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Global Governance of the Knowledge Economy A

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					                      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

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

   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.

                   GGKE Concept Paper – DH Draft of October 13, 2007 -                           2
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

                  GGKE Concept Paper – DH Draft of October 13, 2007 -                               3