Publication

This paper inquires how to apply the concept of a learning economy to the developing country context. It describes the challenges developing countries face in their attempts to cope with globalization and upgrade their industrial sectors, explains why tacit knowledge is essential for adjustment to rapid changes in markets, technology and innovation, and discusses how the diffusion of information technology affects access to knowledge by local agents. It also looks at which institutional features of a national production system best suit the diffusion of tacit knowledge, comparing the Japanese and American models. The paper finds that both models have strengths and weaknesses and encourages developing countries to develop their own hybrid models that best attend to their needs and capabilities.