The World Banks Special Session at Third Global Conference on Economic Geography June 29, 2011, COEX, Seoul,

Korea

Culture and Diversity in Knowledge Creation The Story of the Tower of Babel Revisited
Source: The Economist, January 1st 2005

Masahisa Fujita

Konan University / Kyoto University / RIETI

1. Introduction
Development of the Brain Power Society since the late 20th century Revolutionary development in ICT and Transport Technology

globalization of the world economy

Development of Brain Power Society

The major reorganization of Global economic political social systems (globalization / regionalization / localization)

a comprehensive theory of spatial economics in the Brain Power Society

incorporating

dual linkages
E-linkages: linkages through the production and transaction of (traditional) goods and services (the New Economic Geography) K-linkages: linkages through the creation and transfer of knowledge ideas information
weak microfoundation
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Transforming the East Asia From the World Factory to the Brain Power Society

The World Factory

efficient production network + stronger brain-power network and cultural interactions

a World Center for advanced production Innovation and

culture Brain Power Society

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2. Interacting Cultures

5 Source: The Kyoto University Museum

AC538: mission from Baekje ( ) introducing Buddism to Nara ( ) /Japan

6 Source: http://www.asuka-tobira.com/syotokutaishi/bukkyodenrai.htm

AC607: construction of Horyu-ji Temple in Nara

(the oldest original wooden building in the world)

under and other two carpenters from

Source: Wikipedia

Kongo Construction Company in Nara the oldest existing company in the world

3. Interacting Pop-cultures
Gal Industrial Revolution

AERA 2009.6.8

The Sanctuary of Gal Fashion 120 small shops

SHIBUYA 109

9 million customers annually

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China version

Korean version

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AKB48

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14 AERA 2010.05.03-

AERA 2010.05.03-10

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AERA 2010.05.03-10

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Charity Campaign in Osaka for Japanese Quake and Tsunami 12 Groups: 2PM FTISLAND

http://community.pia.jp/hanryu/2011/05/2011051601.html

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4. Why are culture and diversity important for innovation?

The fundamental resources in the Brain Power Society

Individual Brain Power Diversity in people brains in the society Synergy through the heterogeneous people brains

Diversity in cultures among different regions Synergy through the heterogeneous cultures

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in the cooperative process of K-creation the key factor: diversity of people

Ki
Common knowledge

Kj

Dij
differential K (individual K)

D ji
differential K

new ideas through the encounter of heterogeneous people and culture

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!
With three ordinary persons together, splendid ideas will come out.
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With three ordinary persons together, splendid ideas will come out.

Is it true in the long-run?

Ki Dij
differential K (individual K)

Common knowledge

Kj D ji
differential K

After three ordinary persons meeting for three years, no splendid ideas will come out.

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close cooperation of heterogeneous K-workers

(e.g. nominication in Japan)

antinomy
in the short-run through close communications synergy in the long-run Common knowledge heterogeneity synergy
the Tower of Babel
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Hint: The Story of

How to resolve this fundamental problem?

5. Culture and Diversity

The Story of the Tower of Babel revisited
The Tower of Babel

Source: The Economist, January 1st 2005

Engraving The Confusion of Tongues by Gustave Dor (1865), who based his conception on the Minaret of Samarra

Source: Wikipedia

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The Story of The Tower of Babel (Chapter 11 of the Book of Genesis) a united humanity, speaking single language people getting too uppity, challenging God God confounded their language, and scattered them upon the face of all the Earth (expulsion from the paradise of effortless communication) multilingual / multicultural world Question: Was it a punishment, or blessing in disguise?
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space / distance

barrier for interactions

creating diversity in local knowledge / culture

net effects in knowledge creation?

