Arquivo de etiquetas: Inclusão Social

Human Rights and Gender Equality IV

23/04/2015 Pedro Pereira Leite Deixe o seu comentário

Social inclusion means prosperity that is widely shared and we’ve noted that large groups in society, because of the forces of history. Cultural exclusion, violence have entered the 21^st century in situations that are often extraordinarily difficult and challenging. We know that women in many parts of the world continue to face. Major barriers to their economic participation, their prosperity, their ability to prosper. Young girls have faced the difficulties of achieving and gaining access to the education. The health that they need for their own well-being as future adults and future citizens in their country. We know also that economic forces putting aside for the moment gender and ethnic divisions. Are also playing a role in widening inequality and undermining social inclusion in many parts of the world. I’d like to focus for a few minutes on the economic and political drivers that are causing larger and larger class differentiation within societies.

We have at least three fundamental forces that have been playing a role in widening economic inequalities in the United States, in many European countries, and in many of the emerging economies. Around the world. One is the rising gap between high-skilled and low-skilled workers that has resulted from forces of globalization. A second phenomenon is changing technology that is having a differential effect on different Income groups, different classes within society. And the third force is the political system often amplifying the widening inequalities caused by globalization and by technological change. So. Perhaps the useful starting point to understand these changes is a frequently viewed graph. This case for the United States, but one would find similar though perhaps not as stark conditions like this in other places in the world. This is a graph of the premium in income, the extra income, that is earned by college graduates in the United States, relative to high school graduates. So take the population, the labor force that has a four year college degree or higher, could include those with an advanced degree. Look at the earnings of that group. And then compare it with those that have a high school diploma, but not more. And this is what we observe in the case of the United States, from 1973 until the recent decade. What you observe is that for all of this period, having a higher degree, not surprisingly, means more income.

In 1973, a college grad had a 30% premium relative to a holder of a high school diploma as the top level of educational attainment. That actually dipped. During the 1970s so that that premium fell to under 25%. But then from roughly 1979 onward, we see in this graph, that the college wage premium, as it’s called has soared. And has increased to around 45% wage premium compared with a high school degree holder. It’s interesting that, that increase started around 1979, because that’s also a period when many powerful forces of globalization linking together the high-income world and the emerging economies really started to develop.

So this is a, a puzzle for us. Why did the Gap between those with higher education and those with a high school diploma suddenly widen. What happened? And, I would argue that the three forces that I mentioned, globalization, technological change, and politics have all played an important role. How would globalization work? Well, consider the US suddenly, becoming a trading partner with countries like Mexico or Korea, or Taiwan. Remember those Asian Tigers. Which were the first of the emerging economies in Asia to achieve rapid, economic growth by dint of their export-oriented strategy relative to the U.S. and European market. Or consider the fact that soon after, 1979 China opened its economy to international trade. And opened its border regions in particular to host foreign Companies that would locate in China to produce goods, some of our favorite electronics products for example, to be assembled in China and then reexported to the US and Europe. This kind of globalization is economic integration. Made possible by improvements in technology such as mobile phones, and computer assisted design and manufacturing. Containerization and radically lower transport costs, suddenly put US workers and Chinese workers into the same labor market. Now, the Chinese workers at the time made much less than $1 per hour whereas American workers might have been earning $10 to $20 an hour. And yet suddenly both sets of workers would have the same technologies at their disposal.

