Governance of the Global Knowledge Economy:

An International, Interdisciplinary Research Initiative

Concept Paper

David M. Hart, School of Public Policy, George Mason University

Draft of March 5, 2008

Preface: Oil and Knowledge

The global economy is running on a new fuel these days: knowledge. Unlike oil, knowledge can be discovered anywhere there are people. Unlike oil, knowledge can be distributed at very low cost. Unlike oil, knowledge can be reused many times for many purposes. These extraordinary properties give rise to utopian visions of the global knowledge economy – and with some justification, because the opportunities are indeed extraordinary.

But: these opportunities will not be fully realized if knowledge production and exchange are left to the free market alone. That is not to say that the market should be supplanted as the central organizing framework of the global knowledge economy – far from it. Rather, in order to operate effectively from a societal perspective, the market must be embedded in a broader framework of norms and institutions that channels the great energy that the market arouses.

Objectives: Empirical Research, Agenda-Building, and Engagement with Practitioners

This document sketches a collaborative effort undertaken by scholars from around the world and from a variety of disciplines. The primary goals of this initiative are:

· to produce high-quality empirical research that describes the history and current status of emerging and understudied governance issues that bear on the production and exchange of economically-valuable knowledge at the global level,

· to develop a normatively-grounded conceptual framework that enables the assessment of the these issues and allows the development of a pragmatic global knowledge economy governance agenda, and

· to engage in an ongoing dialogue with practitioners, including national and international policy-makers, senior managers, and civil society leaders in order to identify appropriate issues, define the framework, communicate our findings, and contribute to potential solutions.

Rationale: A Governance Gap

The past decade has brought rapid and accelerating change in knowledge-intensive industries as well as in research institutions themselves. Knowledge production activities have been dispersed to more places than in the past, and new systems for exchanging knowledge, both within and outside of markets, have been established. New boundary-spanning organizational forms, such as the globally integrated enterprises described by IBM’s Sam Palmisano and the transnational technical communities identified by UC-Berkeley’s Annalee Saxenan, have been created to appropriate value from knowledge.

Managerial and entrepreneurial strategies are driving this transformation. Governments are facilitating it, even as they strive to enhance national advantage in the global knowledge economy. Although the self-interested behavior of firms, research institutions, and governments is understandable, even desirable to a great degree, their interactions produce characteristic pathologies that, if not addressed, could over time undermine the very processes of knowledge production and exchange upon which the global economy now depends. The worst case scenario involves a vicious cycle of protectionism and reaction among the leading regions that would leave everyone worse off.

Research Foci: Conceptual and Substantive

The pathologies alluded to above can be organized into three conceptual types:

· Coordination problems that arise as nations compete to seize the perceived “first mover” advantage and to recruit firms to locate within their borders. These are “hyper-competitions” and “races to the bottom” that waste money and create systemic friction unless controlled.

· Public goods shortfalls that reflect short time horizons and fear of free-riding in areas like basic scientific research and human capital development. If such shortfalls are not addressed through collective action, they will impose opportunity costs and exacerbate coordination problems.

· Externalities that impose costs on groups least able to bear them and who may react by seeking protection or even by disrupting the innovation process itself. Limiting externalities or compensating those harmed is a matter of pragmatic common sense as well as fairness.

Substantively, these pathologies are manifested in a diverse set of policy areas, including:

· science,

· education,

· migration,

· intellectual property,

· technical standards,

· investment,

· employment, and

· environment.

By global governance, we mean any conscious collective action that redresses in part or in full coordination problems, public goods shortfalls, or externalities in the production and exchange of knowledge. The mechanisms of global governance include international organizations and international law, but they are by no means limited to them. Corporate consortia, multi-sectoral stakeholder forums, and even informal norms and practices are among the objects of study for members of the initiative. We expect to assess these mechanisms of governance through normative lenses that include efficiency (including the reduction of transaction costs), equity, transparency, and legitimacy.

In a few areas, such as intellectual property rights and the WTO TRIPS agreement, the mechanisms of global governance are reasonably well-developed, and their development has catalyzed the creation of a body of social scientific and legal research. Although such areas are far from exhausted – and far from perfect in operation – many others have hardly been touched. The initiative’s current agenda includes work on global governance of:

· Standards and related intellectual property issues in information technology

· International migration of highly skilled professionals and graduate students

· Multilateral support for “small” science

· Funding and oversight of national and regional intellectual property offices

· R&D spending by multinational firms (innovation offshoring)

· University research relations with multinational firms

· International expansion of universities

· The development and diffusion of technologies for climate change mitigation.

Approach: Empirically-Rooted and Incremental

The knowledge economy and global governance are both domains prone to hyperbole and over-reaching. This initiative will steer clear of these pitfalls, concentrating scholarly energy on empirical observation, agenda-building, and practitioner engagement that focuses on realistic prospects for incremental change. We are very mindful of the difficulty of orchestrating sustainable global action on any important issue, and we also recognize that ill-founded action could impose more costs than benefits.

Outputs: From Research to Policy

The first product of the initiative is expected to be an edited volume that collects empirical chapters across an array of empirical topics, as described above. The authors will meet several times during a period of 12-18 months to identify common questions and themes that will form the normative and analytical framework for the initiative and lead to the development of the broader policy agenda. We will also reach out to a variety of strategic partners in the global public domain to begin the engagement process.

Current Participants

· Ernst, Dieter, Senior Fellow, East-West Center, Honolulu.

· Hart, David, Associate Professor, School of Public Policy, George Mason University.

· Karachalios, Konstantinos, Directorate for International and Intergovernmental Organisations and Institutions, European Patent Office, Munich.

· Sagar, Ambuj, Professor of Social Sciences, Indian Institute of Technology-Delhi

· Sunami, Atsushi, Associate Professor, National Graduate Institute for Policy Studies, Tokyo.

· Suttmeier, Pete, Professor, University of Oregon

· Xue, Lan, Executive Associate Dean, School of Public Policy and Management, Tsinghua University.