Dictionary: Interaction
Interactions and Transaction Costs
Interaction between actors (of all levels) involve the fund and flow of the well known resources: material, money and information. For common transactions, customary and regulatory institutions help to keep transaction costs low. Development initiatives have high transaction costs, more so when agreements concerning the roles and scope of participants are lacking. On the other hand, a centralized setting of detailed rules of the game is unfeasible. Also the socio-diversity, the ferment in several sectors and in information technology are driving complexity and risks for initiatives, and so are (intellectual) property regimes and commercial interests.
Several studies and observations confirm the lack of effectiveness, efficiency and expressiveness in current development assistance <citeulike: aid-effectiveness>.
Lack of General Purpose Resources
Financial and knowledge resources are two kinds of indispensable "general purpose" resources in interactions, including development assistance.
Financial means are hardly available to smallholders in general, and they are in short supply in low-income countries. With material resources such as food, energy and construction materials, money shares the rivalry property : money can only be spent once.
The money supply problem is addressed by innovative financial solutions such as micro-credit, micro-insurance and micro-savings for which CGAP Consultative Group to Assist the Poor provides market intelligence, promotes standards, develops innovative solutions and offers advisory services to governments, microfinance providers, donors, and investors. Some of its publications are at <citeulike: financial>).
Knowledge: Lacking in spite of being non-rivalrous
Knowledge on the other hand is a resource that is non-rivalrous. This opens up opportunities for “economies of reuse”: Externalized knowledge provided via open shared services can be reused innumerable times at no or minute additional cost.
Does the global community currently seize the knowledge reuse opportunities?
Not really! Hence the need for a catalyst.
