The crisis-torn global economy needs a World Knowledge Fund to revive it

Sami Mahroum

Many have drawn parallels between this G-20 meeting and the one involving 44 countries that took place 64 years ago in Bretton Woods, New Hampshire, to devise the post-war international monetary system. The meeting led to the creation of the International Bank for Reconstruction and Development, the General Agreement on Tariffs and Trade, and the International Monetary Fund.

One of the main achievements of these Bretton Woods institutions was allowing the rapid reconstruction of post-war Europe. But these same institutions failed elsewhere, particularly in bridging the wealth gap between the North and the South. A main reason for this is their inability to address the knowledge gap.

The growing knowledge gap  

With a few exceptions, the knowledge gap between the rich North and the poor South continued to expand over the last 25 years. And the gap has not only increased between countries, but within countries too. More than three quarters of the world’s population cannot access modern scientific knowledge or technologies to improve living standards, health or protect the environment. By some accounts, it has taken some countries 48 years to adopt specific, marketed technologies.

This knowledge shortfall has presented developing countries with more problems than benefits as knowledge-intensive globalisation has spread. With knowledge being increasingly traded as a commodity in global markets in the form of products and services, the knowledge gap continues to convert into a prosperity gap. The concentration of traded – and tradeable – knowledge in western economies, has left the 4.8 billion people living in developing and transition economies with only 20 per cent of global GDP.  

A new Bretton Woods system should address all failures of globalisation and not just the recent financial one. While a few countries, cities and regions in the developing world have indeed benefited from the tide of techno-globalisation, most have not. The increased sophistication of production systems in farming, fishing, manufacturing and services have left developing countries with little to exchange with the more advanced economies of the North.  

As a result the comparative advantage of most developing countries remains cheap skilled or unskilled labour. The result is massive legal and illegal migration from knowledge poor to knowledge rich countries, and massive jobs relocation from labour-expensive to labour-cheap countries. The current global economic crisis will put immense pressure on politicians to act to stop flows of people and jobs.

Building the global knowledge infrastructure

When they next meet in April 2009, the leaders of the G20 countries should recognise this failure in globalisation and address it by the creation of a World Knowledge Fund. The fund should be equipped with resources, expertise and talent to do two things:  assist in building the knowledge infrastructure of knowledge-poor countries; and invest in global solutions for global problems.  

The cynics will rightly argue that previous experiments with such organisations – the Third World Academy of Sciences in Trieste, Italy, or the International Foundation of Science in Stockholm, Sweden - for example, have not been successful. Others might point to the World’s Bank recent self designation as a “Global Knowledge Bank”, or the United Nations Education, Scientific, & Cultural Organisation (Unesco). But what is proposed here is a much more focused global entity with a remit to foster knowledge transfer, and which would operate along different funding and operation models.  

The World Knowledge Fund will be governed by a Council representing its funding members, which will oversee its activities and approve its budgets. But operationally, the World Knowledge Fund will work with governments, NGOs and civil society organisations across the world to invite bottom-up activities, as well as initiating top-down ones. More importantly, the knowledge fund will not deliver activities itself, but will provide financial support to create networks of knowledge exchange between the North and the South.

Funding knowledge

Financially, the fund will have a unique model. It will encourage countries to actively participate in the fund by creating a market run by a vouchers system. Every time a country puts money into the fund, the fund will issue vouchers to purchase knowledge services from that specific country. Partnerships will then arise between institutions in the supply countries and clients in the demand countries. This will create incentives for countries to increase their funding of the knowledge fund in order to create new markers for their knowledge products and services.

There will be countries for which such mechanism will not create incentives, such as the Gulf countries in the Middle East, China and other resource-rich but relatively knowledge-poor countries.  

Such countries can have another important role to play though, which is helping achieve the fund’s second mission, namely investing in global solutions for global problems. These problems range from environment and climate change to health epidemics. New research facilities will be needed for a global scientific community to work together on tackling these problems and for capacity building. Resource rich countries can fund the establishment of these new global knowledge facilities in return for playing hosts to these facilities.

The World Knowledge Fund will help remedy part of the problems resulting from the persistent and widening global knowledge gap between countries by improving both access to knowledge and the adoption of knowledge across the world. It will also act as a mechanism for finding best solutions for global problems. Last and not least, it will become an important platform for confidence building and cooperation between different parts of the world.