Innovation as Intensive Learning and Emulating the East Asian NIEs 103.0

Intensive learning facilitated the technological catching up process of the East Asian NIEs like South Korea and Taiwan in the 1980′s, said Professor Patarapong in his paper at ASIALICS 2009 (Posts 80, 81,82, 86 and 87).

The subject fascinates. For me, the hunt goes on for innovation models to emulate so I can enrich the conversation and help raise the Philippines from its seemingly endless slump.

From this book by Nathan Rosenberg (Thanks! Dinesh for the intro to NR.), I found that it has a long pedigree in research: in truth, intensive learning is the innovation process by another name.

I also found out the relationship between STI- and DUI-learning, intensive learning, the typical innovation process as in the SYNTHESiST sidebar, Academia and the real world. I have tried to map this relationship in a simplified matrix below.

I first quoted Lundvall in Post #17 on DUI-Learning, i.e. Doing, Using and Interacting. His National Innovation System says innovation comes from the continuous interaction between STI- and DUI-Learning in a substrate of economic growth (See also Post 99).

From the table, please note that Lundvall’ two components of innovation can be broken down as elements of intensive learning. I have not discussed Research and Development (that translates as Science and Technology in the STI-Learning part) here as the first two steps of intensive learning.

DUI-Learning also has a long and impressive pedigree. And more discoveries are being made …

Learning by Doing. Kenneth Arrow, who won the Nobel Price in 1972 for social choice theory, published the journal, The Economic Implications of Learning by Doing in 1962.

This basic research was later applied and popularized as the learning curve. It has been used in disparate areas like pricing but mainly in projecting productivity improvements according to volume growth in manufacturing.

In the Philippines, the most recent and notable application of this classic is in the pricing of C2 that was priced at P10 on introduction. This price assumed the cost of the PET bottle at full volume. I would not be surprised of Mr John Gokongwei, the tycoon himself, who acted as product manager C2, maybe for fun of it, is aware of K Arrow’s learning curve. C2′s success limited competition to the big players and pushed Coke back into the fold of Coca Cola International.

Learning by Using. Nathan Rosenberg of Stanford University published Learning by Using in 1982 in the book above, “Inside the Black Box: Technology and Economics.” As with Learning by Doing, the goal here was to improve on the analysis of Solow’s residual in growth accounting.

In 1958, Solow said that only 20% of American growth then could be accounted from factors of production like land and labor. The balance of 80% can be considered as a residual in a black box and known to include technical change and productivity improvements in the use of the factors.

On top of the learning curve, Rosenberg concluded that “Using” like in customizing (or Rogers re-inventing) a product also creates learning and contributes to total factor productivity and, thus, explains another part of Solow’s residual.

Learning by Interacting. Bengt Ake Lundvall added learning by interaction in 1988 in the journal ‘Innovation as an Interactive Process – from User- Producer Interaction tothe National System of Innovation’ in Dosi, G. et al.(eds.), Technical Change and Economic Theory.’ I have not been able to find a copy though it is cited in many succeeding Lundvall papers.

Twenty years after Arrow, when firms in the industrial world have become more specialized (the archetypical conglomerate ITT reached its apogee in 1989), Lundvall concluded that firms also learn from each other in the course of commercial buying and selling as well as collaboration.

The Learning Economy. In 2009 and beyond DUI, Lundvall has written about ‘The Danish Model and the Globalizing Learning Economy, Lessons for Developing Countries’ to consolidate the shift to the learning economy from firm level and the social parameters that determine economies that learn fastest. There may be possibility of generalization using Denmark and other Scandinavian countries as case studies in grounded theory research (Eisenhardt, 1989).

Like Paul Romer (1990), this is an interesting area in social innovation for SYNTHESiST to find potential applications for the Philippines.

Final Words. So here we have derived the roots of DUI-Learning that happens to be the result of at least 22 years of scholarly work (1962-1988) and where many more possibilities remain to be examined.

Moving to the rightmost column of the table, we see that with some engineering and technology, DUI-learning transforms to reverse engineering in the real world.

In the real world, there are also interactions between and among the learning stages. For example, science was the lead in the development of electricity and semiconductors. Later on, technology was the starting point into the development of PCR to automate the mapping of DNA or LSI (large-scale-integration) technology to bring microchip line widths to 43 nanometers from 1000 a couple of decades ago.

Similarly, there are interactions between and among adaptive research, manufacturing, product development, and buying / selling for effective reverse engineering.

Like the out-of-school youth (See my Post #99) who are definitely not in the forefront of our society, the Philippines is a latecomer with respect to the rest of the world. Thus, we are better off at emulating the leaders via intensive learning as Professor Patarapong noted for his country, Thailand, rather than starting from more basic research.

Emulating and adapting using competence-building technologies including a change in corporate culture to match the demands of new technologies and processes is the innovative way for the Philippines to progress.
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