Confidence, connectivity, standards & networking

The role of scientific research in economic growth

An address by Jean-H. Guilmette
Director of the Office for Central and Eastern Initiatives
International Development Research Centre

At the occasion of the EMDU End of Project Conference
Kiev, June 23, 1997

affiché le 29-12-2009



Introduction

What causes or allows development and economic growth to take place has been the subject of a great many studies. This question has been haunting philosophers and practitioners for centuries. As an aftermath of World War Two, international and many national institutions have been created to foster development, such as the World Bank, the United Nations Development Program (UNDP), or at the national level, USAID or the German Development Credit Bank, better known as the KFW. The policies and practices of these institutions have been inspired by various schools of thoughts and each has created its own approach and variant.

Throughout my career as a manager and specialist dealing with development, I have been exposed to many doctrines, beliefs, sets of specific explanations and empirical studies. As a manager of public funds, I have contributed in my own way, to enlarging the field of practical experiences as to what works and promotes development. The organizations I worked for followed one or other schools of thought. Over the years, I have taken notice that some countries’ have been successful, while others did not meet expectations. Why was that so? This has been a haunting question for the three decades of my career.

Defined broadly and succinctly, development is – sustained growth over a significant period, accompanied by respect for peoples and the environment and with a reasonable distribution of wealth within the whole population. What makes success? Authors and analysts have underscored many significant factors to sustain a theory or a specific ideology. Some claim that resource availability and other material factors, such as location and technology, make for growth and development. Others suggest that culture or even some religious behaviour fosters development. As well, democracy is increasingly being connected to sustained economic and social performance. Economists on their part, regularly come up with empirical evidence and theories which translate into « sound policies » for sustained growth: the World Bank for example, has been advocating « good governance » as one of the supporting pillars of economic performance. At one time or another, authors have highlighted a range of factors as varied as the human character itself.

The purpose of the following observations is not to suggest that the above-mentioned explanations are incorrect: obviously, it should be easier for a nation to become rich and successful, if it has access to a huge quantity of varied resources and manages them well; or, if its successive governments adhere to sound and reasonable economic and social practices. But evidence suggests that some countries tend to adopt successful strategies irrespective of material wealth, or irrespective of cultural characteristics. Something is behind good or bad results, a « hidden shadow » which would explain why one country adopts good policies whereas its neighbour does not?

In the following notes, I will attempt to share with this distinguished assembly of scientists, those views which appear to provide the best and most conclusive explanation on why some countries have succeeded in achieving sustainable development and others have failed. I will demonstrate that « confidence » is the key to success. « Connectivity » complements confidence, and acts as a motor of development and growth. I will also demonstrate that « standards » and « networks » are essential means to bridge the gap between partners, such as trading nations or between producers and consumers and, as such, play a key role in supporting development. Lastly, I will conclude with remarks on the role and place of scientists in a modern society.

1) Confidence is a prime motor of development

The concept:

The concept of Confidence captures many ideas and may be defined as: – confidence in one’s society, – self esteem, – openness of mind, – tolerance of others and of new ideas, – accountability for one’s actions, – responsibility, – confidence in the value of science and technical inventiveness, – acceptance of diffusion of one’s culture.

Its importance:

Alain Peyrefitte (1) is a well-known French author and political analyst whose essay on the source of wealth and development (La société de confiance) demonstrates the central role of confidence. Confidence is a generic term which refers to a general attitude toward things that seem foreign. A positive attitude of confidence allows for a faster acceptance of new ideas, new techniques and new values. In the context of a changing world, with scientific and technological progress moving at a very high speed, a high tolerance to new ideas is the most effective attitude in adapting to changes in a viable and sustainable manner. No society is totally confident or completely tolerant to change; resistance always exists. The significant question is: « Is the attitude of a society generally negative with respect to foreign or new ideas, values, products or peoples, or is it on average positive? » Countries which adopt a more open attitude have consistently been better performers economically. Conversely, countries where protectionist measures run high, which are hostile to things foreign, which consistently deny progress and new ideas because they do not fit with traditions, have demonstrated throughout history, sluggish growth and increasing pauperization of their populations.