The Chinese workers, after all, would be working in factories using the very machinery, the specifications, often literally the same companies, as the American workers. And so suddenly, the relatively low-skilled Chinese workers, may, maybe with a. A high school education would be using machinery to put together electronics products. Or to cut and sew apparel. Or to make plastic objects, extrusion objects and components of vehicles. That American workers had been employed to do up to that point. This joining of the labor market through the internationalization of the production technologies and the role of multinational companies in bridging. Between the high wage US market and the low wage emerging economies, transformed the labor market globally. In the US, there began a quite significant decline of jobs in traditional manufacturing sectors. The apparel sector, for example, was displaced. Whether to Mexico or the Caribbean, or Honduras, or to East Asian low-wage sites. The electronics assembly industry which used to be part of an integrated electronics operation. Was separated from the R&D base or the the production of the semiconductors themselves so that the relatively lower skill part of the work of assembling. The mother boards of electronics, devices, and household appliances. Could be moved to China, or moved to Vietnam, or to places where the wages were a tenth or a twentieth or a fiftieth of those that might prevail in the U.S. Suddenly the downward pressure on the wages, especially of the relatively lower-skilled workers in the United States. With their High School diplomas suddenly facing competition from abroad became intense. And I think that’s why 1979 is this turnaround time. Deng Xiaoping came to power in China in 1978, threw the Chinese economy into openness and market institutions. And while that took a process of three decades subsequently to build China as the great workshop of the world.

The dynamics of an integrated global market began to really play a powerful role at that point. And we know in the United States that. The US just about time of 1979 had the peak of its employment in the manufacturing sector, around 19 million workers. And from 1979 onward there has been a significant decline. Of manufacturing sector employment. A loss of jobs. Partly a displacement to lower wage economies. For those low wage economies, a huge benefit. A key part of the rapid economic growth that is lifting people from abject poverty. By no means a bad thing. But with a real impact, in the high wage labor markets, putting downward pressure on the wages of the relatively lower skilled workers. Now even if it weren’t for globalization, another force certainly is at play. And that is the information revolution, and all that it signifies. Meaning a progressive automation of many production processes, another force leading to higher productivity, but fewer jobs of the traditional sort. In many key sectors. So put China out of mind from the US perspective for a moment. And just think about how technological change has re-made the shop floor of major manufacturing sectors. Automobiles probably being among the most dramatic. I’ve toured many automobile factories. Some absolutely stunning and amazing. One in Japan of Toyota where we entered a very, very large assembly line completely clean. Completely quiet. And almost no workers around. Vehicles were going their merry way until you looked closely, no drivers. Because the vehicles were being directed automatically to deliver components from one place to another. And the whole assembly line all the way down this large cavernous hall. Robots. Very clever. Very sophisticated seemingly tireless robots with the great precision. Reaching into a basket, taking a component, putting it just where it should be on the automobile chassis coming down the assembly line. Next automobile, often of a different make, and the robot knowing through, of course, its programming. To put that component in a somewhat different place on the chassis of a somewhat different vehicle. All remarkably automated. The robotics are one of the most visible, remarkable aspects of the information technology revolution and the computerization revolution. That we are enjoying in the 21^st century. It’s raising productivity dramatically it is of course lowering the costs of many, many goods and services. That kind of automation even when it’s not literally a robot handling a physical product. But is simply a computer making massive payrolls or processing orders that thousands of clerks might have done in an earlier day, is part of a modern high productivity economy. But, just like the off-shoring of jobs. It’s taking a toll on workers who used to do exactly that kind of labor. And so technology also drives income differences across countries. And we are seeing the combination of globalization and technological change, in an intertwined way, putting a special pressure on lower skilled workers. We can’t even separate these two phenomena with any precision, though you can image economists have written hundreds of articles, I’ve added a few myself. To the debates how much is globalization, how much is technological change. Well since globalization itself is enabled by the same technological change making a clear difference between the two is not possible analytically. But what is discernible is the fact that this rising wage premium has absolutely come from both of these phenomena. Now, I’ve stressed that there is a third factor that is part of this story, and that is politics. And this is extremely important for us to understand.

