Skills for improved productivity, employment growth and development
The meaning of social capability
The capabilities and competences of individuals are determined by both explicit and
tacit knowledge elements. Individuals need to know the technological and commercial
principles, regulations and other rules that they follow (this is explicit and codifiable
knowledge referred to as declarative knowledge) and they need to be able to apply them
competently (this is tacit or procedural knowledge). Tacit knowledge cannot easily be
codified and can therefore only be communicated and transferred between individuals
through a process of demonstration, observation, imitation and practice.
Tacit knowledge becomes collective knowledge when it is shared between the
members of a community and embedded in institutions such as networks, teams,
clusters or “communities of practice”. It is expressed through routines, rules, shared
norms, conventions, regulations, laws and standards. Building social capabilities
therefore involves an extensive process of practice and learning by doing;
communication to others within social networks (families, communities, enterprises); and
embedding the knowledge in institutions (by creating or adapting rules, standards,
regulations, conventions). Technological capability is acquired by identifying
technological knowledge (codified or embedded in machines), learning the rules of
technology transfer (codifiable) and learning how to apply the rules, that is, how to adopt
new technologies, adapt them to local conditions and exploit international knowledge
spillovers (tacit) (Lall, 2000). In the same way, trade-related, industrial and environmental
capabilities are acquired by engaging in the activity, learning the rules of the game
(codified) and learning how to apply them effectively (tacit).
Source: Polanyi, 1967; Cohen and Levinthal, 1990; Lall, 2000; Nelson and Winter, 1982; North, 1990.
314. Tacit knowledge cannot easily be codified, but the accumulated experience of the
past and commonly shared understanding are embedded in institutions such a rules,
norms, traditions, conventions and regulations (Nelson and Winter, 1982). Furthermore,
institutions are required to transform an individual’s tacit knowledge into socially
provided knowledge. Networks, industrial clusters and communities of practices
mobilize and communicate tacit knowledge at the levels of the enterprise, sector and
economy. Hence, interpersonal, communication and teamworking skills are of central
importance since they lubricate interfaces between people within and between
organizations and assist in the generation and diffusion of knowledge.
315. Skills, knowledge and capabilities therefore have two major functions:
First, as human capital, they influence productivity and comparative advantages.
Formal education and training increase human capital and labour productivity.
Learning by doing in enterprises creates economies of scale as per unit production
costs fall with increasing productivity.
Second – and this is highly relevant for the virtuous circle – individual
competences and social capabilities function as a catalyst or driver of development
by increasing the speed with which new technologies are adopted and productivity
growth achieved (Mayer, 2001, p. 34) and therefore the speed of the exploration
and discovery of new markets and products.
This is demonstrated by empirical
studies showing that countries which import capital embodying new technologies
are more likely to improve productivity. Research further shows that countries with
McCartney points out that successful policy cannot simply be judged in terms of its static effects
and the degree to which markets are liberalized: “Once we consider economies as dynamic rather than
static entities and evaluate policy in terms of achieving dynamic not static efficiency, what we
conceive of as good policy becomes far more nuanced” (2004, p. 6). This suggests that there may be
trade offs between static and dynamic efficiency in the short or medium term.