Many have regretted the brain drain from developing countries in favour of rich economies: a careful analysis of motivation shows that most migrations are directly or indirectly determined by the perceived lack of confidence in the country of emigration. This results in a lack of confidence in personal opportunities.

-« On October 18th of 1685, Louis the Fourteenth, King of France, repealed the Edict of Nantes which had been protecting the religious and political rights of Protestants since 1598. Clearly, King Louis lacked confidence: confidence in his ability to withstand difference of opinions, confidence in people who seemed to behave differently. It is estimated that two hundred thousand « Reformist Huguenots » then fled France and emigrated into Germany, the Netherlands and England. In so doing, the King of France gave away to its competitors, the keys to the textile industries in cotton and silk: capital, technology, labour, know-how and most of all, entrepreneurship and innovation. With a stroke of his pen he lost these resources to France. The British, who had a high degree of confidence, opened their cities to those « refugees », which contributed significantly to the expansion of the British textile, paper, tapestry and clockwork industries. Furthermore, the Huguenots played a key role in the establishment of the Bank of England, which, as history demonstrates, became a pilar of the British Empire and the financial motor of its colonial expansion. »(2)

England obtained all those benefits, thanks to the lack of confidence of the French: thanks to its search for scapegoats, to its willingness to withhold innovation, to forfeit progress and to avoid the challenge of competition. Throughout its history, Peyrefitte demonstrates how France repeatedly refused the social costs of change and the risks implied by technological progress and paid a hefty price: in 1735 the first coal fired blast furnace for making iron was lit in Great Britain but would have to wait until 1785 to burn in France, albeit the fact that such technology was well known. (3)

Peyrefitte demonstrates clearly that in sum, confidence was key to the industrial revolution starting in Northern Europe, while Southern Europe lagged behind for almost three centuries, although it was better endowed in resources initially.

2) Connectivity is critical to the building of confidence

The concept:

« Connectivity » is the mother-lode from which confidence is mined; without connectivity, ideas cannot circulate and do their important job as leavening agents.- connectivity, defined as the free flow of ideas and of goods, however it takes place, is both the result of increased confidence and its driving force; – « population mobility is a key ingredient of connectivity: mobility alone does not suffice to explain development, but no development ever took place without the support of human mobility » (4).

Its importance:

What good is confidence if there is no infrastructure for ideas to move about and to reach users? Ideas are imbedded in material products, in cultural artefacts, in books, they travel with television programs and, increasingly they are conveyed on electronic networks such as the World Wide Web. Thus, in many ways, the circulation of ideas is intimately connected to trade. Trade among nations does more than give the direct benefits of products to buyers and consumers: new ideas spring from new products just like mushrooms spring after heavy rain. Strong trading nations tend to have strong economies irrespective of their natural resource base: the Netherlands, Japan and Singapore are good examples of prosperous yet poorly endowed countries, while the USA, Canada, and Australia show that resource rich countries which trade most freely are also more likely to experience long term sustained growth.

People transport their knowledge whenever and wherever they go. Thus all manners of transporting people and knowledge (communication infrastructures) contribute to the sharing of wealth and its enlargement. If communication infrastructures are easy to use and low in cost, they will potentially create more wealth.

The history of scientific discoveries abounds with stories about significant discoveries which were fortuitous and accidental. It’s only when the proper connections were made, either to a specific pent-up market demand or to another scientific or technologic advance that mankind was able to draw the full benefit of those innovations. James Burke (5) has demonstrated after years of well-documented research how discontinuous and non-linear is scientific progress. He shows, through a vast array of examples, how one discovery is linked to another, almost always, following unexpected paths. For example:

- « On November 14, 1854, the Crimean War Allied fleet found itself anchored at the Russian port of Balaklava which was hit by a full-scale hurricane. By morning the entire fleet had been sunk. The French Emperor, Napoleon III, ordered an investigation and Urbain Leverrier demonstrated that through the collection of weather data, the fleet could have received twenty four hours warning. The collecting of meteorological data for military and commercial purpose, spread after that.

The Crimean War also had a salutary effect on public health. The famous English nurse, Florence Nightingale, was absolutely appalled at what she saw in the military hospital. The hygienic conditions made the hospital nothing less than a death house. Upon coming back to England, she wrote a report which was widely read. It showed that of the 18,058 soldiers who had been killed in Crimea, only 1,761 died because of enemy action. The other 16,297 deaths had been the result of hospitalization. These figures scandalized the country and not only brought down the Government, but popularize her ideas about the benefit of hygiene.