Market forces alone would widen inequalities. The wage premium is a real phenomenon coming from the combination of globalization and technological change. What you see in this picture of the income levels by a more detailed classification of educational attainment. Showing that those with an advanced degree have had the biggest gains of earnings. Those with the bachelor degree next. Those with some college, high school, and no diploma basically flat, or even declining income levels, but something more has been at play. When that market inequality starts, starts to rise, politics then enters the scene. In some political systems, government forces would lean against this by saying, well lower skilled workers are facing a problem. They need some extra help. Maybe some new job training. Maybe a cut in their taxes. Maybe added family benefits. High-skilled workers are receiving a bonanza, both because of technological change and because of globalization. And maybe they should receive fewer benefits or pay higher taxes. And in that way, government would, as we say, lean against the wind. If market forces are tending to widen inequality, political forces would tend to narrow it. But in some places, and my own country, the United States is definitely one, political forces amplified the market forces, took a widening inequality, and made it even more. Of a steeply widening inequality as a result of politics, rather than helping the poor and perhaps taxing the rich to do so. In the Unites States, the poor lost even more of their social support as government cut back. And the rich gained government support as their taxes were reduced. Rather extraordinary. And one can even date this, I’ve argued, though some disagree with me, to a specific political event and that starts in my opinion on January 20th, 1981. When Ronald Reagan became President of the United States. And came into office reflecting various political forces which said, that they should implement the libertarian philosophy. Get government out of things. And reduce taxes, reduce social support. The libertarian view does not agree with the basic needs philosophy that everybody’s needs should be represented. The libertarian philosophy more takes the point of view that government should not play a role, that taxes should be cut. That’s argued both on a philosophical base that freedom and liberty are the number one goal. It’s argued on a pragmatic base that, that will free up the dynamism of the entrepreneurs in society and through a kind of trickle-down effect, make everybody better off. But whatever it’s argued in the US, starting in 1981, and really continuing since that time, the rich and powerful have had advantages of politics. Their taxes have been cut. Their even as their wealth has soared they have faced a diminishing share of their income being paid in taxes. Various restraints on their behavior, whether it’s cultural norms that say don’t take so much money or whether it’s practical limitations of how companies operate, have been relaxed. Deregulation in the financial markets for example, enabling the top management of the financial system to pay itself mega bonuses and massive compensation. And so in addition to the market forces suddenly in the United States as well starting in the 1980’s, the incomes, the total compensation package of the. Top management of the big companies, and especially on Wall Street and in the financial companies, began to soar. And so the United States faced not only downward pressures on the low-wage workers, but upward pressures at the very top, what became known in the American. Political parlance as the top 1%, though sometimes it’s even a fraction of that top 1%. The income levels soared, and this is illustrated in a graph showing the ratio of compensation of Chief Executive Officers, CEOs in American companies to average workers. What you see is that that ratio was maybe 10 or 20 times higher in the 1970s, but suddenly, the compensation packages went out of sight. The regulatory constraints, the cultural norms were, went in the direction of saying pay the top everything, let them take huge amounts. And suddenly, these CEOs were earning hundreds of times the income of the workers. And the result is shown in a curve that illustrates the income share taken by the top 1%. Of America’s richest households, the blue curve. And what you see is over the course of a century, the income share was between 15 and 20% up to the time of 1929 when the great depression started. The new deal era of the United States came in, government cracked down on a lot of abuses in the financial sector, for example. And the income share at the top went down sharply. Tax rates faced by the top went up sharply. The income share of the top 1% was around 10% of total income between 1940 and the late 1970s. Still pretty good. 1% of the households taking 10% of the total household income. But then the curve starts straight up and it’s not just market forces doing that because this isn’t observed in this extreme way in almost any other country in the world. It’s politics amplifying the market forces. Reducing the taxes paid at the top as President Reagan did. And as was subsequently confirmed by later administrations. Reducing the political constraints and the regulatory constraints on top managers to take home big take home pay. Suddenly the top income share in the US, the top 1% were taking home 20% of the total household income. And whats quite remarkable is the top of the top of the top, the top 1% of the 1% that is the top .01 % of US households around 12,000 in total because they are, are around a 120 million households. So 1% of those is about 1.2 million households, and 1% of that is about 12,000 households. They are now taking home 5% of the total income of American households, and so the inequality at the top, aided by the political process, also soared. And, in this sense we could say that the challenge of social inclusion is very well illustrated in the US context, though the story up until today is not a very satisfactory one for many, many Americans. On the one hand, market forces have amplified the inequalities. On the other hand, the political system not only did not come to the rescue of the poor, but reacted in a quite stark way. Coming to the backing of the rich. Pulling away some of the social support of the poor. Taking the libertarian view that the Government’s not going to address the issues of inequality. Making it harder rather than easier for society to meet its basic needs. Setting up an even bigger challenge for social inclusion as one of the key pillars of sustainable development. We will look at what can be done in this context because there are ways to reestablish social mobility and social inclusion. But the the political system has to participate in that if those methods of achieving social inclusion are to be effective.

