KARACHI: As Seth Goldin stated in an article on US economic history that the 1800’s were about who could build the biggest and most efficient farming methods. 1900’s were about the race to build the most efficient factories and now the 2000’s are all about ideas and innovation. The Neoclassic and Keynesian economic theories which drove economic growth over the last 200 years are now outdated. What is now emerging is a global “innovation economy”, proven by China and India, that adding value via innovation can disproportionally drive prosperity and economic growth.
Having missed the boat on creating efficient farming models or factories to drive our economy, this knowledge based innovative economy gives us an opportunity to catch the ranks of developed nations rather than ending up as bystanders watching others nations gaining speed and improving their standard of living.
Many may question my optimism; specially having failed to properly educate or industrialise our nation to date, but this new “innovation economy” has a hidden catalytic aspect. The improvement in communication, advances in technology and explosion of software has leveled the playing field allowing more and more countries to participate and compete for the needs and demands of the global market.
News that boasted my optimism was the recently published “INSEAD Innovation Index 2011” report. Pakistan is ranked 105 out of 125 nations in this study, its third consecutive drop in ranking from 93 in 2009. Of the various benchmarking two comparisons stand out. Firstly, on ‘Having an Enabling Environment’, sadly we rank third from the bottom at 123rd. Secondly, on ‘Innovation Efficiency’ ranking, we rank an impressive 4th, ahead of all developed and developing countries except China. This index is the ratio of output over input; ‘input’ being the presence of an environment which fosters innovation, and ‘output’ the sum of patents granted by the European, Japanese, and the US patent offices.
This truly means that Pakistani businesses and entrepreneurs are showing extreme resilience in a very adverse environment, they work with minimum resources to get impressive results. It talks volumes about the pure ingenuity of Pakistani entrepreneurs and businesses.
In comparison Singapore ranked 3rd overall; 1st in an enabling environment, but 94th on ‘Innovation Efficiency’. Considering their unbelievably super infrastructure and encouraging environment, there output fell far below expectations.
Given Pakistan’s strong ‘can do’ attitude in the face of a weak enabling environment, imagine what we can do if given an environment which fosters innovation and accumulation of knowledge and intellectual capital. I have always believed that there is something very special about our DNA, having lived and experienced all sorts of challenges and crisis, we as a race have essentially become much more resilient, creative and sheer survivors.
There is still hope and optimism in our future, if we as a nation can work towards improving our environment and take full advantage of this global “innovative economy”.
Our work is cut out and we must, as a nation, focus on these two. Firstly, on political front we must work towards reconciliation rather than confrontation on economic issues, and secondly focus disproportionally on spreading education and knowledge based learning. If we achieve that, I have no doubt that Pakistan can become a global force to be reckoned with.
The writer works in the corporate sector and is active on various business forums and trade bodies.
Published in The Express Tribune, April 9th, 2012.
COMMENTS (6)
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ
@Saif: I think you need to consult less the economics coursebook and engage more in the shape that global business is taking over the last year. You will realize that the models, though still useful, are becoming less and less relevant in today's world. Not anticipating the 2008 great recession is also a part of this complex and interdependent economic and financial structures of today.
Innovating, aka Steve Jobs, is differs from 'incremental'' growth.
Ofcourse we can do it, I, for one, have no doubt about the ability of my countrymen but for an 'enabling environment' we need committed leadership at all levels of society to pave, guide and nurture the talent.
sorry to burst your bubble but this is the case of (X)/(very small number). Our "enabling" numbers are so bad that it makes the innovation (or X) somewhat irrellavant. Either that or Côte d’Ivoire and Nigeria have awesome futures since they are higher on the index.
Keynesian ideas came in the 1930s during the great depression. The man behind Keynesian economics, John Keynes, was not there 200 years ago.
"The Neoclassic and Keynesian economic theories which drove economic growth over the last 200 years are now outdated" The writer should take an economics course before making such outrageous claims. Neoclassical and Keynesian ideas are still fundamental to economics. There is nothing called "innovation economy". The neoclassical and keynesian models both give a large role to technological growth in explaining how GDP per capita has grown in the past 200 years. (Reference: The Solow Growth model (neoclassical) and modern development theories (part of which are based on Keynesian ideas)). This is not a new idea or concept. When will newspapers stop printing articles that include incorrect/incomplete economic ideas and thoughts.
Interesting piece. Liked it. Although any inference from such surveys need careful interpretation but I feel myself somewhat in agreement with the part where author mentions about the resilience of Pakistanis.