The seeds of innovation

Wednesday / Sep 19 2018

Newspaper : The News

To transform Pakistan into an economic giant, Pakistan needs to give the highest national priority to education, science, technology and innovation. Naya Pakistan must be built on these pillars, with social justice and equitable socioeconomic development as its foundations, so that we can unleash the creative potential of over 120 million young people below the age of 25.

China offers a useful case study as the situation in Pakistan today is more or less the same in terms of poverty levels as it was in China 50 years ago. The key theme driving this progress has been to foster innovation by developing skills and enabling policies. A programme launched in 1978 by China was aimed at developing a well-trained workforce that could match that of Europe, Japan and the US. This allowed China to benefit from the setting up of large industrial manufacturing plants of Western companies in China, allowing it to obtain access to new innovative technologies. China manufactures a range of highly-sophisticated products.

China started sending hundreds of thousands of students to top universities abroad. About 0.6 million students were sent to Europe and the US in 2017 alone at a cost of about $60 billion. The returning scientists and engineers are being absorbed in research institutes, industries and universities. The sheer scale at which this was done by China is mindboggling. China is already overtaking Europe and the US in many emerging fields.

A large network of science parks and zones has been established across China. As a result, the number of patents awarded each year for new inventions continues to increase. The emphasis on online technologies, including e-commerce, e-governance and social media, are accelerating the rapid pace of change.

Chinese entrepreneurs are disrupting traditional industries in powerful ways with more and more start-ups emerging by using crowdfunding, open-source design and innovation incubators. The drive for innovation, supported by enabling government policies that involve massive investments in skill development and infrastructure, has resulted in the growth of private-sector companies over the last decade. As a consequence, companies like Tencent, Baidu and Alibaba are ranked among the top 10 internet companies in the world.

China shifted from labour-intensive manufacturing to growth that is driven by innovation. A valuable internal consumer base that was hungry for new technology drove this shift.

The World Economic Forum Global Agenda Council on China has evaluated the factors for the country’s unprecedented development and concluded that human capital, accessible markets and regulatory issues have been the key drivers of growth. The emphasis has been on four key programmes: introducing government policies to create an environment that makes a dynamic, innovation-driven development strategy possible; facilitating companies to become dominant forces in innovation; bringing about radical changes in education and training in order to enhance the way innovative talent is nurtured; and promoting open-source innovation.

An important factor in this effort has been to remove the traditional disconnect between academics and industrial research. Universities are now encouraged to pursue exciting joint projects with enterprises and set up their own technology enterprises. Technology parks and incubators have been set up either as an integral part of or closely connected with universities in order to connect entrepreneurs with local resources.

The teaching programmes in schools, colleges and universities have been modified to promote entrepreneurship. Many larger enterprises have established incubators to promote the development of new products and services. Today’s China isn’t about imitation. It is about innovation.

In this massive drive for innovation, SMEs are playing an important role within China’s unique innovation system. SMEs own 65 percent of invention patents and 80 percent of the most innovative products in China. Several Chinese companies are included in the top 10 internet-based companies of the world. China’s online retail sales are over $650 billion annually and China is now the world’s largest e-commerce market.

The massive investments in R&D by Chinese companies can be gauged from Huawei’s spending in this sphere. The company allocates 10 percent of its revenue towards R&D, which amounts to about 40 billion Yuan (about $6 billion). The result is that Huawei is the most powerful company in 4G and telecom systems in the world today. Similarly, Sinopec was awarded 2,844 patents in 2015. The 4.5 million-tonne polyethylene project being set up by a consortium dominated by Sinopec in Saudi Arabia is the world’s largest and most sophisticated project of its kind.

To foster innovation, 130 high-tech parks in China are expanding rapidly, and they account for 40 percent of total R&D investment by all of China’s enterprises. They also account for about 33 percent of revenue from sales of new products. For example, the Zhongguancun Science Park (Z-Park) in Beijing recorded 4.07 trillion Yuan (about $610 billion) in revenues in 2015 with ‘strategic’ emerging industries contributing about 72 percent of its revenues.

The newly-established city of Shenzhen leads the world in such sectors as supercomputing, gene-sequencing, metamaterials and 4G technology. It has 1,283 major scientific research labs, including key labs, engineering labs, and engineering centres. In Pakistan, we have witnessed the collapse of higher education and science over the last decade. The HEC’s performance in sending students abroad has been ineffective and has dwindled from about 1,000 foreign scholarships in 2008 to only about 250 in 2017. This is indicative of the negligence of this sector by the last two governments.

The funds released against the HEC’s development budget were slashed from Rs35 billion to a meagre Rs15 billion in the last financial year. In addition, a 45 percent cut was also imposed in the year before, with the money being transferred to support corruption-ridden schemes. This has pushed our universities into an abyss of darkness after an exciting period of growth between 2002 and 2008.

Science and technology in the country received low priority, with only Rs0.9 billion released in the last financial year against an already unbelievably low allocation of Rs3.5 billion. The fact that Pakistan was spending Rs250 billion last year on the 27-kilmetre-long Orange Line in Lahore and less than Rs1 billion on science and technology reveals the intentions of previous governments. The lesson that Pakistan can learn from the development efforts made in China over the last five decades is that we too must strive to transform ourselves from an economy driven by natural resource to one that benefits from innovation-led growth.

There is optimism about Pakistan’s future under the leadership of Imran Khan, who has a track record of selfless service. To achieve our potential, we must invest in education, science, technology, and innovation.