February 26, 2002—With their high literacy rates and highly developed educational infrastructure, the countries of Central and Eastern Europe are widely seen as well-poised for transformation into knowledge-based economies. Yet the global knowledge economy poses enormous challenges to governments and societies around the world that seek to join it. How 10 Central European countries slated for accession to the European Union (EU) view these challenges and are working to meet them was the subject of a forum that brought together the World Bank Institute (WBI), the ECA region, and the Bank's Vice Presidency for Europe with high-level representatives of Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia in Paris last week.

The three-day Knowledge Economy Forum opened on February 19 with a speech by Peter Drucker, who said that the knowledge revolution was leading the world into an entirely new era. Taking a long view, he suggested that transition to the knowledge economy was potentially as wrenching a transformation as the transition from agricultural to modern economies. For the Central and Eastern European countries, which still have to manage the historical shift from agricultural and industry-based economies to service-based economies, the urgent task is to radically improve the productivity of agriculture and industry through knowledge inputs, while avoiding the potentially huge social problems of redundancy. This can only be accomplished, Drucker said, through the transformation of traditional education systems and through a major investment in life-long learning and reskilling. The challenge is the creation of a robust corps of "knowledge technologists" in the EU accession countries.

"If Europe is to become the most competitive knowledge economy in the world in 10 years, as stated by the 2000 European Summit in Lisbon, the challenge we face is to work together as partners in making this a reality for all EU members," said Vice President (VP) of the World Bank's Eastern and Central Asia Region (ECA) Johannes Linn. In sessions chaired by Linn, VP for Europe Jean-Francois Rischard and ECA Director Kevin Cleaver, participants focused over the next three days on the accession candidates' strategies and concerns. They had a fruitful exchange with Irish, Finnish and Korean participants—whose countries have successfully undertaken the transition to knowledge-based economies—as well as representatives of the European Commission, the European Investment Bank, the EBRD and the OECD, who took active part in the brainstorming.

As the country presentations demonstrated, the accession countries are making robust progress in creating the "four-pillar" environment described by Carl Dahlman of the World Bank Institute (WBI) and Kevin Cleaver of ECA as prerequisites for a knowledge-based economy: an economic and institutional framework that promotes the efficient use of knowledge and the flourishing of entrepreneurship; an educated and skilled population to create, share and use knowledge; a dynamic information infrastructure; and an efficient innovation system of firms and research centers to tap into the growing stock of global knowledge and create new responses to local needs.

Evidence of such an environment taking shape in the region ranged from Estonia's focus on strengthening its competitive advantages in biotechnologies and nanotechnology over the next five years; to Lithuania's plan to develop city-based centers for excellence; the Slovak Republic's e-government strategy; and the Slovenian government's center for excellence in public finance. Paul Verhoef, head of the international policy and regulatory aspects division of the European Commission's Directorate-General for Information Society, noted that some of the accession candidate countries are actually ahead of many other countries, including some EU member states and OECD countries.

Building on frank discussions about the need to build a culture that values innovation, VP for Europe Jean-Francois Rischard suggested in his summing up that there was a "fifth pillar" for the knowledge economy—one that would include the all-important cultural variables that elude quantifying, as well as the critical role of government in integrating and promoting knowledge economy ideas throughout society. Taking note of concerns expressed by the WBI's Jean-Eric Aubert that culture was a "black hole" in the methodologies developed by the Bank and the OECD to gauge country progress in the global knowledge economy, Rischard suggested that developing a "bank" of case studies on what worked would be one way of getting greater clarity on how culture, values and mindset work to accelerate or hold back knowledge-economy oriented transformations, and how government intervention can catalyze them.

The participants were unanimous in expressing their wish for more meetings of this kind, to exchange progress reports and ideas. As happened after a similar seminar organized by the WBI with Brazil, China and India in London last year, the ECA Knowledge Economy Forum could serve as a launching pad for a "community of practice" among the champions of the knowledge economy in the accession countries.