Overreliance on imports, a narrow export base and neglect of industrial diversification have led to persistent trade deficits. It has not been realised that true socio-economic development can only occur if innovation is fostered, so that our country can manufacture and export high-technology, high-value-added goods. Excessive dependence on foreign aid and loans has resulted in unsustainable debt, while tax evasion and corruption within the FBR have limited revenue generation. Poor investment in education, science and technology, due to a lack of vision in our leadership, has hindered productivity and innovation.

Nations like South Korea, China, Finland, Singapore and Vietnam have transitioned from low-income or developing economies to high-tech powerhouses through deliberate, long-term policies that fostered a culture of innovation. The financial gains from promoting innovation at the national level are immense.

In South Korea, for example, the transformation from a war-ravaged nation in the 1950s to the world’s 13th largest economy has been underpinned by massive investments in R&D and education. In the 1960s, South Korea’s per capita income was barely $158; today, it exceeds $36,000. This was made possible by prioritising technical education and aligning university curricula with industrial needs. The private sector, particularly companies like Samsung and LG, has played a central role in this transformation. Samsung Electronics alone, with annual revenues of over $230 billion, invests more than $21 billion each year in research and development – demonstrating how private enterprise can drive national innovation. In Pakistan, private sector R&D remains negligible because of myopic government policies.

China's innovation-led economic surge is perhaps the most striking. From 2000 to 2023, China increased its R&D spending from 0.9 per cent to over 2.6 per cent of GDP, totalling around $470 billion annually – second only to the US. Through targeted state programmes like ‘Made in China 2025’ and aggressive investment in science and technology parks, China has become a global leader in AI, 5G, semiconductors and green technology. Its high-tech exports now exceed $940 billion annually. Crucially, the private sector is the main driver of this innovation surge. Huawei alone has over 110,000 R&D employees – more than half of its total workforce.

By contrast, Pakistan presents a starkly different picture. Despite a young population, a strategic geographic location and significant natural resources, the country lags in nearly every indicator of innovation. According to the Global Innovation Index 2023, Pakistan ranked 88th out of 132 countries, lagging behind regional peers such as India (40th), Iran (62nd) and Vietnam (46th).

Pakistan’s R&D spending remains dismally low – less than 0.16 per cent of GDP – compared to India’s 0.7 per cent, Iran’s 0.9 per cent and China’s 2.6 per cent. Fewer than 50 patents are filed annually by Pakistani universities, and industry-academia collaboration remains almost non-existent.

The private sector’s role in promoting innovation in Pakistan is minimal. More than 99 per cent of research funding comes from the government, while businesses prefer traditional, low-risk sectors like textiles, real estate and trade. As a result, Pakistan’s high-tech exports account for less than one per cent of its total exports, and per capita income stagnates at around $1,500. Moreover, the country is witnessing a severe brain drain: in 2023 alone, over 450,000 skilled Pakistanis emigrated, many of them scientists, engineers and IT professionals.

To transform Pakistan into a competitive, knowledge-based economy, it must undertake bold, coordinated reforms rooted in the Triple Helix model. First, universities must be restructured to prioritise research, entrepreneurship and collaboration with industry. Faculty should be incentivised to file patents, create spin-off companies and partner with private enterprises. University rankings should be linked to real-world impact, not just research publications.

Second, R&D spending should be increased to at least one per cent of GDP within five years. Tax incentives should be provided to private companies that invest in research. A revolving National Innovation Fund – of at least $500 million – should be established to support strategic technologies such as AI, renewable energy, biotechnology and advanced agriculture. Public procurement policies must be designed to support local innovation and startups.

Third, and most importantly, the private sector must step up as a key player in the innovation ecosystem. Pakistan’s large conglomerates should be encouraged or required to allocate at least two per cent of their annual profits to R&D, with the government providing matching funds as an incentive. Much like India’s TATA Group or Reliance Industries, Pakistani firms must invest in long-term technology development, not just short-term profits. Private R&D labs, corporate research centres and industry-funded university chairs should become the norm, supported by government funding.

Pakistan should also invest in innovation infrastructure. Special Economic Zones (SEZs) should be expanded into full-fledged Technology Innovation Zones (TIZs) equipped with high-speed internet, co-working labs, prototyping facilities and venture capital offices. Strategic sectors such as clean energy, pharmaceuticals and food security should be supported through targeted ‘technology missions’, similar to India’s National Missions in space and digital technology.

International collaboration will be crucial. Pakistan should form Quad-style partnerships involving Pakistani industries and universities partnering with Chinese industries and universities to manufacture and export high-tech, high-value-added products. The Pakistani diaspora, particularly scientists and entrepreneurs in the US, UK, Canada and the Gulf, should be invited to mentor startups, invest in innovation funds and collaborate on research projects.

If Pakistan can make this transition, it has the potential to lift millions out of poverty and emerge as a serious player in the global knowledge economy. For this to happen, we need a motivated technocratic government that understands the importance and adopts a roadmap to transition to a technology-driven knowledge economy.

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