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6. A two-region model: Culture and Diversity

Ki Kj Cij

Kk Ckl

Kl k, l B

i, j A

(N persons)

region A

intra interactions

Inter-regional K-interactions

intra interactions

(N persons)

region B

i A
Ki

jB
Kl Cil
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This paper
Culture and Diversity in Knowledge Creation
Marcus Berliant and Masahisa Fujita, April 2011
RIETI Discussion Paper: http://www.rieti.go.jp/en/publications/summary/11040034.html

introducing two regions

Knowledge Creation as a Square Dance On the Hilbert Cube

International Economic Review 49, 2008, 1251-1295
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Production of new ideas / patents (at a given time)

in isolation (person i)
%
1

Explicit-K
(patentable)

aii = ni
new ideas produced per unit of time size of K i

(public information)

Patents

Tacit-K (kept alone)

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 in meeting of two persons in the same region (, j A ) i

Ki
Differential K of person i Common Knowledge

Kj
Differential K of person j shared by i and j

aij =

1 d 2 (nij ) 2

1 c (nij ) (n d ) 2 ji

%
1

Explicit-K

Patents (public inf.)

Tacit-K

where the weight on the common-K (0 < < 1 )

i in meeting of two persons in the different region ( A, j B )

aij = 2 (n )

1 d 2 ij

c (nij ) (n )

1 d 2 ji

0 < <1

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linearly homogenous K-production function

normalization

Ki
d nij

d c nij = nij + nij + n d ji

Kj
nd ji

c nij

nij the share of d : m = ij each component ij n

c mij =

c nij

n ij

md = ji

nd ji n ji

when

d ni = n j mij = m d = m d (symmetric K-structure) ji

aij 2 ni

(1 2m d ) (m d )1 = 1 md g (m d )

the normalized : K-production function

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md = where

the share of differential knowledge

Productivity in intra- and interregional K-interaction d d symmetric case: mij = m ji = m

aij 2 ni
K-productivity

the Bliss Point

B

when i A, j A when i A, j B

g(m)

g(m)

mI 0 m
J

0.5

m : the share of

differential K
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1 2

Before the expulsion from the Paradise of effortless communication

aij 2 ni
K-productivity

g(m)

when i A, j A when i A, j B

the equilibrium at the Paradise (2N people)

g(m)

mI 0 m
J

* aut

0.5

m :

the share of differential K

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2+

=
1 C 2

1 2

Phase 1: Just after the expulsion (2N

N in A, N in B)
when i A, j A when i A, j B

K-productivity

g (m)

g (m)

d mAB

mI mS mB 0.5

mJ

m* aut

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d g (m d ) = g (m AB ) > g (maut ) Phase 2: with inter-regional interactions,

K-productivity

g (m)

when i A, j A when i A, j B

g (m)

d mAA

d mAB

mI mB 0.5 m

mJ

m* aut

mS

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( = the proportion of time for intra-interactions)

After the Confusion of Tongues

Ki

Kj Cij

Kk Ckl

Kl k, l B

i, j A

region A
(N persons)

intra interactions

Inter-regional K-interactions

intra interactions

region B
(N persons)

i A Ki

jB
Kl Cil
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d S d Phase 3: staying atm = m andm AB = m B (The New Eden) (achieving a high K-productivity through diverse cultures)

K-productivity

The New Eden g (m)

when i A, j A when i A, j B
I

the original Paradise

g (m)

maut

m =m j A, j B j iA
d ij S

m =m j A, j B j iB
d ij B

m I 0.5

m
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An Example of the New Eden ~ ( = 0, = 0.606, = 0.245, C = C = 32, N = N * = 100 )

0.55

0.50

g(m)
0.45

0.40

0.35

g(m S ) = g(m B )

0.30

K growth rate at the New Eden

g(m)

0.25

K growth rate at the autarky

= 2.97

0.20

0.15
* g(maut )

0.10

0.05
* maut

mS
0.10 0.15 0.20 0.25 0.30 0.35 0.40

mB m
0.45 0.50

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0.05

Tentative Conclusion about The Story of The Tower of Babel Expulsion from the paradise of effortless communication Multilingual / multicultural world Was it a punishment, or a blessing in disguise?

Answer: It could have been a blessing in disguise.

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7. Why is Japan in long stagnation ?

