Page 15 - The Atlas of Economic Complexity

a few bits of it. Society functions because its members form baseball, you must know how to catch, field and bat, but you
webs that allow them to specialize and share their knowl- do not need to know how to give financial advice or fix cavi-
edge with others. ties. On the other hand, to perform the function of baseball
We can distinguish between two kinds of knowledge: ex- player, knowing how to catch a ball is not enough (you must
plicit and tacit. Explicit knowledge can be transferred easily also be able to field and bat). In other words, in allocating
by reading a text or listening to a conversation. Yesterday’s productive knowledge to individuals, it is important that
sports results, tomorrow’s weather forecast or the size of the the chunks each person gets be internally coherent so that
moon can all be learned quickly by looking them up in a he or she can perform a certain function. We refer to these
newspaper or on the web. And yet, if all knowledge had this modularized chunks of embedded knowledge as capabili-
characteristic, the world would be very different. Countries ties. Some of these capabilities have been modularized at
would catch up very quickly to frontier technologies, and the the level of individuals, while others have been grouped into
income differences across the world would be much smaller organizations and even into networks of organizations.
than what we see today. The problem is that crucial parts of For example, consider what has happened with under-
knowledge are tacit and therefore hard to embed in people. graduate degrees, which in the US take four years of study.
Learning how to fix dental problems, speak a foreign lan- This norm has remained constant for the last four centuries.
guage, or run a farm requires a costly and time-consuming During the same period, however, knowledge has expanded
effort. As a consequence, it does not make sense for all of us enormously. The university system did not respond to the
to spend our lives learning how to do everything. Because it increase in knowledge by lengthening the time it takes to
is hard to transfer, tacit knowledge is what constrains the get a college degree. Instead, it increased the diversity of
process of growth and development. Ultimately, differences degrees. What used to be a degree in philosophy, split into
in prosperity are related to the amount of tacit knowledge several branches, one being natural philosophy, which later
that societies hold. split into physics, chemistry and biology and later into other
Because embedding tacit knowledge is a long and costly disciplines such as ecology, earth sciences and psychology.
process, we specialize. This is why people are trained for The Bureau of Labor Statistics’ Standard Occupation Clas-
specific occupations and why organizations become good at sification for 2010 lists 840 different occupations, including
specific functions. To fix cavities you must be able to identi- 78 in healthcare, 16 in engineering, 35 kinds of scientists –
fy them, remove the decayed material and replace it. To play in coarse categories such as “economists”, “physicists” and