Innovation: key to development

Published: November 22, 2012
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The writer is former federal minister of science & technology and former chairman of the Higher Education Commission

The writer is former federal minister of science & technology and former chairman of the Higher Education Commission

In order for Pakistan to emerge from its present quagmire of poverty, hunger, deprivation, joblessness and foreign debt, it needs to migrate to a knowledge economy. About 90 million persons are below the age of 19, which is about 56 per cent of the population of our country. If we are to develop a knowledge economy, it must be through unleashing the huge creative potential that lies hidden in these young men and women. The release of this potential can only be achieved through investing in a high quality education system and linking the process of education with socio-economic development plans. This will allow us to prepare the required number of high quality professionals in areas of national need and utilise them in national projects geared towards achieving self-reliance and enhanced exports, particularly of high technology products.

The government has a pivotal role to play in ensuring universal literacy, establishing good technical and vocational schools and setting up world class universities with centres of excellence in selected fields. It is also necessary to establish technology parks to allow new technologies to be promoted through business and technology incubators, set up venture capital funds to promote innovation and entrepreneurship through new start-up companies and establish industrial clusters in key fields, such as biotechnology, engineering goods, electronics, pharmaceuticals and other high-tech areas.

However, it is largely the responsibility of the private sector to invest in focused research and development (R&D). It is only through massive investments in R&D that nations can enhance innovation and entrepreneurship, increase global competitiveness and have a major impact on socio-economic development. Indeed, it is through private sector R&D that most companies in the US, Canada, Europe, Japan and Korea invent new products, improve the quality of existing products and enhance exports. This is where the Organisation of Islamic Countries (OIC) members have failed miserably, except for Malaysia, which remarkably contributes about 87 per cent of the total high tech exports of the 57 OIC members — the balance of 13 per cent being contributed by the remaining 56 OIC members.

The critically important role that private sector R&D  is playing today is borne out by the fact that the global share of this type of R&D has been rising much faster than government R&D, particularly in rapidly developing countries such as Korea, Singapore, and Taiwan. During 2012, total R&D expenditure is estimated to be about $1.4 trillion of which companies and businesses contribute about 63 per cent, while governments contribute only 37 per cent. Private sector R&D amounts to about 70 per cent of the total R&D expenditure in China, 75 per cent in Korea and Japan, 70 per cent in Germany and 68 per cent in the US. Private sector R&D in Pakistan and most other OIC member states, by contrast, is less than five per cent. This disparity between the West and OIC members is also reflected in the availability of trained scientific manpower. There are 10,563 scientists and engineers per million population (pmp) in Finland, 9,222 in Norway, 8,846 in Denmark and an average of 4,481 in EU countries. However, there are only an average of 451 scientists and engineers in OIC member countries and about 300 pmp in Pakistan, highlighting how far we have fallen behind. Most OIC members have done little or nothing to stimulate private sector R&D through offering tax incentives, grants for promoting innovation and training of manpower, subsidies for establishing high-tech industries or establishing bridging institutions, such as technology parks and incubators. The legal instruments needed to protect the rights of inventors (such as the US Bayh-Dole Act) are missing in most OIC member countries.

In order to gain a competitive edge, countries such as Korea, Japan, Singapore, and Taiwan have focused on selected industries, like automobiles, engineering goods, ship-building, electronics and computer manufacturing. The governments stimulated the development of these industries by giving incentives and helping companies to develop capabilities in design and engineering. To help private industries to enhance their capabilities, semi-government bridging institutions were established including engineering centres, technology parks, industrial parks and incubation centers. Incentives were also granted to establish links with the overseas diaspora that also contributed to the transfer of cutting edge technologies. In Pakistan, we have been oblivious of such initiatives.

It is important to have robust innovation policies as this is vital to ensure competitiveness, industrial development and growth of exports. National policies need to promote the capability for developing indigenous technologies and creating demand for innovation. The knowledge generated in universities and research centres needs to be commercialised and mechansims to make this happen need to be put in place. China, India and some East Asian countries have stimulated demand for innovation through promoting firm-level learning, giving incentives to private companies for hiring skilled engineers and researchers, giving tax incentives for the establishment of high-tech industries, promoting inter-firm collaboration in order to achieve economies of scale and establishing linkages with global production networks. Measures to promote innovation must be grounded on a strong legal infrastructure involving protection of intellectual property rights and backed by regulations that ensure the quality of products, minimum productivity standards and fast commercial courts for dispute resolution. The proper formulation and implementation of competition laws are necessary in order to foster innovation and encourage competition for both exports and import substitution programmes.

Innovation policies need to be directed to help the poor and lower middle classes of our society. We can learn from China in this respect. In 1998, China was producing only 56,000 motorcycles annually made by 12 manufacturers. There was a determined effort by the government to promote this sector in order to facilitate the lower strata of society. By 2010, the number of manufacturers of motorcycles had risen to over 2,000, which were manufacturing 30 million units annually that amounted to over 80 per cent for the domestic market.

Pakistan needs to have a dynamic innovation policy, strategy and implementation plan so that it can emerge from the poverty trap that engulfs it. For this it needs to focus on education as the key driver for socio-economic development. Presently, Pakistan is ranked among the bottom seven countries of the world in terms of expenditure on education as a percentage of GDP. The present government had decided in the education policy approved by it three years ago to allocate seven per cent of the GDP to education, a fifth of which would go to higher education. Alas, it was just an empty slogan as the reality is that we are still allocating only 1.8 per cent of our GDP to education. A knowledge economy requires highly skilled knowledge workers and professionals and only then can innovation and entrepreneurship flourish. This cannot happen with such a low national priority being given to education.