At the same time, a major outburst of cholera struck London for a third time in less than four decades, killing more than 100,000 persons. People were desperate and demanded drastic solutions. The ideas of Miss Nightingale which by that time had become widely known inspired the Government response: « cleanliness is next to Godliness ». So they built sewers. In order to build adequately size sewers, engineers needed to estimate road-washing and stormwater runoff. For these calculations, the meteorological data the army had started to generate as an aftermath of the Crimean War, proved to be absolutely essential.

In a sum, the two evaluations, one by Urbain Leverrier in France and by Florence Nightingale in England, following the Crimean War disaster led to two unrelated outcomes: the regular and systematic collection of meteorological data and the spreading of hygienic practices. In turn, those two outcomes combined their effect, to allow for the development of the first modern sewer system of Europe« . (6)

Here is a second example – « In 1795, Joseph Montgolfier had an idea for supplying water under pressure while observing how the tide would rush up, explosively, through holes in the rock: he called the machine using this concept, a hydraulic ram. In 1857, while drilling the tunnel under Mont Cenis in France, the chief engineer, Germain Sommellier, decided to speed things up a bit, with a variant on Montgolfier’s ram that would use compressed air to drive pneumatic rock drills. Thanks to his ingenuity and to the new drills, tunnelling was improved by twenty times, to a rate of nearly 4,2 metres a day. »

In Pittsburgh, USA, a young man bought a magazine which carried a story on Mont Cenis and the compressed-air rock drills being used there for the first time; his name was George Westinghouse and he realized that the solution to the high incidence of train accidents lay in air brakes. Until that time, trains relied exclusively on the locomotive and on the absolute coordination of brakemen positioned on each car to stop a moving train, which lead to many disasters. Coordinated brakes using air-pistons would improve the performance of trains immensely. By 1876, 15,569 locomotives and 14,055 cars were equipped with air brakes patented by Westinghouse, and the system could stop an 18 kilometre per hour, 103-ton train in 150 metres, three times shorter than the old way. All those benefits, thanks to a magazine article which found its way to Pittsburgh, USA!!! » (7)

3) Standards allow effective communication and exchange: they breed connectivity and confidence

The concept:

« Standards are documented agreements containing technical specifications or other precise criteria to be used consistently as rules, guidelines, or characteristics, to ensure that materials, products, processes and services are fit for their purpose » (8). Standards contribute to making life simpler, to increasing the reliability and effectiveness of the goods and services we use. In so doing, their use increases confidence between trading partners, nourishes connectivity and supports increased trade and economic growth.

Their importance:

The International Organisation for Standardisation (ISO) in Geneva, and the OECD in Paris, have been instrumental in bringing about shared technical and economic standards and principles among their respective members. In the case of the OECD, the adoption by its members of strict standards and common definitions for the National Accounts system are certainly the highest area of achievement and success for the organisation. Only from the existence of precise National Accounts can the economists and analysts of the OECD make meaningful economic forecasts and policy recommendations for member countries. Those analyses of a high quality and the good policies derived from them have been at the root of four decades of economic growth for all the members of the OECD. Furthermore, many potential conflicts have been avoided by the OECD member countries by the sharing of conventions, principles and standards, spanning a wide range of issues including environment and quality standards. (9)

To make this point vividly, allow me to tell a little story. This story comes from the recent experience in one of Canada‘s largest food industry company; more specifically, one of its subsidiary firms, a bread manufacturing facility in Montreal. But before I tell this story, allow me to set the context with a few words on « Total Quality » and on new environmental laws passed by the Canadian Government.

« As a result of persistent consumer demands and pressure, North-American companies have been restructuring their production lines with an emphasis on high quality: a new management doctrine appeared in the late 1980′s called « Total Quality » or « Zero defects ». Prior to that, companies had followed the policy of reduced quality controls in favour of replacing or repairing defective products at no costs to the consumer through guarantee systems: such practices were believed to be an effective means to keep costs down. However, North American consumers increasingly preferred Japanese made products, for example automobiles, to domestically made ones because they did not have to return those products as often to the supplier for repairs.