Lectures / Readings

Education and Sustainable Developement IV

08/04/2015 Pedro Pereira Leite Deixe o seu comentário

Social Mobility

Education is a pathway for all of us to productive lives as citizens and as members of the economy. And it’s a life cycle challenge for all of us to develop our capacities, our skills, our potentials from the earliest days possible where our parents and society crucially can help give that safe environment and the health and the nutrition needed for a good start in life, to the choices that each of us make throughout our lives to continue to accumulate knowledge to gain skills to go through programs of formal education. On the job training. And continuous lifetime learning.

We’ve seen that while education is a pathway, it can also be a filter, and a rather painful one. If higher education is expensive, meaning that only children from affluent families are able to pursue higher degrees and if the returns to higher degrees are themselves quite high, then that filter, the costs of higher education can mean that education becomes a bottleneck for the poor, an amplifier of incomes for the wealthy and yet, another source for widening inequalities. This unfortunately is the situation in the United States today, which once was seen and, and felt by itself to be the great land of opportunity. The land of the highest possible social mobility.

The place where Americans compared themselves with what was taken to be the stogy class based hierarchical, aristocratic societies of Europe. The U.S in its mythos views itself as the land of opportunity but because of the great inequalities now of returns to education, the widening inequalities that our political system has produced, the high costs of education, the mountains of student debt for young people especially from working class and poor families. We now face a low level of social mobility in the United States compared to many, many other high income countries. In general, there is a relationship, that is a rather stunning one and a rather sobering one for countries of high inequality, like the United States. Have a look at this very, very important graph. And let’s consider it in a little bit of detail to understand what it’s showing us. On the horizontal axis, no mystery, that’s the Gini coefficient for this group of high-income countries. And we know that the higher the Gini coefficient, a number between zero and one. The higher is the inequality in the society. The low inequality countries in this graph are Sweden, Finland, Norway, Denmark. At the high end of the genie coefficient our The United States with the greatest inequality among this sample of countries followed by the United Kingdom. So far so clear.Now on the vertical axis, what are we looking at?

Each country is rated by a statistic which measures the relationship of a child’s income to the parent’s income. So this is looking at how closely a parental income translates into the income of the child. So it’s a measure of inter-generational income mobility. If the correlation is quite high at the high end of the vertical axis, that means that parental income and children’s income are highly related. Have a poor parent, you end up poor. Have a wealthy parent you end up having a high income. If the correlation is low on the low side of this vertical axis that means that no matter what the parental income.

The children’s income is fairly much independent of what kind of household background they come from, and, low and behold, looking at the vertical axis, those countries that have a low correlation of child and parental income are the Nordic countries, Finland, Norway, Denmark. And which countries have the highest correlation of parental and children’s income. Well, the same ones we just looked at.

