1、Technology and Cultural Comparative Advantage,John Hooker April 2006,A New Economic Order?,The world economy seems to be moving toward a new equilibrium, based on cultural comparative advantage. Moving away from Western economic hegemony. Successful countries draw on their cultural strengths. Japane
2、se quality Indian information technology Korean manufacturing efficiency Chinese entrepreneurship & relationship-based business Western technology,A New Economic Order?,What is the Western comparative advantage in the new order? Perhaps technological innovation. It is rooted in the Western cultural
3、system.,Caveats,I am using an alternative paradigm for economic explanation. Based on cultural anthropology Franz Boas, Edward Hall, Marvin Harris, Ruth Benedict, Geert Hofstede, et al. Cultural factors are fundamental rather than externalities. Culture provides the social infrastructure that makes
4、commerce and industry possible. Not a rejection of standard economics, but an alternative point of view.,Caveats,Cultural analysis does not stereotype individuals. Every culture contains the full range of personality types. But they fit into the system differently. Cultures are like ecosystems. They
5、 are systems. They can coexist on the same planet. Diversity is good. But cultures create meaning. They require interpretation ( la Clifford Geertz).,Caveats,Beware of Western universalism. The Western view of culture: Everyone is basically the same inside. Culture is all about food, language, custo
6、ms, dress. There is one rational way to live and one path of development. Democracy, human rights, individualism, capitalism are for everyone. Most non-Western countries are “less developed.”,Caveats,Culture is really about fundamental, unacknowledged assumptions. The West universalizes because its
7、cultural system requires it.,Caveats,I make no judgment about which cultures are “better.” But I insist they are radically different.,Example: Japanese Quality,Continuous improvement. Group-oriented, rather than requiring individual reward. Long time horizon. No need for cause-and-effect manipulatio
8、n. Maintain group harmony by honoring everyones ideas. Nemawashi. Kanban systems minimize rework, maximize flexibility. Lean manufacturing, reduced setup times.,Example: Japanese Quality,Just-in-time inventory management Outgrowth of keiretsu (formerly zaibatsu). Old-boy networks, trust relationship
9、s. Keidanren.,Example: Japanese Quality,Case study: fuzzy control Initially rejected by Western engineers as unprincipled. West misunderstood Japanese acceptance of fuzzy logic. Not because it is “feminine” or “Buddhist” logic. Real reason: Western-style scientific modeling of nature is unnecessary
10、to support Japanese culture. Also: Fuzzy rule bases are ideal collaborative projects.,Example: Indian IT,Pantheism vs. secularism No need to maintain & manipulate nature. Coping mechanisms: Inner discipline Get control of ones mind rather than the environment. Modern form: study, intellectual discip
11、line, academic competition. Networking. Efficient way to absorb technical knowledge. A verbal culture. Well suited to academic discourse, information age.,Example: Indian IT,Case study: software development No need for the technology, but well suited to create it. Create an orderly world of the mind
12、, rather than an orderly world externally. Indians see themselves as Westernizing There is a common reliance on rationality. But Indians are leveraging their own cultural traits.,Example: Korean Manufacturing,Initially an imitation of Japanese zaibatsu. Park Chung Hee helped create the chaebol (1960
13、s, 1970s). Samsung, LG, Hyundai, SK Group, Daewoo Cozy relationship between leading industrial families and the government Allowed Korea to build major private corporations in a relationship-based culture. Emphasis on manufacturing for export. Korea manufactured itself out of the Asian financial cri
14、sis.,Example: Korean Manufacturing,Unique organizational characteristics Loyalty to the boss. Paternal relationship. Highly disciplined, hierarchical groups. Organized by age. Highly competitive, masculine culture. Strong national solidarity. Focus on loyalty to team. Bottom line and short-term prof
15、itability are secondary.,Example: Chinese Entrepreneurship,Entrepreneurship is a cultural trait of coastal Chinese. Particularly, speakers of Yu (Cantonese), Mn (Fujianese), and W (Shanghaiese) dialects. Uncertainty tolerant culture. Self esteem tied to wealth and status. “To be rich is glorious” (D
16、eng Xiaoping). Masculine culture, competitive.,Example: Chinese Entrepreneurship,Relationship-based business. Gunx is a time-tested mechanism. Worlds largest economy for 8 of last 10 centuries, soon to be again. Chinese and other Asian businesses are making inroads into South America, Africa, Middle
17、 East. These countries are more comfortable with Chinese relationship-based business style than Western rule-based transparency.,Western Technology,Two roots Disenchantment of nature (cf. Max Weber). Opened the way to manipulation of a secular world. Greek rationality. Human beings are rational, aut
18、onomous individuals. Reality is intelligible (even mathematical). The result: science-based technology. Cope with uncertainty by controlling and ordering the external, secular world. Family, community, internal self-discipline less important.,Western Technology,Technology is easily transferred to ot
19、her countries. Does the West have a comparative advantage here? Technological innovation may be less transferable.,Technological Innovation,Cultural roots Reasoning from first principles. The universe is intelligible. Individualism. Individuals have the right to rethink everything. Universalism of r
20、ules. Laws of science, morals. Autonomous individuals can be governed only by laws, not persons. Laws must be self-evident, inherently logical. They are therefore universal and can be discovered by any individual.,Technological Innovation,Massive cultural/educational investment Students asked to ret
21、hink the field, see things for themselves. Geometrical proofs, science experiments. Most students hate this. Only a few will catch on. Individual expression valued. Concept of plagiarism. Makes society hard to govern. Payoff: new ideas for technological coping mechanism.,Technological Innovation,Arg
22、uments that technological innovation is transferable: Only a few need be involved. Subculture of Westernized elites in many countries.,Technological Innovation,Arguments that technological innovation will remain a Western comparative advantage: World is not Westernizing. Information technology actua
23、lly reinforces regional differences. West overestimates Westernization trend because it universalizes. Non-West overestimates Westernization to emphasize its “development.” Ideas bubble up from below.,Technological Innovation,A problem with relying on technological innovation: Protection of intellec
24、tual property rights. Enforcement already difficult. Despite recent strengthening of IP rights, overall historical trend is away from commoditization. Growing influence of the “South.” WTO is nominally democratic. U.S. domination of WTO may weaken (e.g. “group of 20” at Cancun meeting). Liberalizati
25、on of TRIPS agreement at Doha meeting.,Other Candidates for Western Cultural Comparative Advantage,Entrepreneurship Not uniquely Western, but it helps. Transparency Results in very efficient commerce, but requires stable institutions. May remain a Western peculiarity. Relationship-based business may prevail in an unstable world. Information technology facilitates it. Western transparency-based finance already shaky as a global system.,
