Saturday May 28, 2022

Imperatives for development

In this new world order, science, technology and innovation are the key drivers for socio-economic development. The world has become divided into two halves, those that are investing massively in quality education, science, technology and are taking appropriate measures to promote innovation, and those that are trapped in low value

October 14, 2015
In this new world order, science, technology and innovation are the key drivers for socio-economic development. The world has become divided into two halves, those that are investing massively in quality education, science, technology and are taking appropriate measures to promote innovation, and those that are trapped in low value added economies, relying largely on low value added agricultural goods for exports. Pakistan belongs to the latter.
In order for businesses to grow, modernise and innovate, acquisition of technology is essential. This can be done either by indigenous development of technology or through technology transfer. In India, the emphasis has been on both. The recent decision of India not to buy the latest aircraft from the west but to focus on the improvement of its own aircraft is a reflection of the policy of national self-reliance that was initiated by Mahatma Gandhi and followed faithfully, by and large, by successive governments.
The top Indian automobile manufacturer, Tata Motors, opted for technology acquisition. Founded in 1945, it produced its first commercial vehicle in 1954 in collaboration with the top German automobile manufacturer Daimler–Benz AG. The collaboration ended in 1969. Tata Motors embarked on production of passenger cars and by 1998, Tata had acquired the capability to produce all parts of the cars including the engine, gear box and other parts completely indigenously. The first fully indigenously manufactured car, Tata Indica, was launched in 1998.
In 2008, Tata shook the world by launching the world’s cheapest car, the Tata Nano at a price of under $2000. Tata Motors bought over the South Korean truck manufacturer Daewoo in 2004, thereby gaining access to the latest Korean technologies. In 2008, Tata purchased Jaguar Landrover from Ford, thereby becoming a producer of sophisticated modern luxury cars, and gaining access to the latest technologies in engine manufacture as well as other systems,

knowledge that would otherwise never have been available easily to India. In Pakistan there has been no vision, strategy or action plan to enter the high technology manufacturing sector. This is because of successive governments who have either been thoroughly corrupt or those with a myopic vision who do not understand the importance of a knowledge-based economy.
For technology transfer, one needs to have highly skilled workers who can adopt, properly absorb and utilise the available technologies. Pakistan is unable to do so because, while there are over a thousand technical training centres, they are pathetic in standards. These need to be linked to top international institutions and brought to world standards, as otherwise we will be unable to absorb technologies acquired from external sources.
Development of new technologies involves much greater challenges than technology transfer: high-quality universities, R&D institutions, and government support to transform ideas to products and processes through access to technology parks, business incubators, venture capital and an enabling environment so that private sector R&D can flourish. All this is missing in Pakistan. The science development budget of India today is about Rs200 billion, while that of Pakistan – unbelievably – is only Rs1 billion (having shrunk from Rs6 billion in 2002 when I was the federal ninister of Science & Technology).
Innovation and technology development are vital both at the micro and macro levels. At the level of individual companies, it is critically important to have trained technicians and engineers so that they can operate and maintain sophisticated machinery that is used in industry today. At the macro level, it is important to link Foreign Direct Investment (FDI) to technology transfer so that a key prerequisite to project approval by the Planning Division is acquisition and indigenous development of capabilities in technology. India did this several decades ago – and we should do it now.
There are several different aspects that must come together harmoniously for an innovation ecosystem to flourish. Pakistan is lacking in all of them. The first is quality education from kindergarten and elementary schools through secondary schools and universities. This education system should encourage a problem solving approach rather than the rote learning practiced today.
It is important to have high quality school and college teachers since the foundations of the personality are laid at a very young age. This has been one important reason for the success of Singapore as dramatic changes in salaries were made at school level and highly qualified persons attracted to school teaching. Pakistan is alas ranked ninth from the bottom in the world in respect of its investment in education.
The second key factor is R&D spending. In Pakistan this had gone up to 0.63 percent of GDP in 2007 after the establishment of the Higher Education Commission under my charge but has shrunk back to about 0.3 percent, indicating the myopic policies of the governments that followed. There is a direct relationship between R&D expenditure and socio-economic development, as borne out by the examples of China, Korea, and Singapore.
The third major factor needed for a robust innovation ecosystem is enabling government policies that promote private sector R&D. In technologically advanced countries most of the R&D occurs under the umbrella of the private sector and the governments have played a pivotal role through appropriate policy measures to promote private sector R&D. These include tax incentives to companies that are investing in R&D, provision of government grants for foreign training of workers in key technologies, strengthening of laboratories in private industries through matching grants, promoting new business ventures in high technology areas through long-term tax rebates etc.
One example of the impact that this can have is the 15-year tax holiday that I gave as federal minister of Science & Technology to the IT industry in 2001 and the massive investments made in the establishment of high quality IT education institutions including the creation of endowments in public sector engineering universities to upgrade R&D programmes in the Information Technology area.
The result: there was a report published in New York Times on August 10, 2015 that Pakistan’s global annual IT sales had gone up to $2.8 billion (up from only $30 million in 2001), that there were about 10,000 IT graduates entering the market annually, and that Pakistan ranked number three in the world (behind only USA and India) for supplying freelance programmers who now account for $850 million of the country’s software exports. The seeds that we sowed back in 2001 and bearing the fruits now.
The impact of investment in science is huge. Two examples: Just one company, Nokia, of Finland – a small country with a population of 5.5 million, (about a quarter of that of Karachi) – had exports of $50 billion in 2010, double those of Pakistan. A second example, Singapore – another country with a similar population to Finland – had exports which were almost 20 times those of Pakistan. The reason: lack of technologically competent and visionary governments in Pakistan.
So, Mr Prime Minister, invest in education, science, technology and innovation – not just in infrastructure projects – if you want Pakistan to progress.
The writer is a former federal minister and former chairman of the HEC.