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So what exactly is a “knowledge bank”?

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Unsurprisingly, with the recent arrival of a new president fresh from the groves of academia, the halls and meeting rooms of the World Bank are buzzing once again with talk of the “Knowledge Bank” or KB for short. But what exactly is a “knowledge bank”?

To my mind the paper that pins the idea down best is “Positioning the World Bank” by Chris Gilbert, Andrew Powell and David Vines in the Economic Journal in 1999.

Knowledge as a public good
Gilbert & Co argue that knowledge about best-practice development is a global public good – the entire world stands to benefit from it, even though some may benefit from it more than others. Given the public good character of global knowledge on development, too little of it would appear if production were left to the free market.

In principle countries could band together and commission the required knowledge work from universities, think tanks, etc. However, such a solution would run into at least two problems. First, potential providers of such knowledge will have their own goals (academic tenure, profits for their consultancy, etc.), making it hard to get incentives right. We know, for example, that the odds of getting published in a top economics journal are much better if you write about the US than a developing country. A global institution dedicated to producing development knowledge – and disseminating it for free – has a better chance of setting the right incentive structure. Second, there are potential economies of scope and scale to be had from having a large number of people working on different aspects of development under one roof.

The question remains though – why bundle the activities of knowledge production and lending alongside one another inside a multilateral development bank? Why don’t development banks like the World Bank simply get the knowledge they need from an international agency set up with the express purpose of producing first-rate development knowledge? One answer to this question is that people tasked with knowledge production are likely to produce more relevant and more practical knowledge, and stand a better chance of infiltrating it into operational work, if they work alongside – and support – the people working “in the trenches” on lending operations, policy dialogue, etc.

A subtler second facet of the 'Knowledge Bank'
So a key function of the KB is to correct the market failure due to knowledge being a global public. But Gilbert & Co argue that the knowledge work of the KB has a second function – to rectify information failures. Investing in emerging economies is inherently risky, and the private sector may lack the necessary experience, expertise, contacts, etc. to assess accurately the risks and returns to such investments. And even if it were able to acquire the necessary information, a commercial lender wouldn’t want to disseminate it, because it is a source of competitive advantage. By efficiently generating and disseminating the knowledge it gleans through its lending operations, the KB can help rectify these information failures, and ‘crowd in’ private investment.

This doesn’t clinch the argument for a KB – a public bank whose sole knowledge function was to distill and disseminate knowledge gleaned through its lending work could do the job. But Gilbert & Co argue that this work is likely to be more effectively by an institution that has an explicit global knowledge-production goal – people with analytic skills from the knowledge-production side of the institution can be brought in to help with the “knowledge capture”, and placing a high value on knowledge generation should encourage this type of work.

Implications for assessing the success of the 'Knowledge Bank'
What Gilbert & Co write has two important implications for how we think about judging the success of the KB in its knowledge work.

First, while the synergy argument suggests that the knowledge-production side of the KB should influence the operational side, the audience of the KB’s knowledge work is actually the entire world. This is true not just of knowledge products we traditionally think of as global knowledge products like flagship reports and research but also of knowledge products that are about a specific region or country. A Latin America regional study on conditional cash transfers is likely to be of value well beyond Latin America. A study seeking to understand why malnutrition in India has remained stubbornly high despite years of high economic growth is likely to be of interest well beyond the borders of India and its neighbors. A study about health reform in China is likely to be of global interest. And it is not just governments that are likely to find such work valuable – the number of individuals and organizations likely to find such work of value is potentially huge.

The KB, being a bank, doesn’t always see it in this way. Like other banks, the KB lends to clients, and there is a tendency to see both lending and knowledge activities through the same bank-client lens – to judge knowledge as useful only to the degree that the intended client government finds it useful. To be sure one would hope that knowledge work oriented toward a particular country would be considered valuable by the government of the country. But the mission of the KB is broader – to ensure that knowledge is available to all interested parties and stakeholders, and to governments and citizens in other countries so they too can learn. Asking a client government what they think about a specific sector study is informative, but it gets at only a small part of the value of the study.

Second, a major feature differentiating the KB from a commercial lender is the KB’s goal of crowding in private-sector investment by capturing and disseminating knowledge gleaned from its lending work. Presumably not everything the KB learns through its lending work can be disseminated publicly, but a lot can be. And a lot is. The work of the Bank’s Independent Evaluation Group goes well beyond checking whether Bank operations were successful and tries to draw and disseminate lessons from operational work. The Bank itself shares internally and externally lessons from its operational work.

But I think it’s fair to say that some of our knowledge work may not be as explicitly oriented as it might be toward the second knowledge function of the KB that Gilbert & Co identify – rectifying information failures, helping to crowd in private investment and presumably investment by other public organizations, including potentially other donors. There’s clearly an internal audience – helping the Bank do a better job in future operations. And clearly the client government is an important person in the audience too – helping it do things better. But most of the audience for this knowledge work is external.  It’s about enlisting others – private and public entities – in the fight against global poverty. Seen through this lens, knowledge work related to Bank operations becomes hugely valuable, its value deriving from the extra growth and development caused by the extra investment the work crowds in. I’m not sure this is the way the KB thinks about its knowledge work relating to operational work.

These thoughts raise in my mind two questions. Are we under investing in knowledge because we see it through the bank-client lens instead of through the lenses of global public goods and rectifying information failures? And does the wrong lens lead us to misjudge the effectiveness of the KB, forcing us toward overly narrow indicators? 

For part II of this post, visit this blog next week.


Adam Wagstaff

Research Manager, Development Research Group, World Bank

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