The United States, the United Kingdom, add Italy to this mix. What you see is an upward sloping line, while it doesn’t prove causation, it has a rather sensible narrative, one that’s easy to understand, it says that unequal countries with a wide dispersion of household incomes, in other words, a high Gini coefficient are also countries of relatively low social mobility. If there’re big gaps between rich and poor then the process of education, the levels of educational attainment, the ability to get to good jobs is also highly filtered. It is a track for wealthier and richer kids it’s not a pathway that is, holds much promise for the poorer kids. The United States and the UK are examples of two rather unequal societies, with rather low social mobility. And the three Nordic countries in the lower left hand side of this chart, Finland, Norway, Denmark. And one would add in Sweden close by as a fourth part of the Nordic representation on this chart.

Are cases where the income inequality is quite small and in addition, the correlation of parental and children’s income is also characteristically small. In those rather equal societies where government spends massively to provide for pre-school. To provide for early childhood development. To provide for university education. On the public tab. The social mobility is quite high, the child’s background just doesn’t count for all that much, because there is such a high degree of mobility and such support from government.

A similar kind of relationship is found in the upward sloping graph that you’re looking at. This also puts the Gini coefficient on the horizontal axis just the same way. The vertical axis is a different kind of wage persistence. It’s looking at the gap of earnings of young people depending on the education level of parents. High up on the axis are places of big inequality of income depending on the fathers education level. Places that are lower down are places where there is a small gap. Of children’s income depending on the father’s education level. The message is just the same as in the preceding chart. Places with high income inequality are places where there’s a high correlation across generations which we can interpret as places of low social mobility. And the lesson here is rather striking and rather important. We’re finding essentially that unequal societies are societies that replicate that inequality across generations.

They are societies that become societies of low social mobility and by many ethical systems, societies that are rather unfair because the future prospects of a child are not that child’s own determination. They depend more on to whom the child is born, than on what the child is able to accomplish on their own. And for myself as, as a U.S. citizen, a country that has prided itself on high social mobility, these kinds of findings are quite stunning. One more look at this evidence to finalize the point. In this kind of bar chart, we see a comparison of the United States and Canada. And what we see is a division of these households by decile and looking at the probability of a son falling into a low decile or a high decile depending on their fathers income status. So have a look at children born to poor fathers for example. Which is the graph that you’re looking at right now. And then you see which of these 10% categories, the son falls into, so of the sons in the United States whose father is in the poorest 10% of the population, you can see in the bar all the way to the left, that around 23% of those kids themselves end up in the bottom 10% of the income distribution. Another 18% or so end up in the second lowest decile of the population. And around 7% or so of those kids end up in the top decile.

For Canada, you can see that it’s a little bit more equal. Because Canadian children that are born to poor fathers don’t have the same very high proportion ending up in the poorest part of the income distribution. And they have a much higher chance of ending up in the high income part of the income distribution. This is consistent with the preceding two graphs that we looked at. It’s basically saying that since Canada is a more equal society, children are less likely to follow exactly the track of their parents. Now let’s look at the other end of the income distribution. Consider it, the kids born to high income fathers, what happens to them? Again we can compare the unequal U.S. with the relatively more equal Canadian situation. In the United States if a son was born to a top docile father, rich father, then you can see in about all the way to the right of the graph that around 27% or so of such kids end up. Also in the top decile the probability that a rich father will end up with a rich son is quite high. You see that in the case of Canada the bar just next to it, it’s a much lower rate of intergenerational transmission. A top decile father, one in the top 10% of the income distribution has, gives the son a, around of 20% a probability of ending up in the top as well. Look at the other side of the income distribution. What’s the chance that a son born to a top decile father ends up in the bottom 10% of the income distribution. Naturally, not all that large. But in the United States, around 3%. In Canada, around 8%. This is the flip side of the same point. That in the U.S. under our current conditions where households track, successful households, largely through educational success, university attainment and are having kids who make it to good jobs and good earnings and poor kids not making it.

You see that there is the inter-generational replication of the income distribution, the more equalist the society, generally depending on a strong role of government in ensuring early childhood development in ensuring axis to quality education at all levels. Than that inter-generational mobility is enhanced, the inter-generational correlation within the household is greatly diminished. And for most of us, the meaning of that is that, poor kids have a chance in places where inequality is reduced. And where the government is playing that role of ensuring that every child has the chance of meeting his or her potential.