« Total Quality » production thus became a means for North American manufacturers to regain market share lost to foreign competitors, especially Japan. This management approach means that a product must not have any imperfections when it leaves the factory. However, quality controls are expensive, as they require not only extra employees, but once a flaw is found, the company would have to dismantle the product at great labour costs and make repairs. It was demonstrated that the best way to insure that a product is perfect is to insure that every step of the production is perfect and that parts from suppliers meet the same consistent high quality standards. Using « Total Quality », a company must identify precisely a source of error to redress it at that very place it enters the production sequence. « Find the source and fix it! » has become the central motto of this industrial revolution. « Total Quality » has turned out to be an extraordinary learning experience as it forces a company to know very precisely how, when and where things happen.

Also, in the 1980′s, the Government of Canada was also being pressured by its electorate to clean up the environment. These are the same people that put consumer demands for quality to companies. Because of this pressure, the Government passed strict environmental laws.

Fortunately, by then, the company – here comes the little story I promised earlier – had learned how to use the « Total Quality » method. One of its bread factories in Montreal was responsible for a large quantity of waste in the form of dough or improperly made breads. Its team of auditors undertook to find out why. The problem was quickly identified: bread or dough had to be discarded because the ingredients provided by various suppliers did not meet the specific standards spelled out in the contracts between the bakery and its suppliers.- Mechanically made bread is very sensitive to the exact proportions and quality of its ingredients. To reduce waste, all the company needed to do, was to call the suppliers and enforce strict compliance to their obligations to meet quality specifications: of course the suppliers obeyed diligently, as they risked losing a most lucrative contract otherwise. They also used the « Total Quality » method to fix their own problem.

As a result, the bread factory of Montreal reduced its waste by 80%. Furthermore, this resulted in economies through reduced product loss, and increased profits were generated rather than costs, normally associated with reducing pollution. They now had more good bread to sell for the same overall input costs. I suppose it is useless for me to insist about the fact that the self-esteem of the company was enhanced, as well as its confidence in its commercial environment. The buyers of the bread have also acquired more confidence in the product and are more willing to consume it. In this example, standards were clearly at the source of economic growth and an improved environment.

4) Networks bring about an explosion in a country’s capacity for expansion

The concept:

A network is an arrangement of interconnected people or operations. There can be many types of networks, including informal ones, such as we find among scientists – in any highly specialized domain, there will be few researchers who know each other, get together regularly at international symposia, and are used to exchanging views, ideas, and even their discoveries. There is no one officially in charge of making such a network operate. It runs by itself, in a sense, and its cost is small. It can be argued that, relative to its cost, it is a most efficient model: it can lead to infinitely great advantages, pecuniary and otherwise, while its operating costs are next to nothing. On the other hand, there are formal networks, with imposing structures and widely respected identities, comprising a core of officials serving both the institution and the network. The OECD and INTERPOL are two prime examples. A third category can also be identified, that may be rarer but no less effective: it blends informality within a structured arrangement: the World Banks annual consortia meetings would fit this description.

There lies a whole gamut of network possibilities, ranging from informal but structured to more formal but less structured networks. During the eighties, networking became a feature of the communications industry. At first computer networks were merely the instruments of an existing network of individuals; however, the emergence of Internet and of the World Wide Web has witnessed the birth of a new entity, literally a world community, an immense network of unsurpassed might where hundreds of millions of individuals, companies and institutions freely exchange information. Many experts have heralded this as the beginning of a new revolution, technological and social.

Its importance:

The 1950′s witnessed the emergence of the phenomenon of networks and networking throughout the United States, to the point where it is now considered quite normal for an employee’s performance to be appraised in terms of his « networking » ability. Robert Lattès (10) is one expert who sings the praises of networking. He attributes the extraordinary scientific progress of the 1960′s and 1970′s to the emergence of the informal networks that American, British and French researchers have used so freely to share their results among themselves.(11)

- « The dissemination of scientific and technical information does not come free. The key to the game is the rule of reciprocity. Trading information enhances and speeds up everyone’s work« ….He tells the following story to better illustrate the importance of those points.(12)

