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Tuesday, May 18, 2004

DRAFT - Research Proposal - DRAFT 

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Research Proposal
May 2004
Francisco Toro

Tentative Title:

Making Technology Policy in the WTO-era: Is the multilateral rule-making system learning about innovation?

"Decision-making in public policy is no longer the exclusive act of governments, as other actors are increasingly sharing the responsibilities and often times leading the process. These new patterns of decision-making in economic policy areas consist of negotiations among many actors along 'policy networks', substituting the old hierarchical patterns in which states made decisions centrally. "
Werner Corrales

Research aim:
The proposed research will identify the barriers to the adoption of targeted technology policy instruments posed by World Trade Organization rules, and will analyse the dynamics of the WTO rule-making system on issues relevant to the adoption of such policies. The research will focus on the way participants in the WTO rule-making system understand the role of technology in economic development, and how this understanding shapes their conceptualization of national interests.

In contrast with neorealist approaches that assume problems are well-defined and state interests are readily apparent to actors in the international arena, the proposed research will explore how problems come to be understood and how concepts of national interest come to be formed. Focusing on the interstice between belief systems and technical knowledge, the research will explore how policy actors assimilate and deploy new information. It will question how such information is aggregated into an understanding of state interest, and how such learning processes affect the overall dynamics of the WTO rule-making system with regard to technology policy.

Drawing on the complementary literatures on Advocacy Coalitions and Epistemic Communities, the research will first analyse policy actors' causal and normative beliefs about the policy problems they face (cite, cite, cite, cite.) An important goal, will be to analytically describe (map) these belief systems, drawing out the links between policy actors' understanding of the key relationships in world trade and their policy preferences. The research will seek to explain the dynamics of the WTO rule-making system as a function of such belief systems, and of their evolution over time as a result of a process of policy learning (Kingdon).

The overall goal of the proposed research will be to develop a sophisticated understanding of the WTO rule-making system that emphasizes the role of knowledge and learning as motivating factors in the process of policy change. (Schlager and Blomquist.)

Research context:
For a generation now, economic researchers have increasingly focused on innovative capacity as a critical determinant of national economic performance. Starting with Freeman and Lundvall (cite), scholars have focused on the National System of innovation as a key explanatory factor for economic performance. Researchers working within this tradition have put forward increasingly sophisticated formal alternatives to the standard neoclassical model of economic development and growth, emphasizing the role of innovation and technological change. (Metcalf, Silverberg)

Though first formulated to account for the performance of developed economies, (cite a Swede) the innovation system approach was quickly adopted by scholars interested in the problem of development. A growing number of studies persuasively credit firms' innovative capacities and the institutional structures that support them for the superlative economic performance of several of Asia's Newly Industrialized Countries (Lall, Kim, cite.) Others have used the insights of the NIS framework to account for the relative under-performance of Latin American economies since the 1970s (Katz, Cassiolato.)

The innovation system approach sees firm competitiveness as a factor of the knowledge intensity and innovative capacity of each firm. Innovative capacity, in turn, is seen as largely determined by the institutional context firms operate in. Innovation system scholars argue that firms rely on a multiplicity of linkages to acquire the information and knowledge they need to innovate. These include knowledge-rich forward and backward linkages, as well as interactions with universities and public research institutes, financial institutions, government regulatory agencies and near-by firms. (Mytelka, Metcalf, cite.)

A series of policy proposals stem logically from this understanding of competitiveness and development. In contrast with the standard recipes arising from the neoclassical tradition, innovation system scholars do not believe that market forces, on their own, can launch developing countries on a path to sustainable and sustained development. Insteady, they argue that states must implement active and selective economic policy instruments designed to foster firms' innovative capacity.

In the developing world, such policies are broadly understood to include measure to ease and hasten the transfer of new technologies from developed to developing country firms. The policy mix also includes measures to foster dynamic networks of small firms through local content requirements on foreign firms, as well as technology-transfer requirements on foreign entrants, targeted R&D subsidies and other industry-specific technology policies. As mentioned, some variant of this policy mix was implemented in each of the Asian NICs.

Many obstacles stand in the way of successful implementation of such a policy mix in the developing world today. The proposed research will focus on one: the trade regime set out in World Trade Organization rules.

Trade analysts working from the Innovation System school have warned with increasing vehemence in recent years that significant portions of the international trade regime managed by the World Trade Organization is incompatible with much of the policy agenda outlined above. The implication, then, is that the WTO regime constitutes a structural impediment to the development of the world's poorest countries.