Post WW

high growth

transition

high-tech growth

IT Irevolution T
globalization

Capitalism with mass-production

Brain Power Society

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Japanese ranking in terms of per capita GDP among OECD countries

2nd

18th

19th

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Per capita GDP ranking for OECD countries ($US)

1Japan 2Switzerland 3Luxemburg 4Norway 5Denmark 6United States 7Germany 8Austria 9Sweden 10Iceland 11Netherlands 12Belgium 13France 14Canada 15Australia 16Italy 17Finland 18United Kingdom 19Ireland 20Spain 21New Zealand 22Greece 23Portugal 24Korea 25Mexico 26Hungary 27Czech Republic 28Turkey 29Slovakia 30Poland 1993 35,008 34,698 34,697 27,147 27,101 25,374 24,691 23,983 22,944 22,786 22,112 21,993 21,897 19,340 17,609 17,413 17,229 16,675 14,234 12,986 12,315 8,851 8,649 8,194 4,592 3,824 3,598 3,033 2,511 2,392 1Luxemburg 2Norway 3Switzerland 4United States 5Denmark 6Ireland 7Japan 8Iceland 9Sweden 10Netherlands 11United Kingdom 12Finland 13Australia 14Germany 15France 16Belgium 17Canada 18Australia 19Italy 20Spain 21New Zealand 22Portugal 23Greece 24Korea 25Czech Republic 26Hungary 27Mexico 28Poland 29Slovakia 30Turkey 2002 50,444 41,824 38,308 35,945 32,323 31,120 30,837 30,345 27,279 27,243 26,605 26,008 25,560 24,446 24,388 24,305 23,465 21,768 21,061 16,494 15,513 12,343 12,217 11,570 7,346 6,552 6,300 5,128 4,537 2,621 1Luxemburg 2Norway 3Iceland 4Switzerland 5Ireland 6Denmark 7United States 8Sweden 9Netherlands 10United Kingdom 11Finland 12Austria 13Australia 14Japan 15Belgium 16France 17Canada 18Germany 19Italy 20New Zealand 21Spain 22Greece 23Portugal 24Korea 25Czech Republic 26Hungary 27Slovakia 28Poland 29Mexico 30Turkey 2006 79,565 63,961 55,517 50,469 48,289 47,716 41,574 39,535 38,577 37,310 37,276 37,216 36,592 35,650 35,585 35,150 35,073 33,703 30,341 27,146 26,150 20,252 17,474 16,470 12,133 10,931 8,778 7,854 7,176 4,954 1Luxemburg 2Norway 3Switzerland 4Denmark 5Ireland 6Netherlands 7Iceland 8Sweden 9Finland 10Austria 11Australia 12United States 13Belgium 14Canada 15France 16Germany 17United Kingdom 18Italy 19Japan 20Spain 21Greece 22New Zealand 23Portugal 24Czech Republic 25Korea 26Slovakia 27Hungary 28Poland 29Turkey 30Mexico 2008 117,967 94,763 64,885 62,054 59,944 53,094 52,568 51,954 50,931 49,527 48,049 47,186 47,151 44,950 44,550 44,519 43,237 38,455 38,371 34,971 31,174 29,693 22,929 20,719 19,115 17,566 15,363 13,861 10,270 10,183

http://www.esri.cao.go.jp/jp/sna/h20-kaku/percapita.pdf

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Opening of Shinkan-sen in 1964

Tokyo overconcentration Tokyo mono-culture

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Japan and Regions

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Source: The ECONOMIST June 11th 2011

Decentralization
regional diversity industries R&D culture

Brain Power Runaissance

the Age of Brain Power Society

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Source: http://www.kampoo.com/map/south_korea_map_dosigundo_japanese.pdf

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High-speed Railway in China

Source: International Herald Tribune June 23th 2011

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achieving East Asian Renaissance together based on diversity

contributing to the World Development

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8. Closing words borrowed from Lsch(1940)

Die Ramliche Ordnung der Wirtschaft
Epilogue. On Space
If everything occurred at the same time there would be no development. If everything existed in the same place there could be no particularity. Only space make possible the particular, which then unfolds in time. Only because we are not equally near to everything; only because everything does not rush in upon us at once; only because our world is restricted, for every individual, for his people, and for mankind as a whole, can we, in our finiteness, endure at all. - - Space creates and protects us in this limitation. Particularity is the price of our existence. - - -

August Lsch in 1935 (15 October 1906 30 May 1945)

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 Thanks