Universities are the single most important producer of knowledge that leads to innovation, entrepreneurship and development of a knowledge economy. Once research is established at a university, creation of new ventures flourishes. According to author Richard Florida, “wherever creativity goes, and, by extension, wherever talent goes – innovation and economic growth are sure to follow.”
The World Bank identifies education and skilled force, ICTS and innovation as three of the four essential pillars of a knowledge economy. Likewise, the World Economic Forum identifies higher education and training, technology readiness and innovation as three of twelve pillars of a knowledge economy. According to a recent World Bank report, not only do higher education institutions help impart behavioural, cognitive, and technical skills that make workers effective in the labour market, they are increasingly valued as engines of research that can drive innovation, entrepreneurship and productivity.
The modern university, with its mix of teaching, innovation and research, is different from the universities of yesteryears, which only served as teaching grounds. By introducing innovation, creativity and interdisciplinary research as a vital component of teaching, the university contributes more directly to the economy and the society than many other institutions. Industrial countries have always viewed universities as an instrument for accelerating technology to enable them to stay ahead in competition. World War II was a boom for R&D at universities: The jet engine, nuclear power, radar, computers, and many other technologies took root in the 1940s in the research labs of the universities.
New small businesses created at the universities are the ones creating jobs, according to a study by the Kauffman Foundation. Since 1980, nearly all net job creation in the US occurred in firms less than five years old, which was the result of university incubation. Over the last four years these young start-ups created two-thirds of all new jobs. Apple, which started in 1976, has a valuation of $508 billion, annual sales of $128 billion, with over 200 m devices sold. Pakistan, on the other hand, came into being in 1947, its GDP (ppp) is $480 billion, exports are $30 billion, and the population is 180 million. Facebook started in a university dormitory by students in 2004. Today its valuation is over $104 billion, with over 900 million users. Success stories continue even today: Instagram started in October 2010, and, with only 13 employees, was bought for $1 billion by Apple in April 2012.
Stanford University triggered the establishment of the Silicon Valley. Hewlett Packard was the first company to start in a garage in 1939 initiated by two unemployed graduates of electrical engineering with an investment of only $500. MIT and Harvard are responsible for over 1,500 hi-tech companies around Route 128 in Boston. Companies established just by MIT have turnover exceeding $11 trillion, roughly the size of Korea’s current GDP. Likewise, North Carolina State University and Duke University initiated the Research Triangle, home to some of the largest R&D operations in the world.
In Europe, the Cambridge Science Park, founded by Trinity College in 1970, is the oldest science park in the UK, with strong links with the University of Cambridge. Ireland is yet another example of a modern knowledge economy. Since 1970, 17 Institutes of Technology have been established in Ireland. Today, Ireland is ranked as one of the wealthiest countries in the OECD. Finland, despite a major banking crisis in 1993, loss of trade and high inflation, invested in R&D and its economy grew. Today it ranks first in the number of researchers per 1,000 population. With a population less than half that of Karachi, its one high-tech company, Nokia, has more exports ($48 billion) than all of Pakistan ($30 billion).
East Asian Tigers South Korea, Hong Kong, Singapore and Taiwan followed Japan’s example through the development of research universities in the 1960s and the 70s. The fruits are clear: Singapore’s economy grew 189 fold since the country became independent from Malaysia – its per capita rising from $512 in 1965 to $36,537. South Korea became an economic superpower in less than four decades, increasing its GDP from $3.9 billion in 1960 to over $264 billion in 1990 to $1.5 trillion now.
Emerging Asian economies are now beginning to adopt this model as well: Turkey in the last 20 years has built over 43 technology parks attached to its universities. The largest ones at METU, ITU and Bilkent University with over 700 companies generate revenues of over $750 million. Turkey’s GDP has grown to over 10 percent this year, with exports exceeding $111 billion. In Malaysia, Educity is building seven universities in a development zone three times the size of Singapore, expecting to attract over $100 billion’s investment in two decades. India over the next five years will establish 200 new universities, including nine new IITs, bringing the total number of IITs to 16.
Even oil-rich countries are beginning to realise the importance of a knowledge economy. King Abdullah University of Science and Technology in Saudi Arabia was established with a $10 billion endowment, with strong facilities for research including the fastest supercomputer in the Middle East and one of the most powerful in the world. Qatar and the UAE have built their own knowledge cities, attracting the best Western universities. Iran has invested in excellent universities and there is an exponential increase in research coming from Iranian universities. Its nuclear power for peace programme is indigenously designed and -developed. Iran also plans to establish over 50 technology parks by 2015.
Pakistan is catching up too. With research at an all-time high, this year, six of its universities were ranked in the top 300 universities of Asia. The HEC has established six Technology Incubators at its leading research universities, and the results are beginning to show with the creation of new companies. Six more Incubators are planned, depending on funding. Seventeen Offices of Innovation and Research (ORIC) have been established in the last two years, and 13 more will be established in the next two years. Three Centres of Advanced Study and Research in priority areas of development (Energy, Food Security, Water) are being established this year. One technology park is on the anvil at Islamabad.
Pakistan therefore needs to continue to focus on investing in quality higher education and research, or risk being left behind other emerging economies in the region.
The writer is chairperson of the Higher Education Commission of Pakistan. Email: jlaghari@ hec.gov.pk