Many parts of the WTO regime have been questioned in this regard. The TRIMs agreement is designed to "prohibit discriminatory or trade-restricting performance requirements (Corrales p.23), effectively barring access to a series of policy tools that states might otherwise use to increase the knowledge intensity firms' forward and backward linkages. The Agreement on Subsidies and Counterveiling Measures bans all industry or firm specific subsidies, closing the way on policies that are particularly important for enterprise development, clustering and network policies, technology, knowledge and innovation policies, as well as policies for enhancing marketing capabilities. (Corrales 24) In a similar vein, the Trade Related Intellectual Property Rights agreement closes spaces for some R&D subsidies, the 1994 GATT agreement imposes restrictions on the use of public procurement as policy instruments for innovation, and the Agreement on Agriculture restricts subsidies as well as other mechanisms to provide incentives for firms to improve their performance. Moreover, the current negotiations on the so-called Singapore Issues (Investment, Competition Policy and Trade Facilitation) threaten to introduce restrict developing countries' spaces for implementing critical policies.

Taken as a whole, then, the WTO regime appears to substantially restrict the spaces for policy-making available to developing countries as they attempt to implement an innovation-system based package of policy reforms. However, the WTO regime must not be seen as a static, unchanging entitity. In fact, the current round of multilateral negotiations has seen considerable debate on many of these issues as they impact the developing world, under the broad rubric of Special and Differential Treatment (SDT.) The 2001 Doha Declaration pledges to make SDT provisions "stronger, more precise more effective and more operational." (IISD 2003) Some observers believe the SDT debate is the key to enshrining new rules that expand the menu of technology policy options available to developing countries.

Unless the Doha Round yields a substantially expanded scope for SDT that allows for active technology policy interventions, developing countries are likely to face substantial constraints in their ability to implement development-oriented technology policies. Proponents of the innovation systems approach therefore have powerful reasons to study the rule-making process as it unfolds in the Doha Round trade talks. At stake is the possibility of adopting the policy agenda suggested by the innovation system approach.

The dominant strand of research into decision-making in Multilateral Negotiations stems from the Neorealist tradition of international relations. In this view, negotiators seek to apply their country's power to advance their national interest. The model of the individual as a rational, maximizing agents with perfect information and unlimited computational abilities is borrowed from the canon of neoclassical economics.

Designed largely to explain matters of state security, the neorealist approach assumes that states' interests are readily apparent to policy actors. The questions of agenda setting and interest formation are not seen to be in need of explanation. But there is good reason to believe that in technically complex issue areas marked by uncertainty about the likely outcome of policy, it cannot be assumed that actors know what is in their state's best interest (Burstein). Arguing that the multilateral trade regime is marked precisely by such technical complexity and uncertainty, the proposed research will adopt an alternative approach centered on identifying the process whereby actors in the WTO rule-making system come to identify their states' interests.

In contraposition to the neorealist approach, the proposed research will draw on two separate but related strands of the political science literature:

1-The Advocacy Coalition approach sees actors as instrumentally rational, but draws more heavily on work in cognitive and social psychology than in economics. The framework "does not assume that that actors are driven primarily by simple goals of economic/political self-interest." (Sabatier 98 -109) Instead, it focuses attention "on the inner world of individuals [and on] the structure and content of their belief systems." (Schlager and Blomquist 96, p. 661) Instead of assuming individuals' preferences, AC analysts develop and test empirically verifiable hypotheses concerning actors' belief systems.

The AC framework attempts to account not just for belief systems, but also for how they change over time. Sabatier and Jenkins-Smith, who first developed the framework, emphasize the importance of adopting a time horizon of a decade or more in order to capture key shifts in policy dynamics. Following Kingdon (1984), advocates of the framework are especially concerned with "policy learning" - i.e. the way actors in the policy system adapt and, less often, change their belief systems to incorporate newly discovered technical and scientific knowledge.

2-The Epistemic Communities Approach (ECA). Unlike the ACF, the Epistemic Communities Approach was originally developed to account for instances of international cooperation, particular on scientifically or technically complex matters. On particularly contested areas of policy, the ECA argues, marked by uncertainty and plausible claims to technical expertise by technical elites (Sebenius) state actors may have no direct or readily apparent way to know how best to conceptualize the problems at hand, let alone judge what is and what is not in their state's interest. When faced with such problems, decision-makers will seek to "discover" their interest by turning to scientists and "experts" for interpretation. On given areas of technical expertise, groups of experts who share particular causal and normative beliefs will form Epistemic Communities - groups brought together by a shared set of beliefs (cite definition)... As Haas (1992) argues, "control over knowledge and information is an important dimension of power."

There is important conceptual overlap between the concept of an epistemic community and that of an advocacy coalition. The advocacy coalition concept is certainly broader, including not only scientific and technical experts but also citizen activists, journalists, and state decision-makers. With their privileged claim to be able to generate scientifically valid statements about the world, epistemic communities might be considered the technical knowledge kernels of any advocacy coalition.

The concepts were developed to explain different levels of policy making. Advocacy coalitions are normally cited within a national policy-making context, whereas epistemic communities are transnational in nature and seek to explain interactions between states rather than within them. What's more, the notion of competition between coalitions is a basic tenet of the advocacy coalition framework, while it is absent from much of the research into epistemic communities.

