A new book co-edited by Prof. Luc Soete is dedicated to Jorge Katz, a renowned scholar on the economics of innovation and technological change, particularly in Latin America. Katz is also a close friend of UNU-MERIT, and until recently served on our board of governors.
Entitled Learning, Capability Building and Innovation for Development, the book is based on Katz’s main areas of work: processes of learning; technological capability building; the connection between innovation, productivity and competitiveness; macro-micro interactions; catching up processes including technological regimes; natural resources and the role of ‘under-the-radar’ innovation.
Katz’s approach to Latin American structural and economic development has not been confined to conventional economics. He saw early on that the reality in developing countries could not be fully explained by conventional economics, and therefore created an entirely original approach. In answering the questions that follow, Dr. Michiko Iizuka – who authored a chapter in the book – explains this approach and the significance of capability building for innovative development.
1. This book argues that capability building is an active, not a passive, process and requires a purposeful effort from learners. What does this mean in practice?
One of Katz’s contributions is on capability building, also called technological efforts. In conventional economics knowledge was considered similar to information which can easily flow from one person to another; however, knowledge can only be acquired with conscious efforts to learn—the active process of technological efforts—and cannot be obtained passively. This was clearly demonstrated by observing a number of firms in Latin American countries.
2. The book also claims that economic development is a process of creative destruction. What does this mean in the real world? Can you give any recent examples?
The creative destruction process is often led by 
the emergence of new technology that radically changes our lives. For instance, we now have a completely different way of purchasing music since the arrival of the iPod. This new product changed the way music is distributed and fundamentally changed the music industry. With the arrival of the Internet we now have new ways of dealing with daily chores, such as buying tickets, books and even groceries.
New lifestyles prevail after we have replaced or ‘destroyed’ the old ways of doing things. But of course these processes are rarely simple. When we think about learning and capability building, we tend to focus on learning new things; but it is also important to forget the old ways of doing things. This sounds easy but sometimes it is extremely difficult to unlearn the way things have been done for many years or generations. A good example would be our stuttering attempts to use more renewable energies and to close carbon-based transportation systems.
3. A number of Latin American countries are leveraging natural resources for development. Is Latin America a special case in this respect? Is this kind of growth sustainable?
For many years natural resource based activities were not 
considered an engine of development. Yet views are changing, partly due to the recent commodity boom and partly due to the presence of new technologies, including biotechnology and nanotechnology and the development of corresponding institutions for intellectual property rights. As a result, natural resource based activities have proven to be knowledge intensive.
Leveraging development via natural resource activity is not unique to Latin America. It can be applied to any country which has the right combination of factors of production, among others natural endowment, labour and capital.
Development based on natural resources can be sustainable but consideration is needed in areas such as environmental carrying capacity and inclusiveness. The extraction of natural resources — especially renewables — needs to be managed effectively to maintain continuity. This requires local capability in investigation and formulation of policy/regulation and enforcement. And due to climate change and various evolving conditions this needs constant attention and efforts.
Additionally, access to knowledge becomes more unequal in line with rising technology levels (required for natural resource based activities). This knowledge gap is likely to increase as these activities take off. Fairer and more sustainable policies are therefore needed to improve inclusiveness and avoid harming the livelihoods of marginalized populations.
Dr. Michiko Iizuka joined UNU-MERIT as a researcher in 2008. Her areas of interest include innovation systems in the context of developing countries, the role of innovation policy in development processes, and the impact of global institutions on local capability building. She has previously worked for the UN Economic Commission for Latin America and the Caribbean, and as a consultant for the United Nations Industrial Development Organization. Image: Flickr / H.Lyon.
