clock: once one can relate performance to uniform time units, work is never the same” (p. 49–50). It was the invention of the mechanical clock which in turn led to one of Adam Smith’s seminal insights: wealth and prosperity depend directly—to use Smith’s language—on the “productive powers of labor.”<sup>35</sup> So, work becomes an important organizing principle of life and productivity the engine of prosperity. A related value concerns whether societies operate in meritocratic systems where rewards are linked to performance and excellence, or whether advancement is the result of other factors— friendships, ethnic kinship, family connections, party affiliation. Productivity will be enhanced when resources are allocated on the basis of efficiency considerations rather than some criteria unrelated to performance. A recent paper by Bertrand and Schoar (2006) shows empirical evidence that countries “where family is generally regarded as more important have lower levels of per capita GDP, smaller firms, a higher fraction of self-employed, fewer publicly traded firms, and a smaller fraction of total market value controlled by families, on average.” (p.82).

What is a society’s relationship to the acquisition of knowledge and skills? Toshimichi understood that, to paraphrase Landes, “knowledge makes almost all the difference.” Education and training are emerging as key drivers of competitiveness. As the global economy has become more complex, it has become evident that in order to compete and maintain a presence in global markets, it is essential to boost the human capital endowments of the labor force, whose members must have access to new knowledge, be constantly trained in new processes and in the operation of the latest technologies. As coverage of primary education has expanded rapidly in the developing world, higher education has gained importance. Thus, countries which have invested heavily in creating a well-developed infrastructure for tertiary education have reaped enormous benefits in terms of growth. Education has been a particularly important driver in the development of the capacity for technological innovation, as the experience of Finland, Korea, Taiwan, and Israel clearly shows.<sup>36</sup> Lack of basic skills severely limits the possibilities of citizens to participate in the development process, to be gainfully employed, to be well informed judges of government policies and politicians, and to avoid falling prey to the manipulation of demagogues—as we have seen in recent years in various corners of the world. From a business perspective, as noted by Porter (1990), “the quality of human resources must be steadily rising if a nation’s economy is to upgrade. Not only does achieving higher productivity require more skilled managers and employees, but improving human resources in other nations sets a rising standard even to maintain current competitive positions.”<sup>37</sup> The radius of identification and trust in a society and, in particular, whether it is narrow or wide, is also likely to make a difference. If the primary identification within the community is with the family or the tribe, there may be problems in fruitfully engaging

> 35 Smith, 1994, p. 5.

> 36 On the role of education in the emergence of Israel as an ICT power see Lopez-Claros and Mia, 2006, “Israel: Factors in the Emergence of an ICT Powerhouse.” _Global Information Technology Report 2005– 2006_ . Hampshire: Palgrave Macmillan, 89–105.

> 37 Porter, 1990, p. 628.

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