The Importance of Academic Networks on the Diffusion of Technical Information
As a Cornell student or faculty member, you are likely well acquainted with a slew of well-distinguished Cornell professors, renowned for their novel ideas and prominence in their respective fields. These professors have made a name for themselves by questioning the status quo and enriching the realm of human thought. If you have engaged with research, you have similarly struggled—together with other brilliant individuals—to present and defend profound hypotheses about the condition of the world. You, and your professors, have analyzed the work of those before you, building onto and synthesizing older ideas, in the perpetual pursuit of knowledge. The processes of academia bear an impact on the economic conditions of the society we live in. In such an advanced society, education plays an incredibly crucial role in the diffusion of ideas and technical processes, which are later employed by the masses. These academic circles, in which research is performed and ideas challenged, are where breakthroughs are first discovered and change first instated. In the paper, “Investment in Humans, Technological Diffusion, and Economic Growth”, Columbia professors Richard R. Nelson and Edmund Phelps (the 2006 Nobel Memorial Prize in Economic Sciences recipient) argue that education is especially important for the innovative functions behind economic growth. They note that production management, in particular, necessitates keeping up with technological development, and that a manager’s higher level of education augments their ability to keep up and for an organization to succeed. I will be building onto this premise by asserting that network effects play a crucial role in this diffusion of technological ideas, suggesting that the explicit structure of academic and industry networks reflects the model of diffusion with respect to thresholds as discussed in class and that the formation of such networks bears positive externalities.
The concept of highly educated individuals being important to the success of a large industrial corporation as raised by the authors of the paper can be likened to the concept of clustering in the diffusion of information in networks. Take each person as an individual node, and a large corporation to be a single densely connected node. In a particularly striking example, the authors of the paper note that “in large, industrial corporations, in which there is a fine division of labor, the function of keeping abreast of technological improvements may be assigned to scientists”. Due to the nature of cutting-edge technical information being first propagated in scientific circles, scientists in these academic circles serve as bridges to the main connected components and allow for the diffusion of information into the corporation. An established corporation can be seen as a dense cluster of nodes with a high density, making it hard for new ideas to break in. Due to the high number of nodes in the cluster and a low number of bridges to the main connected component, the thresholds of nodes inside the cluster are low enough to a point where ideas can never break into the cluster, and the cluster maintains its old ways. Taken in respect to the points of the authors of the paper, a corporation that is not failing can offload the responsibility of keeping up technologically from the manager to a few select scientists. These scientists, who are in the cutting-edge academic circles, are much better connected to other proponents of new ideas and are able to form a bridge to the organization and allow the diffusion of these new ideas.
Positive externalities also arise given the diffusion of technological ideas through education. The authors note, “if innovations produce externalities, because they show the way to imitators, then education—by its stimulation of innovation—also yields externalities”. In the process of innovation, the technological methods behind the innovation can be shown to viewers to benefit others. From a more macro level, education allows academically inclined individuals to discover these technological methods in a process that generates externalities. The author does not specify exactly what these externalities are, though I posit that the prime positive externality is when ideas clash and new ideas are synthesized from conflicting or new information, which bears greater validity given more individuals together. Through this process of dialogue and interactions, the more individuals committed to the research, the greater is the validity that the research has. This demonstrates that the process of education benefits from a network effect in that the more individuals that participate in the process, the greater the benefit it brings to everyone involved.
In a technologically advanced society as is the one we live in, the importance of education can be seen as allowing one to be connected to a circle of academic thought. This makes highly educated individuals more valuable in large organizations, who otherwise would behave as a tightly-knit cluster that might be impermeable to new ideas. The involvement of more individuals in the academic process is also subject to a positive externality, in which more people involved results in a higher level of refinement of the technological processes developed. These factors seem to justify the high demand for an elite education such as one at Cornell, showing that one can be more valuable to organizations given that they are engaged in the elite academic circles of a prestigious university.
Nelson, Richard R., and Edmund S. Phelps. “Investment in Humans, Technological Diffusion, and Economic Growth.” The American Economic Review, vol. 56, no. 1/2, American Economic Association, 1966, pp. 69–75, http://www.jstor.org/stable/1821269.