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The Local Knowledge Bank: Uncoveing the Processes and Networks of Social Innovation at Brazil's First Community Bank By Ying Gao B.S. Foreign Service Georgetown University Washington, DC (2007) Submitted to the Department of Urban Studies and Planning in partial fulfillment of the requirements for the degree of MASSACHUSETTS INSTn E OF TECHNOLOGY Master in City Planning at the JUN 1 9 2014 MASSACHUSETTS INSTITUTE OF TECHNOLOGY (MIT) LIBRARIES June 2014 ( 2014 Ying Gao All Rights Reserved The author hereby grants to MIT the permission to reproduce and to distribute publicly paper and electronic copies of the thesis document in whole or in part in any medium now known or hereafter created. Signature redacted A uthor..................................................................... ....... ------ DepartmeYo" rhan Studies and Planning May 22, 2014 Signature redacted C ertified by................................................................. .. / K e- d Karl Seidman Senior Lecturer in Economic Development Department of Urban Studies and Planning Thesis Supervisor Signature redacted Accepted by ................................. ............ ............................. Associate . ofessor fhristopher Zegras Chair, MCP Committee Department of Urban Studies and Planning 2 The Local Knowledge Bank: Uncovering the Processes and Networks of Social Innovation at Brazil's First Community Bank By Ying Gao Submitted to the Department of Urban Studies and Planning on May 22, 2014 in partial fulfillment of the requirements for the degree of Master in City Planning Abstract In this thesis, I apply a case study method to examine the processes of knowledge management both within the neighborhood, and in institutional partnerships, by Banco Palmas, Brazil's first community development bank, as a way of uncovering a key component to understanding community-driven social innovations. Founded in 1998, in an urban peripheral neighborhood in Fortaleza, Brazil, the bank is best known for an unusual combination of microfinance integrated with local social currency. An increasing emphasis on community-driven approaches has become part of the practice of development in sectors ranging from economic development, disaster relief, to refugee assistance, yet what to make of the self-organized practices originating from the poor, as a concept, model or theory, is far from clear. First, I outline a "follow the knowledge" research design combining a working conceptual framework of knowledge, multisource data collection, including semi- structured interviews and extensive participant observation, and other fieldwork activities. The resulting 22 formal interviews from 13 institutions and additional case study data were interpreted with mutual corroboration and thick contextualization relying on relevant literature. The findings from within the neighborhood showed that the most effective function related to knowledge had to do with maintaining a community of practice of local social entrepreneurs, which the bank expertly did by combining what I identify as three practices and two processes of local knowledge management. Moreover, the bank's local knowledge directly built on the community's long history of mobilization, and the accumulation of experience-based knowledge was such that the organization could be seen as serving in the role of local knowledge bank for the neighborhood. In institutional partnerships, Banco Palmas provided local knowledge to key partners and allies in academic, civil society and government branches, while responding to a number of institutional constraints in contemporary Brazil, charting a unique path from the grassroots to influencing national policies. In conclusion, I draw lessons on replicating local knowledge bank, suggest strategic and tactical recommendations for Banco Palmas, and reflect on my personal learning experience. Thesis Supervisor: Karl Seidman Senior Lecturer in Economic Development Thesis Reader: Balakrishnan Rajagopal Associate Professor of Law and Development 3 4 Acknowledgements It is with amazement and gratitude that I happily thank so many people for helping me through the journey whose outcome became this thesis. The list of debt must start from around twenty years ago. My mother and father, who were then graduate students from China studying education and economics at Hokkaido University in Japan, take credit for first showing me the joys of learning and of spanning boundaries. Fast forward to the past two years, I am most indebted to Professor Karl Seidman, a caring mentor and practitioner to aspire to, for opening my eyes to the subject of community development institutions, and to Professor Balakrishnan Rajagopal for introducing me to many of the writings that are referenced in this thesis, as well as for challenging his students to question the dominant order from below. Taking courses by both professors in the first semester at MIT inspired my initial steps toward this topic. I am deeply grateful to Professor Karen R. Polenske for her generous advice throughout my time at MIT, and for sharing the wisdom and skills on analyzing the intersections of socioeconomic matters and geography. Discussions with Professor Ceasar McDowell on community engagement have been illuminating. Professor Emeritus Tunney Lee was inspirational on how to think in terms of systems and integration at neighborhood scale. I am also especially grateful to Professors Xavier de Souza Briggs, Gabriella Carolini, and Albert Saiz of Department of Urban Studies and Planning (DUSP) and Professor Ben Schneider of Political Science Department for valuable comments on the research proposal at various stages, Lily Steponaitis and Victoria Del Campo from the DUSP family for their wonderful support at our home away from home, Professors Nilma Dominique of MIT and Viviane Gontijo of Harvard University for making Portuguese fun, and Rosa Coelho-Keyssar at MIT-Brazil for being the biggest cheerleader for MIT students going to Brazil. Above all, this project would not have been possible without the kindness and generosity of the individuals I met in Brazil. I am deeply grateful and fortunate to have known Asier Ansorena, Juliana Braz, Joaquim Melo, Professor Paul Singer, and many more. I offer my heartfelt gratitude to Professors Joaquim Guilhoto, Carlos Azzoni, and Eduardo Haddad, and colleagues at the University of Sio Paulo's Regional and Urban Economics Lab (NEREUS) for the insightful discussions on Brazilian regional economy over many cups of coffee. Special thanks also go to Naoto Kanehira, Satoshi Ogita, Kaori Oshima, and Alexandre Takahashi at the World Bank for thoughtful sharing of ideas. Many others in Brazil and elsewhere were also phenomenally helpful and gracious but cannot be thanked here since I promised to keep their names anonymous; you know who you are. Much came out of this research beyond the thesis document. I am personally grateful to Sandro Diez-Amigo, Rohit Naimpally, Meghan Mahoney, and Pooja Wagh at the Abdul Latif Jameel Poverty Action Lab U-PAL) and its friends and affiliates, Leo Burd of the Media Lab, Ilma Paixio of WSRO radio, and the leaders at Interaction Institute for Social Change for enabling the first steps toward implementation of the study's recommendations. I would also like to express my gratitude to CoLab, MIT-Brazil, and Public Service Center (PSC) for funding and institutional support. The research was every bit the best experience any academic endeavor can hope to be. That is to say, it was, as a philosophy professor at Georgetown University had once scribbled in the margins of my term paper, a delightful train trip without itinerary. 5 List of Figures Figure 1: Map of main contents in this study.............................................................................12 Figure 2: Three realms of existing literature ............................................................................... 17 Figure 3: Nonaka & Konno's spiral evolution of knowledge conversion and self- transcending process ................................................................................................................. 35 Figure 4: Spiral development of knowledge .............................................................................. 36 Figure 5: Zigzag development of knowledge ............................................................................ 36 Figure 6: Map of key findings in this study............................................................................... 46 Figure 7: Jayo et al's three pillars of ASMOCONP's developmental strategy.......................83 Figure 8: Kobayashi et al's relations of Banco Palmas and surrounding organizations...........83 Figure 9: Photography from Conjunto Palmeiras: Exterior of ASMOCONP compound in Jan uary 20 14 ............................................................................................................................... 86 Figure 10: Photography from Conjunto Palmeiras: Interior of ASMOCONP compound in July 20 13 ...................................................................................................................................... 88 Figure 11: Photography from Conjunto Palmeiras: Exterior and interior of Instituto Palmas building in January 2014 ...................................................................................................... 88 Figure 12: The local knowledge bank..........................................................................................89 Figure 13: Knowledge exchange scored