Countries that have realised that their true wealth lies in unleashing the creating talents of their young and instituting a fiercely independent and merit-based systems of governance in the public and private sectors are marching forward rapidly. Strong public institutions play a critical role in promoting innovation, which is the single most important element for countries to transition from developing to developed economies. This is corroborated by finding of the World Bank, which has identified institutional malfunction as the major cause of poverty and underdevelopment. Poorly governed institutions not only cause waste of financial and human resources but can also inflict irreversible damage to the social and economic fabric of society.
There is no use formulating policies and plans if institutions to implement them either do not exist or have weak capacity (Metcalf 1992). These are not just institutions involved in human resource development and scientific research but economic institutions such as investment banks, industrial and technology institutions, which provide standards related services and legal institutions that regulate the flow of information and intellectual property. The effective functioning of all these institutions is essential for innovation, and productivity growth.
Pakistan needs to restructure and redesign its institutions to rid itself of institutional inertia that is caused by poor governance, mismanagement, corruption, non-transparency and lack of accountability. Frequent interference by politicians and other ruling elites has destroyed whatever little competence or credibility was left in our institutions. Today our institutions are nothing more than white elephants, which hinder rather than facilitate the flow of knowledge and effective implementation of laws.
We also need to reform our knowledge-generating institutions to make them more responsive to the needs of the society. Public R&D institutions in Pakistan work with often overlapping objectives and minimum coordination with their sister organisations and the industry they are actually meant to serve. They are mostly managed and administered by persons who have neither management nor entrepreneurial experience.
In 2001, one of us (Atta-ur-Rahman) as minister for higher education, tried to reform the institutions of higher learning in Pakistan through the formation of the Higher Education Commission under which a large number of issues related to governance, management, merit-based recruitments, performance based promotions for university faculty and appointment of vice-chancellors were addressed. For the implementation of these reforms new departments were established at the Higher Education Commission ensuring continuous monitoring and evaluation. This process is still on and has shown, all in all, excellent results.
The existing governance and management system in public R&D institutions needs to be critically analysed to allow decentralised decision-making, mergers and strengthening of selected institutions on the basis of their relevance to the economy. The selected institutions or centres should be staffed with high-quality faculty and researchers and equipped with modern research and ICT infrastructure. These Centres of Excellence with appropriate governance and management structures should be encouraged to build a culture of teamwork and creativity, promoting values of intellectual integrity and an attitude for learning, sharing and mentoring.
Centres of excellence with internationally competitive wages and working conditions can become magnets for high quality scientists both at home and abroad and for attracting FDI. The recent flow of FDI towards India is attributed to some world-class institutions of higher learning – i.e., the Indian Institutes of Technology (IITs) that are not only training high-quality engineers but have accumulated specialised knowledge in specific areas that is relevant to local conditions. Multinational firms seek collaboration with these institutions for redesigning their products meant to be sold in local markets.
The East Asian economic success is attributed to strong public research institutions such as ITRI in Taiwan, KIST in South Korea and MITI in Japan. These institutions were staffed and managed by highly educated and competent professionals selected on merit. They steered the innovation systems of their countries by developing a long-term technology vision in close coordination with the industrial and production sectors.
China introduced its economic and institutional reforms in the late 70s. The public S&T and R&D organisations were subjected to three pronged reforms: i., reforming the funding system, ii., improving R&D management and iii., strengthening linkages. Public financial support R&D organisations institutions was reduced to force them to seek other sources of funding either through contract research or by providing consultancy services. Applied research was encouraged through incentives such as licensing of technology developed by institutions, establishing onsite manufacturing operations and creating technology based spinoffs.
More public funding was directed towards basic research in strategic high- technology industries. Improvement in R&D management included measures such as decentralisation of decision-making, change in the evaluation criteria for measuring efficiency, fostering competition among organisations and diversifying their activities. Supporting R&D in the manufacturing sectors strengthened their linkages with public research institutions. The government established semi-government bridging institutions between public research institutions, such as engineering centres, technology markets and incubation centres to strengthen linkages between public research institutes and manufacturing organisations. (Huang, et.al.)
In 1970 Taiwan’s computer Industry was based on small scattered firms engaged in imitation of computer parts and video-games. Realising the potential of this industry for future growth, Taiwan’s government established the Institute for Technology and Industry (ITRI). ITRI developed a long-term vision with the objective to make Taiwan’s computer industry globally competitive. In the first phase ITRI established its R&D facilities by importing equipment and training of personnel and promoting research programmes including joint research agreements with foreign scholars.
In 1981, ITRI, after having built a solid infrastructure for development of computers, decided to establish an experimental factory to build capability for production engineering. ITRI helped local manufacturers by transferring 280 CMC100 technology to Hang Yo company in 1982. This encouraged contract research between ITRI and local manufacturing firms. ITRI assisted local firms, including ACER with R&D for manufacturing and IBM-compatible computer manufacturers in 1984 for technology upgrade to PC-AT.
From 1984 to 1990, in order to cope with increasing competition Taiwan’s computer manufacturers had to upgrade their product quality and production time to survive and grow. At this stage ITRI supported the industry not only for hardware development but also provided technology for testing, quality control and high-quality production. In 1985 ITRI established the government-supported Chip Implementation Centre to help manufacturers establish their IC design technology. United Microelectronics Corporation (UMC), Taiwan’s first private-sector IC manufacturer was a spin-off from ITRI” (Chang, et al).
There are many lessons for us to learn by such successful examples from other countries. What is needed is the political will and honesty of purpose.
Acknowledgement: We are thankful to Abdul Baseer Qazi, PhD Fellow, United Nations University-MERIT, The Netherlands, for his valuable inputs.
Prof Atta-ur-Rahman is president of the Pakistan Academy of Sciences. Dr S T K Naim is an expert on STI policy and a consultant at COMSTECH.