Back in the 1950s, when he (R. Lattès) was working at the Atomic Studies Centre of France, he had to deal with a tricky problem. Atomic research was then clouded in secrecy, for obvious security and commercial reasons. Nevertheless, scientists who met at international conferences had taken the habit of sharing discoveries. In one particular instance, British researchers had given to their French counterparts their plans for a new reactor being build in England. Reviewing the British calculations, French mathematicians and physicists were puzzled: their calculations suggested that the designs they had in mind should pose no risk of melting nuclear fuel cartridges, but when they tested these calculations on the British model, they discovered that there were in fact serious risks inherent in that model: they prepared a report on it. By coincidence, the very afternoon that they finished their calculations, they learned that some of the fuel bundles in the British reactor had melted, forcing them to shut the reactor down for several weeks. Needless to say, the French experts fired off their report to the British scientists as quickly as possible.(13) Lattès marvels at the costs that were thus saved by the British and by the French atomic industries through this simple exchange. Speed in technical and industrial development was enhanced for the benefit of both countries. I would also argue that a measure of confidence was added to the confidence level of those trading partners.

Conclusions : working together

Two ways are open for scientists to contribute to confidence and to growth within their society. The first is clearly spelled out in this presentation: – to build sturdy networks within which ideas are freely exchanged, – to adopt international standards and to strive to enrich those progressively, – to induce a change in mentality more conducive to synergy and effectiveness. Through such a process pertinent discoveries will abound, as well technical solutions will be found to existing problems.

Showing the way is a second avenue which has been offered to scientists. Science is based on the principle of transparency. The ultimate test of a scientific discovery is through publishing widely so that scientists from the world over can verify and criticize it. Scientific research has, by tradition, transcended all national boundaries so as to serve mankind.

To succeed and to be recognized, science has had to develop according to the highest standards of ethics and quality. Only through these attributes could it be distinguished from myth, faith and superstition. Even today many people exist, who are suspicious of scientific knowledge as they have learned to see its danger and its downside. Obviously some scientific discoveries do pose immense ethical and social problems, however most discoveries, when properly used, do contribute to increasing the wealth and easing the life of humans. But standards and connections are of the essence. Chernobyl was essentially a problem of poor standards compounded by isolation. It has, predictably, resulted in reduced confidence within the nation.

We understand that life today is most difficult for scientists in Ukraine since money for research and research centres has just about vanished. Nevertheless, the solutions for « Reforms » lie in part in the mind of scientists such as those gathered at Puscha Ozerna for this conference on Environmental Management.

For 27 years IDRC has been helping scientists and research centres to cope. Our task has been to help construct or rebuild confidence, to increase connectivity through systematic exchanges among scientists worldwide, through the implementation of durable networks and finally, through the dissemination of ever-increasing rigorous standards and methods. Our commitment to those values is unfaltering. Attached to this document is our perspective on standards as related to the challenges facing Eastern European countries. These are values we wish to pursue together with you.

One last remark. Secrecy inhibits growth and cripples development efforts as it inhibits the free flow of information. Centuries ago, myths and beliefs served to constrain the free search for new ideas and solutions. Suffice to remember Galileo’s plight. During this century sovereignty issues and nationalisms have bred fears and justifications to curtail communication, to ban the circulation of ideas, to imprison the mind and the ingenuity of human beings.

Since World War II, how many discoveries have been denied to mankind because Ukrainian scientists were not connected to the rest of the world?

Annex

The Management of Quality Standards

In carrying out its activities, OCEEI will pass to our clients the highest level of internationally accepted standards and will work with these partners to develop such standards where they do not exist or will modify existing standards to meet the specific needs of the eastern European environment. OCEEI will also manage its activities to the highest internationally accepted standards and will seek to have its clients do the same.

In the countries of eastern Europe the standards inherited from the Soviet era have in many cases broken down and if still in effect, are often out of step with those considered acceptable by importers and consumers of the world.

OCEEI’s specific concerns about standards:

1. Human rights: IDRC has always supported the highest levels of standards of human rights, one of which is equality between the sexes. Equally of concern is freedom of expression and movement, freedom from arbitrary detention or loss of property, equality under the law for all people, as well as gender equality.

