NATIONAL STRATEGIES OF SMART DEVELOPMENT: TURNING CONSTRAINTS INTO GROWTH OPPORTUNITIES

1. NATIONAL STRATEGIES OF SMART DEVELOPMENT:TURNING CONSTRAINTS INTO GROWTH OPPORTUNITIES Prof. Dr. Giedrius Jucevičius (Lithuania) Prof. Dr. Shlomo Maital (Israel)

2. „Smart“ technicalsystem Energy efficiency Closed loop control Networking capabilities „Smart“ socialsystem ?

3. „Smart“ socialsystem 1. Closed loop control Self-adjustment through collective learning Escaping „vicious circles“ Creating „virtuous circles“ Continuous upgrading Efficient use of internal resources Self-solving problems Leveraging weaknesses and strengths 2. Energy efficiency Making use of „weak signals“ Access to external resources Adaptation of good practices Partnering for shared value creation 3. Networking capabilities

4. Selective factor disadvantages Shortageoflabour Highervalue-added Expensivelabour Earlyautomation Irrigationtechnologies Pooragriculturalland Financial services Earthquakes, populationdensity Safetytechnologies Environmentalsolutions Small domestic market Early internationalization

5. Smart Leveraging („Middle income trap“?) Self-sustaining cycle („Welfare trap“?) Strong Governance „Poverty trap“ „Resource curse“ Weak Poor Rich Economic resources / factors

6. Smart Leveraging („Middle income trap“?) Self-sustaining cycle („Welfare trap“?) Strong Governance „Poverty trap“ „Resource curse“ Weak Poor Rich Economic resources / factors

7. It ismoreproductive to convertanopportunityintoresultsthan to solve a problem– whichonlyrestorestheequilibriumofyesterday. Peter F. Drucker

8. When mind is WEAK, a situation becomes PROBLEM When mind is BALANCED, the situation becomes CHALLENGE When mind is STRONG, that situation becomes OPPORTUNITY

9. Irish „vicious circle“ Solutions ?

10. Irish „vicious circle“ +? Solutions ?

11. Power of Irish Network +

12. From negative feedback loop („vicious circle“) to positive feedback loop („virtuous circle“)? But...

13. To the moon and back… where it started Improved balanceof payment Export growth Employment growth (short run) + Expatriation of profits Outcompeted local firms - Increased unemployment (longer run) Increased emigration (again…)

15. Reassess the situation Refocus the problem Building linkages between big and small To create opportunities for learning and catchup

16. - - + +

17. From negative to positive feedback loops ) ( ) (

18. Lesson 1“Strength and weakness are two sides of the same coin” What makes us weak can also make us strong What makes us appear strong can also make us weak They always depend on the context and our perception

19. Lesson 2 Smart development is based on the acceptance of contradictions: BOTH … AND… “The test of a first-rate intelligence is the ability to hold two opposed ideas in mind at the same time and still retain the ability to function.” F. Scott Fitzgerald

20. Tension as „puzzle“ (simple system) Tension as „dilemma“ (simple/complicated) ? “Finding a point of balance” ? „Best solution“ Tension as „paradox“ (complex system) Tension as „trade-off“ (complicated system) “Choice „either-or” ? “Taking the best of BOTH worlds”

21. “Smart” systems are good at both Exploitation Exploration Focus Flexibility Knowledge Tinkering Short-term Long-term Stability Agility Financial Social

22. TALPIOT programme • Elite Military School that Feeds Israel's Tech Industry • Elite training programme for young people with outstanding academic ability in sciences, physics and mathematics. • Higher education in the army, then utilize expertise in R&D projects of Israel Defense Forces • Entrepreneurship skills in highly competitive and high pressure environment • Connections, management skills, action-oriented mindset • Later – occupy senior positions in Israeli high-tech industry (unforeseen byproduct of the Programme)

23. Lesson 3 Trust knowledge and recognize its limits – our world is dominated by “unknown unknowns” “Using what you know is Intelligence, but Using what others don‘t know is Smartness” Bharat Sharma

24. “Unknown unknowns” (Rumsfeld, 2001)

25. “Black swan” events – large-scale unpredictable and irregular events of massive consequence (Nassim N. Taleb)“Outlier” events that can be explained in hindsight, but cannot be predicted by foresight Country that is most resistant to “black swan” events Always benefits from global shocks (antifragile) “Dictatorship from the bottom” Macro stability and micro dynamism

26. Behaviour under uncertainty - + “Dumb” + - “Smart”

27. Behaviour under uncertainty - “Dumb” “Smart”

28. Lesson 4 Recognize the level of complexity you are dealing with • Balancing linearity and non-linearity in decision making • Stable environment and dynamic interactions; creative ideas and focused implementation;

29. Smart development of social system is not a rocket science - it is way more complicated !

30. Complicated system vs. complex system Creating a park and building the ecosystem are two different tasks

31. Knowing when to apply linear and non-linear solutions Regulation Self-regulation Both work and are necessary in different contexts

33. Lesson 5 Some problems get solved by themselves or by applying a good leverage

34. “LLL” framework for latecomer catchup(Jonh A. Mathews) Linkage Leverage Learning

35. “Flying geese” development pattern(South / East Asia) Source: Okita (1985)

36. Thinking in terms of your contribution to a larger ecosystem leads towards success in development

37. Lesson 6 “Be careful what you wish for” Curse of linear management: unintended consequences and perverse incentives

38. Lesson 7 All buzzwords can be dangerous – even this one! There’s a minor difference between MEDICINE and POISON Every new concept is valuable as long as it is not taken too far and misused for the “practical” purposes of different interest groups

39. Did you know that… Karl Marx was against any oppression by the State Adam Smith was against any form of economic concentration “killed” by Marxists “killed” by neo-liberals

41. Humannaturehas a tendency to admirecomplexity, butrewardsimplicity BenHuh

42. Thank you for your attention!