Due to the peculiarities of the WTO system, the proposed research will seek to include aspects of both the ACF and the ECA. Although the WTO is a multilateral organism that reaches decisions on the basis of state-to-state negotiations, many of its rules concern matters traditionally governed by national economic policy. Domestic political actors - actors that may well form part of given advocacy coalitions in the national context - have much at stake in the outcome of WTO negotiations.

Based on a highly complex and contested explanatory model developed by academic economists, the WTO accords is certainly marked by the uncertainties and plausible claims to technical expertise. Yet it's clear that not all of the economists and experts at work on the system share a set of causal and normative beliefs about the role of technology and innovation in economic development. In other words, there are a multiplicity of expert-networks working on and shaping the debate about the international trade regime. Instead of the domain of a single Epistemic Community, the multilateral trade regime is an arena of competition between Epistemic Communities.

Focused as they are on the "inner world" of policy actors, both the ACF and the Epistemic Communities Approach see persuasion as an important mechanism in the policy process. The frameworks drive analysis far from the realm of perfect rationality and optimizing decision-makers prevalent in traditional economic and International Relations scholarship, and towards an approach critically concerned with actors' understandings of the causal mechanisms at work in their policy realms, and how those understandings change over time. (Burstein)

The Advocacy Coalition framework holds that in order to make the policy, coalitions need to win the debate first. What it means to "win" such a debate, what the necessary and sufficient conditions for a coalition to be successful are subjects of intense debate in the literature. Sabatier advances two specific hypothesis to account for policy change. The first - that policy change is unlikely so long as the advocacy coalition that instituted the current policy remains in power within a jurisdiction - is not directly applicable to a transnational negotiating system devoid of a central state jurisdictional authority. The second - that policy change is unlikely in the absence of significant perturbations exogenous to the policy subsystem - will be examined in detail.

But there is no reason to think this is the only, or even the main, avenue for policy change. A number of other hypothesis have been advanced. Hall (1993) compares the theoretical bases of given economic policy regimes to scientific paradigms, and explains certain processes of "persuasion" in policy-making as stemming from Kuhnian paradigm shifts in underlying causal models. Freudenburg and Gramling (2002) hypothesize that, in certain circumstances, a coalition's initial success in dominating a policy-subsystem and implementing its policy-preferences may set the stage for a backlash - increased mobilization and organization on the part of opposing coalitions - and may undermine the long-term prospects for the coalition's policy agenda, a process they describe as allogenic succession.

By tracking actors' beliefs as they move through the Doha Round negotiations, the research will seek to adjudicate between these competing theoretical accounts of the determinants of policy-change. How do participants in the WTO rule-making system assimilate new technical information into their causal understanding of the link between innovation and development? How open to falsification are their understandings of the underlying causal mechanisms? What role does persuasion play in the evolution of policy-actors' belief systems? Is there an identifiable backlash against the policies of the dominant coalition? Is there reason to believe that a process of allogenic succession could be in place?

The proposed research will adopt qualitative methods to question the WTO rule-makers' causal and normative beliefs about the role of technology and innovative capacity in economic development. It will track the changes in these belief systems over time though a research strategy well developed in the literature on Advocacy Coalitions.

The research methodology developed by Advocacy Coalition Framework advocates will be applied. Relying on interviews of key informants, Lickert Scale surveys designed to identify and measure actors' causal and normative beliefs, and textual analysis of policy actors' published statements on the policy matters at hand.

Though largely qualitative in nature, the ACF has been consciously designed to meet scientific standards of falsifiability. The approach relies on qualitative research methods designed to capture (map) policy actors' understandings of the key causal mechanisms in the policy areas they are engaged in. Three data-gathering strategies are dominant in the literature:

1-In depth interviews of policy actors using open or semi-open questionaires. (Cite)
2-Surveys of policy actors, often using a Lickert Scale methodology to capture causal beliefs. (cite)
3-Textual analysis of documents and/or statements by policy actors that set out to synthesize their understanding of the policy-dynamics at work. (Cite.)

The proposed research will employ all three strategies. It will begin by identifying a small nucleus of key informants active in the WTO rule-making system, and compiling a broader list of policy actors for subsequent study. A Lickert Scale survey will then be produced to examine actors' causal beliefs about the role of technology and innovative activity in economic development.

As the Doha Round negotiations advance, follow up surveys will be administered to track the evolution in policy actors' conceptualizations of the key causal relationships in economic development. The proposed research will attempt to conceptualize and describe the nature of the policy-learning at play.

The proposed research will also analyse policy actors' causal beliefs as revealed in documents and statements made by key policy actors, and will attempt to discern changes over time in policy actors' public positions on matters relevant to technology policy.

Overall, the research will provide new insights into the WTO rule-making system's impact on nations' abilities to implement technology policies, and describe the systems evolution through the crucial current round of multilateral negotiations.

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