2. Civil law: Particular concern is given to the need for laws dealing with ownership of property and business law. Fair and objective interpretation of laws and protection under the law are concerns, as is corruption. Legal reform and at all levels is a prerequisite for economic reform and progress. Weak civil laws, lack of enforcement of the law and corruption all pose risks to the success of enterprises in a country, and will deter foreign or even local investment in that country.

3. Environmental standards: Eastern Europe has been left in a state of environmental degradation. To maintain the health and well being of the population, internationally accepted environmental standards need to be adopted, for example the ISO environmental standards applicable to business enterprises or the standards legislated by the European Community. OCEEI through is projects will help the introduction of such standards.

4. Financial and management standards: OCEEI will require that its partners follow generally accepted accounting practices and will endeavor to teach best standards of project management. The establishment of market-based standards of management and acceptable standards of business ethics is a major challenge facing eastern European countries.

5. Quality standards: In the Soviet days the economic system was production oriented, with too little regard for quality, or cost or value of the resources used in production. As a result, many manufactured goods from eastern Europe do not sell in world markets. IDRC will promote internationally accepted standards of quality, for example the ISO 15000 quality standards.

6. Research: All IDRC projects embody some aspect of research, therefore, OCEEI will assure that the results of its projects are based on application of accepted research methodologies and that they meet the standard of international peer review in terms of methodology and results as well as presentation, using internationally accepted methods of presentation.

IDRC will fund research projects which help solve well documented societal problems or concerns, and contribute significantly to the health and well being of people in the recipient country. To be fundable, proposals must be firmly supported by existing knowledge and research. They must have clearly defined goals and realistic work plans, milestones and budgets, and the proposals must be of a quality capable of meeting international peer review.

7. Human safety and occupational health: Human safety and occupational health were topics largely ignored in the past. OCEEI will promote and adhere to the highest standards of safety possible in all its activities.

Endnotes(14)

1. Alain Peyrefitte, has written a superb essay on this issue: « La société de confiance« , by éditions Odile Jacob, Paris, 1995. In this book, the author tries to answer the difficult question: « what is development? How does modernity, progress and growth come about? » Most authors have looked into material causes, such as capital, labor, technology or natural resources; he demonstrates with persuasion and elegance that attitudes and behavior are at the source of wealth. Inter alia, an « ethos of confidence » is, in his view, at the core of the mind-set conducive to growth and sustainable development. He compares Northern and Southern Europe over a period of four centuries to demonstrate his thesis.

2. ibid, p. 194

3. ibid, p.153

4. ibid, p.18

5. James Burke is the author of « Connections » and « The Day the Universe changed », both these books are the basis for a highly rated documentary series named « Connections 2″ on the Learning Channel and initially filmed by the BBC. A recent book, « The Pinball Effect », by Little, Brown & cie, Boston, 1996 is the source of quotes for this text. More information is also available on WWW.DISCOVERY.COM.

6. ibid, summarized from pp136/139

7. ibid, summarized from pp 105/106, 140/143 and p 147

8. The International organization for Standards (ISO) is a worldwide federation of national standards bodies for 100 countries. It promotes the development of standardization and related activities in the world. See WWW.ISO.CH.HTML

9. The Organisation for Economic Deveolpment and Cooperation was founded in 1949. It now comprises 24 countries. Its purpose is to conceive and coordinated sound policies and transparent public information systems. Its interests range a large spectrum from economic issues to technical problems such as transport or agriculture; see WWW.OECD.ORG

10. R. Lattès is a well respected scientist in France who has occupied many prestigious positions both as a scientist and as a top civil servant; in this book he marvels at the speed at which scientific and technical progress were achieved after the war; his experience and research allows him to clearly identify the strong networks of scientists and researcher who shared knowledge in the context of numerous networks. This explains, in part, the strong economic growth of the West between 1970 and 1990: L’apprenti et le sorcier [The Apprentice and the Sorcerer], Plan, 1988, Summarized from pp.33 and 34.

11. Ibid., p. 28

12. Ibid, p. 33

13. Ibid, p. 34

14. IDRC on the web may be found at WWW.IDRC.CA; for OCEEI’s page add: /OCEEI

 Copyright 1997 © International Development Research Centre, Ottawa, Canada , July 7, 1997

 





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