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Complex equation

Recipe for entering the knowledge society has more ingredients than one imagines, according to a European report

brazWhat is the recipe for constructing a society in which innovation is an inseparable part of people’s economic and day-to-day environment? The German economist Peer Ederer, a professor from Zeppelin University and a director of the Lisbon Council and Deutschland Denken research groups, has developed a methodology that tries to organize a reply to this question. In his assessment, the ingredients are far from being restricted to the high levels of schooling, to setting aside resources for science and technology, or to the companies’ efforts to gain competitiveness. Ederer sustains that the equation is far more complex and depends on other fundamental requirements, which range from the participation of parents in the education of their children to the capacity for giving jobs for the human capital whose training the nation has invested in. The study, entitled “Innovation at Work: the European human capital index”, applied the methodology to the 13 countries of the European Union and established the ranking of the bloc’s nations according to their capacity for participating in the so-called knowledge society, the one in which technological changes and innovations occur at such as swift pace that, besides the traditional factors of production, such as capital, land and labor, it is fundamental to manage people’s knowledge in an intelligent way.

Ederer’s index has four main components. “Each one of them represents one aspect of how human capital contributes towards generating economic activity”, he explains. The first of them takes into account the efforts of a nation to train its citizens or to perfect its workforce, which covers everything from the scope of formal schooling, which goes from the first grade to higher education, to the training that companies give their employees and the participation of parents in the education of their children. This set of efforts corresponds to human capital, which undergoes a process of obsolescence, which is also recorded. The second component measures the effective good use of human capital. There is no point in training brains and see them migrating to neighboring countries that offer better chances for work – a well-known problem of the developing nations that also applies to less competitive countries of the European Union. German physicians who have migrated to Nordic countries and French professionals from the area of finances attracted to institutions of the United Kingdom are some of the examples mentioned by Ederer.

Another component assesses the productivity of the knowledge, measured by the ration between the country’s gross domestic product and the stock of human capital. Finally, takes into account the demographic changes. Nations with negative population growth may have problems in remaining competitive in the forthcoming generations.

For Andre Tosi Furtado, a professor from the Scientific and Technological Policy department of the Geosciences Institute of the State University of Campinas (Unicamp), the study disclosed by the Lisbon Council errs for the lack of a more in-depth methodological detailing. “Clearer explanations about some components are missing. For example, what interpretations should be given to the fall in the productivity of human capital? The paper is laconic in this regard. The second component of the index on the occupation of human capital is obscure. There isn’t a clear explanation”, he says. Even so, Furtado sees relevance in the proposal. “The usefulness of an indicator like this is making international comparisons. A similar index, also with various components, is used by the European Community to measure innovation”, he explains.

Although the European Union has established officially the target of becoming “the most dynamic and competitive knowledge-based economy in the world”, Ederer’s study shows that the situation is unequal and the balance of power is moving on the continent. Featuring at the top of the ranking is Sweden, followed by Denmark, United Kingdom, Austria and Holland. In the second group are Finland, Ireland, France and Belgium. In last place are Spain, Portugal, Germany and Italy.

The leading position of the Nordic countries is explained by their good performance in all the questions – in addition to legislations that impose a greater participation of the family in the education of the children. In Sweden, for example, fathers and mothers share between themselves the enjoyment of leave that can last up to a year and a half after the birth of a child. The government pays 80% of the salary. It is also possible to take leave of absence to look after a sick child.

Finland has the best educational system in Europe. But it is surpassed by Sweden and Denmark in attention to childhood. The two countries, incidentally, are prodigal in taking advantage of their human capital: 63% of the national knowledge base is in activity in Denmark, against 55% in France and 52% in Italy. France shows a good performance in some questions, such as the productivity of human capital, but suffers with a relatively low endowment of human capital per capita and makes incomplete use of the existing potential. Ireland and Spain, although distant from the first group, stand out for the increase in the use of qualified labor in the last two decades, which, according to Ederer, is at the same time a cause and an effect of the rapid economic growth that they have been enjoying. The ugly ducklings of the survey are Italy and Germany. With piffling demographic growth rates, they are flirting with stagnation: they will be responsible for 70% of the decline of the work force in Europe in the next 25 years. Germany has an endowment of human capital, but its productivity has fallen more than in the neighboring countries. Germans are slow to go into the labor market. On average, they reach the master’s degree level at the age of 28, one of the highest levels in Europe. “If Italy and Germany continue to ignore the dimensions of human capital in their public policies, their economic power is going to move inexorably from the center to the periphery, reversing a hierarchy that has been in force for centuries in Europe”, says Ederer. “The European Union is engaged in a race against China and India in which our capacity for developing innovative products and service is going to determine our ability to generate the necessary wealth for preserving our social well-being for the new generations”, explains the researcher.