This discussion is in large created by a blogpost by Ricardo Hausmann, former Chief Economist of the Inter-American Development Bank. Transcripts of this post below, the full text post attached. It's an interesting post and resonates fairly well with Stiglitz et. al book publication on 'creating the learning society. The post of Haussman emphasises the difficulties of transferring tacit knowledge if the brains do not come along as well.
- Why is it that today’s smaller and more educated urbanized families in emerging market economies are so much less productive than their counterparts were a half century ago in today’s rich countries. Why can’t today’s emerging markets replicate levels of productivity that were achieved in countries with worse social indicators and much older technologies. The key to this puzzle is tacit knowledge. To make stuff, you need to know how to make it, and this knowledge is, to a large extent, latent – not available in books, but stored in the brains of those who need to use it.
- Getting it there is really tough. Tacit knowledge is acquired mostly through learning by doing. That is how we train musicians, barbers, doctors, and scientists. Consider how long it takes an adult to learn to speak a language or a musician to master the violin. Moreover, tacit knowledge is vast and growing, so that only a miniscule fraction of it fits in anybody’s head. But most products require much more knowledge than fits in anybody’s head, so that making them requires teams of people with different pieces of knowledge, not unlike a symphonic orchestra.
- Getting more tacit knowledge is easier said than done, because economies can offer experience only on the basis of current jobs. How do people learn to do jobs that do not yet exist? How do they create and mobilize coherent teams of people in new economic activities if the requisite tacit knowledge is missing?
- Recent research at Harvard University’s Center for International Development (CID) suggests that tacit knowledge flows through amazingly slow and narrow channels.
- It is easier to move brains than it is to move tacit knowledge into brains. For example, as the CID’s Frank Neffke has shown, when new industries are launched in German and Swedish cities, it is mostly because entrepreneurs and firms from other cities move in, bringing with them skilled workers with relevant industry experience. They seldom hire locals.