That after all, is the whole challenge and goal of an inclusive society. It’s one where individuals have responsibilities, but they need the help, especially the kids in poor households. That the help of government can make it possible to achieve that goal.

Lectures / Readings

Education and Sustainable Developement V

08/04/2015 Pedro Pereira Leite Deixe o seu comentário

The Role of Higher Education in Sustainable Development

We’re thinking about education. It’s role for an individual, it’s role for society. I’ve been emphasizing that education is absolutely critical for economic development, education is a pathway for a high productivity workforce. Education is the ticket to individual job security and higher incomes for individuals, especially in an age of knowledge at the center of so many parts of the economy.

I want to talk about higher education even beyond those individual human capital, issues and reflect on the importance of higher education. For overall economic development through other pathways as well. Not only the training of individuals, but the problem solving of society. Now let me say straight out, I’m utterly biased. I love universities and I have been in, universities now.

I’m, probably shouldn’t tell you, but it’s, more than 40 years, since entering, college, life, in, 1972. And since then, I’ve had the great joy and pleasure to be part of 2 great Universities, Harvard and Columbia University, throughout my life and throughout my career, places of great learning, wonderful students, wonderful opportunities to expand ones knowledge. I admire Universities for what they can do and should do for society. And I wanted to reflect a little bit on how important higher education is. Not only in preparing you or me for a job in the labor market. But for enabling us to participate more broadly as citizens and especially to participate in each generation’s challenge of problem solving. What we know about higher education is that, not only does it boost the human capital of the individual, but it goes right to the core that I’ve been stressing of the key to long-term economic development of technology and of know-how.

Higher education has shown itself repeatedly to be crucial for the 2 kinds of growth that we observed.

One is the endogenous innovation based growth, where new science and new technology are developed, giving birth to new industries, whether it was James Watt working in the workshop at Glasgow University in 1776 when he said, I got it. The new steam engine, or whether it’s the advances that have been pouring out since over the following two centuries, including the great breakthroughs in computer science, in material science, in Moore’s Law which has underpinned the transistor and integrated circuit revolution of the last 50 years of genomics, of agronomics. Universities and higher education have been absolutely central, because technology and scientific advance has been central.

The second kind of growth, is the adaptation of technologies from abroad. It’s true that not every technology requires a high skilled user to use it. How many of us really understand the quantum physics of how our mobile phones work, because quantum physics is crucial for understanding solid state electronics which is at the core of of the integrated circuitry, which makes it possible for the digital revolution to work. Well, not, not too many of us could recite all of the details of the digital age, but we can still use the phones. Some technology just is marvelously packaged, so that it can be used essentially by anybody. and, this is a wondrous thing when the breakthroughs of science are in a pill that can be taken to save a life, no matter what the education level of the pill taker. When the brilliant rapid diagnostic test that we have mentioned enable a village health worker to save a child from malaria. That’s a kind of technology that is packaged in such a way that it is very, very broadly accessible.

But a lot of catching up growth, which depends on bringing technologies from abroad and using them effectively, depends on skilled workers. Not necessarily the same kinds of scientists that invented the technology in the first place, but scientists and especially engineers who can adapt those technologies to local conditions. Seeds that are taken from one place very often have to be adapted to local growing conditions, or certainly to local farm systems. Even though Norman Borlaug’s seeds from Sonora, Mexico worked in India, thank goodness for India’s green revolution, how to plant them in the Punjab of India depended on skilled agronomists being able to make that translation of the technology from one place to the next.

So technology transfer is essential. Highly skilled workers are vital for that, universities of course are vital for providing that knowledge. Universities are vital for providing the research and development that our, at the core of science based innovation. Universities are vital, of course, for providing not only a highly skilled, highly trained labor force, but for training the trainers. Especially the teachers, who are going to be working throughout society. Helping to prepare youngsters at preschool all the way through primary and secondary education, so that they are developing their human capital to full capacity. And universities are critical for one more major activity that I want to underscore.

