The
Challenge of the Global Information Age
Where the Information Economy Meets Economic Development
Kenan Patrick
Jarboe and Richard Cohon
(Ideas in Development: Growing Assets, Expanding Opportunities,
Corporation for Enterprise Development, Washington, DC, 1999)
The global information age is upon us – and the practice
of economic development must adapt to this new environment. At issue is
the changing nature of production, which is no longer merely a process
of combining capital, energy, materials and labor. The key inputs today
are both formal knowledge/information and informal tacit knowledge that
is imbedded in skills and worker experience. This shift changes the skills
and community assets required for economic activity. It also changes geographically
where production and work take place. Both changes seriously affect the
practice of economic development.
The shift to an information economy raises fundamental questions for communities
left behind. Will they continue to lose ground, or is this an opportunity
to reinvent and reinvigorate themselves? It also raises concerns for lower-skilled
production workers and low- to middle- management who are currently "middle-class."
Will those who are just getting by, fall behind, creating a new set of
at-risk communities?
For governments and other institutions involved in economic development,
old forms and roles are likely to be ineffective or irrelevant in the
changed economy. We need to re-develop the basic repertoire of economic
development practices, keeping what works and discarding what does not.
We must learn how to identify and manage intellectual capital and to understand
best practices within the economic development community. This will require
an ongoing dialog among those who are trying to understand the global
information age, those who are trying to shape it and those who are trying
to cope with its effects – in both the public and private sectors.
The new global information economy has emerged with the rise of electronic
commerce and greater use of computer and telecommunications technology.
In the world of digitized economic activity, information can be delivered
instantaneously anywhere in the world. Rather than relying on the knowledge
of some small, specialized information elite to direct the organization,
many companies are creating a new decentralized social organization of
work where success depends on the ability to capture and use the skills
and knowledge of the entire workforce. Even in what may be considered
lower-level activities, information and knowledge play an increasingly
important role as frontline workers assume ever-greater responsibility
for their tasks.
Use of information and knowledge is what really counts – not just
its production or manipulation. For this reason we believe that the future
belongs to the knowledge user as well as to the computer programmer and
the knowledge creator. This use of knowledge includes the ability to use
both formal knowledge (explicit and codified in books, manuals and databases)
and tacit knowledge (experiential, intuitive). Both formal and tacit knowledge
are necessary. Either is crippled without the other. It is extremely difficult
to use the tacit knowledge of a person who is functionally illiterate.
On the other hand, tacit knowledge allows an individual to recognize and
use elements of formal knowledge in ways appropriate to a particular situation.The
increased importance of both kinds of knowledge is dramatically altering
the relationship between production and place, which is at the very core
of economic development. While physical capital is easily transferable
from one location to another, knowledge and human capital are not. A worker’s
skills (including formal and tacit knowledge) are as mobile or immobile
as the worker.
Here we stumble upon a paradox for the information age: Individuals and
information appear to be more mobile than ever. This leads some to argue
that new information technologies will cause services to follow manufacturing
toward footloose production. We disagree. Given the importance of both
tacit and formal knowledge, face-to-face human interaction remains the
most information-intensive means of communication--a critical factor in
an information-rich economy. Silicon Valley is just one obvious example
of this tendency to cluster information-intensive activities.
Likewise, localized knowledge is needed for customization and for the
ability to adapt to rapidly changing situations. For example, a local
insurance agent can tap into the company’s knowledge base (formal
and informal) to custom design coverage to meet the client’s specialized
needs. In this case, tacit localized knowledge is combined with global
resources. The result is a production system that is strongly rooted in
its local market and knowledge base, and that also draws upon and contributes
to the global networks.
So, we may not face a world of completely footloose production where economic
activity can be transferred to wherever labor is cheapest or economic
development incentives are highest. Instead, the competitive economic
success hinges on geographically centered clusters of human capital, skills,
knowledge, and local relationships. Importantly for economic development,
tacit knowledge is only partially based in the individual; it also resides
in the special circumstances and situation of the community.This creates
special dangers and opportunities for those communities already left out
of the economic mainstream. The danger is that they will not be able to
surmount their formal educational deficit and master the skills needed
to survive. The opportunities stem from the fact that locally developed
information assets are increasingly the keys to economic success. Seizing
these opportunities and meeting these challenges requires creativity to
discover and develop a community’s information assets, including
its hidden pool of tacit knowledge.
The first part of this volume explores asset-based approaches to economic
and community development. We suggest expanding that view by taking a
lesson from leading companies who are seeking ways to identify and develop
their own information assets under the rubric of "intellectual capital."
As Thomas Steward wrote in Intellectual Capital (1997), these companies
are developing techniques for locating and then managing their "resources,
tacit and explicit perspectives and capabilities, data, information, knowledge
and maybe wisdom." Companies find these assets in the skills and
knowledge of their people, in their organizational structures and in their
relationships with the outside world, especially their customers.
The corporate experience with identifying and managing intellectual capital
is still in the early stages of development. There are no hard and fast
techniques, nor are all of the concepts used in a corporate setting applicable
to economic development. However, learning from the corporate experience
could show the often-fragmented development community how to identify
the formal and tacit knowledge both internally in their organizations
and externally in the communities that they serve. Then the development
community can begin to build a base of common knowledge and understanding
about (1) internally what knowledge needs to be shared, what is duplicated,
and what may be lacking, and (2) externally what are the local information
assets, what assets need to be developed, and who are potential partners.
Armed with this common understanding, development practitioners can begin
to develop specific local information assets. This will require re-examining
old strategies and re-evaluating the institutions that we rely on to develop
and transfer knowledge, as well as those that support the development
process. A dialog among all parties – public and private – can
begin to determine what works and what is needed. Creating such a dialog
is a fitting task for CFED as it embarks upon its next 20 years.
Kenan Patrick Jarboe is President of Jarboe & Associates,
a Washington, DC-based
political economy consulting firm, and a Senior Fellow at the Progressive
Policy Institute.
Richard Cohon is President of the C.N. Burman Company, a manufacturer
and
importer of home furnishings located in Paterson, NJ. He is actively involved
in
both community economic development and organizational development in
the
Information Age.