It has long been recognized that most standard of living increases are
associated with advances in technology, not the accumulation of capital.
Yet it has also become clear that what truly separates developed from
less developed countries is not just a gap in resources or output but a
gap in knowledge. In fact the pace at which developing countries grow is
largely determined by the pace at which they close that gap. Therefore,
how countries learn and become more productive is key to understanding
how they grow and develop, especially over the long term.
In Creating a Learning Society, Joseph E. Stiglitz and Bruce C.
Greenwald spell out the implications of this insight for both economic
theory and policy. Taking as a starting point Kenneth J. Arrow's 1962
paper "Learning by Doing," they explain why the production of knowledge
differs from that of other goods and why market economies alone are
typically not efficient in the production and transmission of knowledge.
Closing knowledge gaps, or helping laggards learn, is central to growth
and development.
Combining technical economic analysis with accessible prose, Stiglitz
and Greenwald provide new models of "endogenous growth," upending the
received thinking about global policy and trade regimes. They show how
well-designed government trade and industrial policies can help create a
learning society; explain how poorly designed intellectual property
regimes can retard learning; demonstrate how virtually every government
policy has effects, both positive and negative, on learning; and argue
that policymakers need to be cognizant of these effects. They
provocatively show why many standard policy prescriptions, especially
associated with "neoliberal" doctrines focusing on static resource
allocations, impede learning and explain why free trade may lead to
stagnation while broad-based industrial protection and exchange rate
interventions may bring benefits, not just to the industrial sector but
to the entire economy.
The volume concludes with brief commentaries from Philippe Aghion and
Michael Woodford as well as from Nobel Laureates Kenneth Arrow and
Robert Solow.