And that is problem solving, policies and strategies to make the differential diagnosis that we’ve been speaking of, identifying the specific challenges that countries face, whether in public health, or in transport and infrastructure systems, or in facing the problems of climate change, or in adapting cities to be more resilient to natural hazards. There’s a tremendous amount of innovation that will be required of new systems thinking, new ways to govern, new principles for our behavior and our organization of our social lives and our political systems, and universities are needed to play a key role in that kind of problem solving. Now this, of course, poses a major challenge.

We’ve already looked at this map which shows the difference of enrollment rates in higher education in different parts of the world. Not surprisingly, we know that countries like the United States, the Scandinavian countries, Western Europe, Australia, New Zealand, Russia, are countries with a very high rate of university going, though, probably not high enough given the, information age that we are in right now. But compared to poor countries, throughout Asia, and especially throughout Africa we see that the reach of universities in many of today’s poor countries are not adequate to the needs for these societies to be able to generate the technology transfer and the homegrown innovation that’s so essential for their development, and to have the highly skilled well-educated leadership, crucial for the national problem solving. If you look at this picture, which is a map of the share of national income devoted to research and development, it looks a lot like, the tertiary education enrollment rates. R and D is heavily concentrated in the high income world.

This has been true, essentially for two centuries now, since the start of the Industrial Revolution. A tremendously high share of the new innovations have come from a small subset of countries. The United States, Western Europe, Japan, now Korea, Singapore, Israel. Just a few countries in the world accounting for the lion’s share of the scientific breakthroughs and the patented intellectual property, that underpins a lot of the technology advances.

And to a very important extent that technology, even when it’s being developed by businesses, depends on the university sector. Indeed it is itself a fascinating and complicated and complex challenge to understand how a society becomes an innovative society. As usual for the kinds of problems that we’re looking at there’s no simple linear path, nor a single answer. You might say well high income country has businesses that do R and D and it’s from that research and development that new innovation emerges. But inevitably, those companies first need, highly skilled scientists and engineers to be doing, that kind of research. But even more important than that, the research that is the basis for new technologies, is often not being done in the companies at all. It’s being done in national laboratories, or research centers, or to a very significant extent, in the universities themselves.

There is a very complex and subtle network that links businesses universities, national laboratories. And other cutting edge knowledge institutions together in a flow of information sometimes commercial, sometimes open scientific research or open source knowledge. There’s alongside that flow of information and research findings, more pathways of money flowing. Maybe the universities are supported by business to do some targeted research. Maybe it’s the government that’s funding the universities doing research that then gets incorporated into new start up companies. Started in clusters around the universities, like Silicon Valley.

Next door to Stanford University. So, we say that this is a national innovation system. That integrated mix of public and private, and philanthropic foundations of universities, of businesses, of government national laboratories. Of financial flows, and, All directions that is putting together a very rich flow of innovation and ability to make cutting edge steps forward in science and technology. It is part of the challenge of every country’s development to create a national innovation system, consistent with its capacities, with its needs, and with its opportunities. And within that, higher education plays an enormous role.

I want to turn to the fourth Aspect of Universities, that I very much admire and believe need an even larger place in our societies as we grapple with the challenges of sustainable development.

And that’s Universities as major engines of problem solving, looking at the complex problems that we’re discussing with sustainable development. How to move to a new energy system. How to have sustainable agriculture. How our cities can be re-engineered, re-purposed, redesigned for healthier more resilient settings with high economic productivity and less impact on the physical environment. And what has been known now for centuries, but really, demonstrated time and again, during the period of modern economic growth, is the role that institutions of higher learning can play and helping societies to grapple with their very complicated problems.