Published in The Express Tribune, November 23rd, 2012.

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Reader Comments (10)

  • Nadir
    Nov 23, 2012 - 12:30AM

    The private sector, especially in Pakistan will never be able to invest enough money to finance R&D in Pakistan. Your historical revisionism doesnt help. In Japan it was the MITI that developed industrial policy and nudged resources towards the Zaibutsu’s, Japanese industrialist groups that spurred on growth. MITI being a government body. In South Korea, R&D was not in the hands of the private sector, rather the state underwrote investments and then, once developed passed it on to favoured industrial groups such as Hyandai and Daewoo, that by the is what we call corruption. In America, World War 2 and mass centralization of R&D under the government later contributed to commercial success. You are cherry picking facts to suit your rather shallow arguments. You talk about a knowledge economy, yet you are making comparisons of motorcycle production. Unbeleivable that you were running Higher Education in Pakistan! Mass commercialisation of education, free hand to military run universities and scholarships to favoured cronies, family members and recommendations. Please spare us the Pakistan needs to do this and that, you had a military dictator backing you and what did you do apart from creating a massive bureaucracy and visiting one conference on higher education abroad, one after the other!Recommend

  • sabi
    Nov 23, 2012 - 1:16AM

    @Nadir:
    Dr Salam has strongly proposed respective Pakistani governments to adopt their policy on the patren of MITI of japan.He always stressed the need of research based economy.He suggested that government should adopt mechanism which make it mendatary for all industries to have research department in their industries.But his voice fell on deaf ears.Perhaps security of this very poor land was more important.No funds.Ironicly we have developed human resources in the form of what we today know as strategic assets.Now we are geting bitter fruits of this ugly tree tree.

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  • binger
    Nov 23, 2012 - 10:54AM

    who says we are not innovative and creative? we have developed such mervelous weapons of human destruction and the techniques of pushing back into the stone ages, that the whole world is like bitting their own fingers. you can see these new industries mushrooming in every street, where a whole bunch of new methods of humiliating the opposite sects are invented very smartly and amazingly people are buying their products like the rest of the world is mad about buying iphones.
    In short the only thing that is left is to start exporting these smart innovations to the rest of the world, then you will see in a very short span of time the whole world become a peacefull

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  • Falcon
    Nov 23, 2012 - 10:56AM

    If I understand it correctly, innovative capability is a second priority of any reasonably sized business, survival is the first priority. In Pakistan with expensive economic inputs such as energy and lack of law & order, even big business are having trouble running basic operations, forget about the challenges of SMEs. Once we cross the milestone of providing those basic infrastructure services, we can move to the next step of incremental innovation and ultimately put ground work in place for disruptive innovation. But I agree, our first and foremost priority should be handling education on a war footing.

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  • Falcon
    Nov 23, 2012 - 11:05AM

    @Nadir:
    There are two development models. One is the Asian Model and other is Latin American model. Govt based economic intervention for accelerated transition into high tech industries is the Asian model which you are referring to. However, Latin America worked the other way around mostly because they opted for Washington Consensus based policies, which subscribe to smaller government. Therefore, private sector in those countries did most of the heavy lifting. I have to agree with Doctor Sahab that with our tax-to-GDP ratio being one of the lowest in the world and Govt not having resources to provide basic services, we would have to devise more innovative ways at least in the short term through indirect incentives rather than pumping capital directly into specific sectors (as occurred in Asian countries), because the Govt. simply doesn’t have the capacity due to severely constrained fiscal space.

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  • NAkhtar
    Nov 23, 2012 - 4:49PM

    u have been working with mushrraf, why did you not take the suggested steps, who stopped you?

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  • shakrullah
    Nov 23, 2012 - 6:14PM

    @NAkhtar:

    He cannot be blamed for not taking any steps when in power . He pumped billions of

    rupees into higher edcation to turn our universities into knowledge-generating , innovative

    places . Result ? Utter failure , universities continue to be graveyards of learning . The Doctor, unfortunately, does not have the courage or flexibility of mind to see this fact .

    And therefore keeps harping on his nostrums that did not work .

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  • shakrullah
    Nov 23, 2012 - 6:43PM

    What key was employed by the Holy Prophet for triggering development of mankind .

    What was the priority in his plans : to discover new technologies , to explore

    new economic resources ? No . His priority was to give his people a dynamic ideology, to

    infuse in them high ethical and moral principles . to give them a vision of good life

    and a passion to pursue it . The rest —-conquests or economic affluence or

    superamacy in knowledge—- followed as a corolary .

    Our greatest failure in education is not backwardness in sciene, technology or research.

    Our greatest failure is that our schools colleges universities fail to produce people with

    moral-ethical rectitude or an inspiring worldview .

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  • Vikas
    Nov 23, 2012 - 9:00PM

    No need to spend anything on education. Pakistan needs to buy an aircraft carrier like India. Common Pakistan.

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  • Bonga
    Nov 24, 2012 - 8:37AM

    @ Shakrullah

    I cannot resist to appreciate your thoughts. I heard many unethical practices in our so called world ranked universities. Thats why private sector is not interested to invest in innovation through local institutes.

    Recommend

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