodate fair use without hampering the
prospects for information dissemination.
Transaction costs can be addressed via new
technological “fixes.”
• The basic issues are:
– to promote a change in culture among
consumers about the negative effects of piracy;
– to allocate resources to enforcement;
– to foster convergence toward minimum levels
of protection at international level, relying on
international treaties negotiated under the
WIPO and the WTO.
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Software: The “Heterodox” View
• IPRs are being extended well beyond their
original scope, increasingly becoming
instruments to protect/leverage market
power rather than instruments to promote
innovation;
• There are alternative models to operate in a
networked environment as illustrated by the
Internet and the Open Source Software
movement.
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Variables Influencing Software Choice
(proprietary, open source, illegal)
• Affordability (total cost of ownership);
• Reliability, performance, scalability,
security;
• Support services;
• Switching costs;
• Availability of regular upgrades;
• Consistency with local needs (language,
metaphors, easy-of-use);
• Social beliefs (respect for property rights).
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The Expansion of Open Source Software
Background: OSS and Free Software
• The expansion of the Internet and the Web
(TCP/IP network protocol, GNU/Linux,
Berkeley Internet Name Daemon, Apache
web server, scripting languages (e.g., Perl,
Tcl)).
• Growing opportunities for cooperation in a
networked environment;
• Growing competitiveness/technical maturity
of OSS solutions
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OSS Limitations
• OSS offerings concentrate on infrastructure/ backend software (reasons: origins of OSS, focusing
on the needs of programmers rather than end-user
applications; easy-of-use not a key concern;
historical roots: networking code and operating
system software);
• Limited OSS offerings in the desktop application
space;
• Interoperability problems;
• Concerns about accountability/commercial
support.
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Opportunities
• OSS can promote competition in the
software industry, contributing to lower
costs and greater choice (reducing
vendor lock-in);
• OSS can help minimize security risks;
• OSS can foster local ownership;
• OSS can contribute to capacity
building.
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Challenges
• Depth of programmer community:
translating into problems with respect to
skills and support availability;
• Public sector procurement guidelines that
create ambiguity concerning the choice of
OSS solutions;
• Low levels of “digital literacy”;
• Misconceptions about the legal implications
of OS/FS licenses.
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Concluding Remarks
 Creation and effective use of knowledge is key to rapid
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economic growth;
The continued expansion of networks will further promote
interest and use of OSS;
OSS communities can foster knowledge creation and
dissemination;
Proprietary solutions can co-exist with OSS. “Maximalist”
solutions in the protection of IPRs in networked
environments can be counterproductive;
Governments should avoid blanket preferential policies in
favor of OSS. The key is to pursue procurement policies
that allow for fair competition between proprietary and
OSS solutions;
Mythology (the “bazaar” metaphor) vs. reality (the
hierarchical status-based structure of successful
communities).
More information
The World Bank
www.worldbank.org
Development Gateway Portal
www.developmentgateway.org
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