Now I’m very much attracted to one of America’s great breakthroughs in this regard, called the moral act. A piece of legislation passed in the US Congress in 1862 and signed by none other than President Abraham Lincoln. The moral act created what are called Land Grant Universities in the United States. They are Land Grant because the Federal Government granted land to the states, to establish new centers of higher education. And there is one for every state in the United States, in this system of land grant universities. But what makes the Moral Act and this initiative so novel and so important for America’s history, is that these institutions were set up not only to train, but to help the local communities and the states in which they are located to solve problems, to develop the skills the techniques, the knowledge base to solve problems, especially from 1862 for a long period of time, to solve agricultural problems through agricultural field stations and outreach of university based scientists into the community to help farmers grapple with problems of pests and productivity and soil nutrients and climate and the other variables and inputs into high productivity agriculture. So, the Moral Act in 1862, said that this endowment would support the maintenance of at least one college per state, where the leading object shall be, and I’m quoting from this Act. Without excluding other scientific and classical studies and including military tactics, to teach such branches of learning as are related to agriculture and the mechanic arts, in such manner as the legislatures of the states may respectively prescribe, in order to promote the liberal and practical education, of the industrial classes in the several pursuits and professions in life. These were practical undertakings. What a great advance 150 years ago to think about the federal government, no less in the middle of America’s Civil War, saying we need to invest in higher education to solve the practical problems one per state in the United States. Other countries of course in similar ways have championed their institutions of higher education to play this kind of role.

But, many, many countries have so far not really taken up this idea. I meet with government officials in many places in the world where I find the reaction cringe worthy I might say. Where they view universities mainly as places to teach, perhaps as hotbeds of political controversy. But not as partners in development. And I always try to explain that government should view universities as engines of problem solving and of national development, and not only, though it is part of their role as places of education, and certainly not as hostile territory, where governments are worried about the political implications.

Thinking, yes, can lead to new innovation, new approaches, new calls for new kinds of governance, and it should. But universities must be seen by governments in this complicated age of sustainable development. As partners in problem solving. It’s for that reason that I’m also especially honored that UN Secretary General, Ban Ki-Moon, asked me to help him in his global leadership challenge of promoting solutions to sustainable development. To help put together a knowledge network based on the universities around the world, precisely so that these universities can be more effective partners in their own cities, in their own nations, in their own regions, in problem solving for sustainable development. You’re looking at the cover of a report that this new, United Nations sponsored sustainable development solutions network, or SDSN, as we finally call it. Issued to the Secretary General, in, identifying the main challenges for sustainable development for the period of 2015 to 2030.

SPSN is an outreach organization aiming for very broad membership of institutions of higher education from around the world. To join together to exchange knowledge, ideas, to debate and discuss alternative technological approaches, for example, the clean energy. To help keep universities around the world at the very cutting edge of sustainable development, thinking, ideas, technological know-how. Also so that students can be trained to be at the cutting edge. And countries around the world are forming their own chapters of DSDSN, the Nigeria chapter, the Ethiopia chapter, the Indonesia chapter, the Malaysia chapter, the Korea chapter, as well as regional groupings, for example, around the Mediterranean Basin region, headquartered, at the University of Sienna, or around the Si Hill countries of West Africa, centered, in, Dakar, Senegal. Or around the, universities of the horn of Africa with a base, in Nairobi, Kenya. or, the Osian universities for the southeast Asian countries with a, a headquarters in Bali.

In all of these cases, these networks are strengthening themselves through partnership. Through online materials, through joint activities, through, common teaching programs, through common problem solving efforts. To be available to society in the same way that the moral act created the land grant institutions to be available for practical problem solving. On the complex challenges of sustainable development.

I believe that by forming this kind of network, by energizing the extentand intensity of problem solving, and I’m counting on all of you to be part of that as well, we can indeed succeed in this great challenge of achieving the multiple objectives of economic development, social inclusion, environmental sustainability, and good governance that all of our societies need and yearn for.

The inclusion of community knowdlege on territorial development