Towards a knowledge economy

Transitioning from agriculture economy to knowledge economy, universities, industry, government need to work together.

In today’s world, nations are not built just by investing in brick and mortar in roads and bridges, in dams and powerhouses but by their ability to unleash the creative potential of their youth and use their talents for socio-economic development.

In order to develop a knowledge economy, a clear road map has to be developed through what is now a well understood and documented procedure — a Delphi-type ‘foresight exercise’. This involves a thorough and careful analysis of each sector to identify the key programmes for future development, including an assessment of the natural resources of the country, the niche opportunities after considering the current and future growth areas with emphasis on new and emerging technologies, the export opportunities and import substitution potential in different sectors and the investments needed to prepare the required skilled human resources.

In order to transition from a low value added agriculture economy to a knowledge economy, the three major players that need to come together are universities, industry and government. Universities need to adequately prepare human talent needed in each sector, as well as to set up technology parks and business incubators to provide opportunities to young entrepreneurs to establish new start-up companies. The facilities that should be freely available within such technology parks include legal and financial services as well as professional management advisors. The government can make the needed investments to improve university standards of teaching and research, set up centres of excellence in selected fields, provide financial assistance for the establishment of technology parks, provide venture capital towards new high technology industries, offer tax incentives to new technology-based industries and make national self-reliance the cornerstone of national policies and development plans.

The private industrial sector has a critical role to play in this effort to set up a knowledge economy. Indeed, the single most striking difference between research and development (R&D) expenditure in developing countries versus the technologically advanced countries is that in the advanced world, most of the R&D expenditure comes from the private sector whereas in the developing world, the investment made by the private sector is miniscule, the government being the main provider of research funding. Such funding is useful to create a research environment in universities and adequately train scientific manpower but it is not focused to develop new industrial products, improve productivity or improve product quality and boost exports.

So, the problems in Pakistan in this respect are twofold: firstly, we spend too little on education, science and technology and secondly, whatever we do spend, cannot be properly used by industry because of a lack of a research culture in industries and a critical shortage of properly trained manpower. We are not alone in this respect: similar problems afflict other Islamic countries. The Organisation of Islamic Countries (OIC) countries spend an average of only 0.46 per cent of their GDP on R&D, compared to three per cent or more of the much larger GDPs of technologically advanced countries. This is reflected in the fact that the R&D expenditure per capita of OIC countries (which include the oil-rich states) is only $27 compared to $601 for the European Union countries. Among the OIC member states, Malaysia is the only country in which the private sector contributes the highest percentage to the R&D expenditure — about 85 per cent, with only about 15 per cent being contributed by the government. The average R&D expenditure contributed by the private sector in other OIC countries is less than five per cent of the total R&D expenditure in those countries. This disparity between Malaysia and other OIC countries is reflected in high technology exports. About 87 per cent of total high technology exports from OIC member countries are contributed by Malaysia alone ($52 billion) with the remaining 56 OIC member countries contributing only 13 per cent. This is a remarkable fact.

In 2004, the Pakistan Cabinet decided that such a technology-based industrial vision and strategy for Pakistan’s socio-economic development should be carried out under my leadership. This would set a clear national path to determine how the country could transition to a knowledge economy and rid itself of hunger and poverty that engulf large sectors of our urban and rural population. Over the subsequent two years, an intensive exercise was carried out to determine the road map within the 13 different key sectors (agriculture, engineering, information technology, telecommunications, electronics, chemicals, pharmaceuticals, textiles, etc). This involved detailed consultations within each sector among subject experts, industrialists, specialists among our diaspora abroad and officials of the relevant ministries of the provincial and federal governments. The specific projects to be launched within each sector were thoroughly debated and then identified along with their costs, technical and human resource requirements and the benefits. As a result of this effort, a 300-page document was prepared, which clearly sets out what Pakistan must do in each sector over the next 15 years, broken into three five-year periods, the cost of each project, the institutions to undertake the work and the impact on the national economy and on the process of social development. This 15-year industrial vision, strategy and action plan was approved by the Cabinet in August 2007 and an inter-ministerial committee was constituted for its implementation. Unfortunately, nothing was done later as a new government was soon formed that had other priorities and this important document now lies gathering dust in the cabinet division and in the prime minister’s office.

The only way out of this huge mess that we have created in Pakistan is an honest, technologically-competent and visionary leadership that realises that our real wealth lies in our youth and makes massive investments in schools, technical colleges and universities so that Pakistan can unleash its creative potential and establish a strong knowledge economy. All we need is sensible decision-makers.

Published in The Express Tribune, December 1^st, 2012.