What do you think are the key determinants of a country’s economic and social development?
Life in modern-day society is complex. It requires numerous complementary ingredients and, if just one of them is missing, it will have huge negative effects. Thus, two equally poor countries may suffer from the absence of very different ingredients. This is also why simple recipes, such as education, micro-credit or “institutions”, are inadequate answers. But if I had to come up with a synthetic vision to encompass all developing countries, I would say that the secret to development or, in any case, the most difficult ingredient to accumulate is collective know-how or knowing-how-to-do things. The secret to prosperity is technology, but technology is expressed in three kinds of elements: tools or equipment, codes or prescriptions, and know-how or tacit knowledge. While tools and prescriptions are easy to disseminate, know-how is hard to spread, because it is acquired slowly through imitation and repetition, in the same way that we learn to walk or learn a language as children. Nobody learns to play a sport or diagnose a patient by reading about it. It requires years of practice.
Why does collective know-how matter so much?
It is a phenomenon with two elements that make it a major obstacle in development. First, modern technology often requires collective know-how, in that the task to be done can only be accomplished by a diverse but cohesive team. It is like a symphonic orchestra: in order to play a symphony, it is not sufficient to have one violinist, however skillful he might be. The capacity to create teams of people with sufficiently diverse know-how to be able to play the piece is often the most difficult aspect of disseminating a technology.
The second is that even if a violinist teaches his art to others, which allows the reproduction of the know-how he already possesses, he cannot teach others to play the oboe. And if nobody in the country knows how to play the oboe, then there is nobody who can train others for that instrument. The absence of oboe-players makes it impossible to play any pieces that require an oboe part. Thus, having the first person with a certain type of know-how is a challenge like the chicken and egg dichotomy: nobody knows how to do something that they have never done, but nobody can do what they do not know how to do. The main challenge in development is to find ways to resolve this issue, which is a problem of coordination.
This feature of development means that less developed countries not only produce less per capital, but also that they produce a lesser variety of products in general and those they do produce tend to be more simple, in that they require less collective know-how. They tend to be quartets rather than symphonies.
Comparing the difference between Somalia vs Germany:
More explanation:
Life in modern-day society is complex. It requires numerous complementary ingredients and, if just one of them is missing, it will have huge negative effects. Thus, two equally poor countries may suffer from the absence of very different ingredients. This is also why simple recipes, such as education, micro-credit or “institutions”, are inadequate answers. But if I had to come up with a synthetic vision to encompass all developing countries, I would say that the secret to development or, in any case, the most difficult ingredient to accumulate is collective know-how or knowing-how-to-do things. The secret to prosperity is technology, but technology is expressed in three kinds of elements: tools or equipment, codes or prescriptions, and know-how or tacit knowledge. While tools and prescriptions are easy to disseminate, know-how is hard to spread, because it is acquired slowly through imitation and repetition, in the same way that we learn to walk or learn a language as children. Nobody learns to play a sport or diagnose a patient by reading about it. It requires years of practice.
Why does collective know-how matter so much?
It is a phenomenon with two elements that make it a major obstacle in development. First, modern technology often requires collective know-how, in that the task to be done can only be accomplished by a diverse but cohesive team. It is like a symphonic orchestra: in order to play a symphony, it is not sufficient to have one violinist, however skillful he might be. The capacity to create teams of people with sufficiently diverse know-how to be able to play the piece is often the most difficult aspect of disseminating a technology.
The second is that even if a violinist teaches his art to others, which allows the reproduction of the know-how he already possesses, he cannot teach others to play the oboe. And if nobody in the country knows how to play the oboe, then there is nobody who can train others for that instrument. The absence of oboe-players makes it impossible to play any pieces that require an oboe part. Thus, having the first person with a certain type of know-how is a challenge like the chicken and egg dichotomy: nobody knows how to do something that they have never done, but nobody can do what they do not know how to do. The main challenge in development is to find ways to resolve this issue, which is a problem of coordination.
This feature of development means that less developed countries not only produce less per capital, but also that they produce a lesser variety of products in general and those they do produce tend to be more simple, in that they require less collective know-how. They tend to be quartets rather than symphonies.
Comparing the difference between Somalia vs Germany:
More explanation:
