Wednesday / Nov 09 2022
Newspaper : The News
Countries making rapid economic strides have their primary focus on innovation to create the ecosystem abilities so that they are able to manufacture and export high-tech goods
Unfortunately, Pakistan has failed miserably in this area because of the myopic policies of its successive governments. The result is that our exports have stagnated below $30 billion for decades while nations such as Singapore or Korea, which are much smaller than us, have moved ahead with their exports ten-fold higher. Even Bangladesh, which was way behind Pakistan in economic development at the time of its creation in 1971, has performed better than us with its annual exports of $52 billion, almost double than those of Pakistan.
The problem is that Pakistani governments get so caught up in tackling routine day-to-day problems that they cannot see the forest for the trees. They fail to focus on the big picture, how to lift a country out of poverty and how to set up a strong innovation system that can propel it towards a technology-based knowledge economy.
Properly designed national industrial and innovation policies can give a country a competitive advantage in emerging high-tech fields and earn it much-needed foreign exchange. This requires sustained investment in research and development in selected areas to create the required high-quality human capital and infrastructure along with suitable policy frameworks that support nascent industries. These policies must particularly support research and development in the private sector, offer tax breaks for industries in high-technology fields, and provide access to capital and markets as well as support measures for export.
The natural resources of a country must be properly utilized for optimum industrial growth. Let us take the case of energy. Pakistan has one of the largest coal deposits in the world, but disinterested politicians decided several decades ago to ignore this valuable resource and base the country’s energy production on imported oil.
Today India uses 55 per cent of its natural coal reserves for energy production, and Pakistan seven per cent. Selfish acts carried out by our leaders in the energy sector have pushed the nation into poverty for decades to come. The utilization of our plentiful clean energy sources such as water, wind and sun for our energy requirements remains limited.
To establish a robust innovation system, there are three major interconnected components. The first is the resources (endowments) available to a country. The most important one is the human resources that a country possesses – the level of education, culture, and demographics. Then comes natural resources such as oil, gas, and minerals. A country’s climate that is conducive for agriculture, its geographical landscape that is conducive to tourism, and its system of governance also hold importance. Other essential factors are the integrity and technical competence of its leaders and its system of justice that can swiftly provide justice and punish criminals in a fair and equitable manner.
The second important component is government policies that can act as a powerful enabler to properly use the resources a country possesses. These policies include investments in high-quality school, college and university education, promotion of research, development and commercialization with particular focus on new and emerging technologies, the ability to create a business-friendly environment through ease-of-doing business, the law and order situation and favourable trade policies.
The third vital component in the national innovation system is the role of the private sector. Research and development programmes carried out under the umbrella of the private sector play a critically important role in the transition to a knowledge economy, and this is where Pakistan is ranked among the weakest countries in the world. In contrast to research in government laboratories, research studies carried out in private-sector institutions have a razor-sharp focus on the cost-effective development of commercially viable new products for the local market or for exports.
To profit from innovation, a country requires to focus on carefully selected commercially important projects with effective coordination of R&D personnel with design, production and marketing activities. These are best conducted in private organizations. It is understandable that more than 50 per cent of R&D expenditure in the most advanced countries comes from the private sector. Unfortunately, in Pakistan it is less than one per cent mainly due to myopic government policies.
Looking forward, it is imperative that the government should target critically important high-technology products for manufacture and export, and give major incentives to industries to invest in these fields. Opportunities are plentiful and range from biosimilars, nutraceuticals and vaccines in the pharma industry, lithium batteries for the automobile industry, extraction and processing of precious minerals for the electronics and materials industries to products related to artificial intelligence, cyber security and internet-of-things for the IT sector.
The defence industry too presents huge opportunities for Pakistan in some emerging areas such as the manufacture and export of swarm drones controlled by powerful AI software. This area is already shaping the directions of future warfare as evident from the ongoing Ukraine–Russia war.
To develop a national innovation system so that the country can migrate to a technology-driven knowledge economy, Pakistan must follow two parallel paths: (a) declare a national education emergency and make massive investments in quality school, college and university education, leading to the creation of top-class universities and research centres closely linked with industry – as done by Singapore, Korea and China; and (b) incentivize corporate research and development efforts in carefully selected fields by the country’s largest industrial groups.
Our government’s efforts need to be focused on IT, mineral resources, manufacture of automobiles, ship building, semiconductors, batteries for electric cars, next-generation solar cells, pharmaceuticals, and defence products, to name a few. Simultaneously, we need to focus on the services sector including banking, broadband penetration and telecommunications that offer huge possibilities.
The innovation process must be primarily driven by the private sector, and this is where the successive governments have failed miserably to provide the necessary incentives, laws and ecosystem to make this possible. The science, technology and innovation policy for Pakistan was approved in January 2022, and it has many excellent recommendations. It is time this policy was implemented with a sense of urgency as we are following behind other nations with every passing day.