Business » Economy

Updated: January 11, 2012 23:45 IST

‘Markets cannot manage a knowledge economy'

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Joseph Stiglitz
Joseph Stiglitz

Pointing out that the gap in knowledge between developed countries and developing countries is probably more than the gap in resources, Nobel laureate Joseph Stiglitz said here on Wednesday that market forces were not efficient in producing and distributing information and knowledge.

“There is no assumption that markets are good at managing a knowledge economy,” Prof. Stiglitz said during his lecture on “Learning for a new economy: insights for the developing world” at the Indian Statistical Institute.

Advocating “a balanced role for markets, government and civil society,” in the course of his lecture, Prof. Stiglitz pointed out the failures in “development thinking” over the past 40-50 years, including the Washington Consensus

Citing the example of Trade-related Intellectual Property Rights (TRIPS) agreement, he said that it was not developmentally-oriented. Intellectual property rights often restricted the use of knowledge and contributed to monopolies, he said.

He also emphasised on the kind of innovation that was adopted by developing countries as “we cannot just borrow or adapt technologies from the North.”

“Much of the innovation in developed countries has been targeted towards saving labour, but in many developing countries labour is in surplus, unemployment is the problem. Labour saving innovations exacerbate the key social problems,” he said.

The real scarcity today is natural resources, which are unfortunately “under-priced,” he said adding that emphasis should be on innovations that saved resources and the environment. He said developing countries should create new centres of learning, innovation and research to focus more on the scarcities as they were here in the developing world.

The silver lining for a country like India was that democracies were more conducive to creating a learning society, he said.

“Democratic ideals question authority, which is so essential for creating a knowledge economy,” he said cautioning that non-inclusive growth could undermine democracy.

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