By Muhammad Raza Ahmad Khan
Under the present government of Prime Minister Imran Khan, we witness a much-desired emphasis on rejuvenating Pakistan through building a resilient knowledge-based economy!
In simple words, knowledge (k)-economy is a generation of wealth by exploiting intellectual capital (know-how)! Leading economies of the world have capitalized on this concept to progress their communities and earn invaluable foreign exchange. The STIPs (Science & Technology Industrial Parks) in China, as an example, had sales revenue and exports worth US$373 billion and US$88 billion respectively in 2006 employing over 3.5 million workers! (Source: The Annual Statistics Report of the Torch Center, 2007)
Our country‟s potential to grow and embrace the era of the k-economy is immense.
Our country relies heavily on natural resources and agriculture i.e. a factor-based economy. In the modern era, while the world moved on to industrialization (efficiency-based) due to advances in management and technology, we remained focused on agriculture and labor-intensive industry (mainly textile which historically is the mainstay of our exports at around 60%). Now, we are experiencing another shift where more and more economies are being driven by their capacity to discover knowledge and thus innovate; the knowledge(k) economy!
Our country‟s potential to grow and embrace the era of the k-economy is immense. With an abundance of natural resources, fertile land, and raw human capital it is an opportunity waiting to happen. What is required is a planned, focused, and methodical approach to marshal our energies and limited financial resources for the biggest bang for the buck gains. We have a proven track record of accomplishments once we set our mind and focus on it. The development of nuclear technology is a very good example of it. If a country like Singapore, comparable in size to our capital Islamabad, had exports in excess of US$300 billion in 2018, there is no reason that Pakistan cannot have exports in multiples of this number.
A careful and data-driven selection of development sectors in the short, medium, and long term is of paramount importance. We cannot just enter into developing high technology products without having a firm grip on delivering medium technology products and services.
All and everything has to stem from the definition of the big picture, a vision, that needs to be defined by no other than the Honourable Prime Minister himself. With buy-in from all relevant stakeholders, a comprehensive data (fact, not opinion) driven assessment of the current and desired state must be carried out, define the gap, and then develop and implement a strategic plan with stipulated timelines and Key Performance Indicators(KPIs). We must also understand that, given the limited size of our pie, not everything can be done at the same time. Therefore, a careful and data-driven selection of development sectors in the short, medium, and long term is of paramount importance. We cannot just enter into developing high technology products without having a firm grip on delivering medium technology products and services. However, the masterplan has to be robust enough to take Pakistan into the league of leading developing countries within the next 10 years (by the year 2030) with exports growing to US$500 billion.
There is no doubt that the economic rise of a region is closely tied to the rise of its research universities, the seats for discovering and generation of knowledge. In the process of discovering knowledge, universities become a repository of knowledge and in-turn provide a focal point for creating knowledge-based economies. Universities hold a continuous supply of raw and creative human capital. The challenge is to convert the raw talent and exposure into well-trained knowledge-job creators!
We need to make targeted investments into building incubation centers and technology parks defining their role in a broader framework for economic development identifying technological/industrial sectors as key focus areas to be highlighted in Tech.
We are witnessing a positive shift towards entrepreneurship, innovation, and start-ups; especially under the banners of Offices of Research Innovation & Commercialization driven by the Higher Education Commission of Pakistan and the Kamyab Jawan program started by the government. We have built more than three dozen business incubation centers in universities with many more in the pipeline. In addition, with the advent of the National Science & Technology Park (NSTP), we will see more emphasis on technology/science/business parks in the days to come. All of these are positive initiatives with good intentions.
Universally, incubation centers and technology parks have proven to be an important source of converting ideas into commercial products/services thus making significant economic and technological contributions to several nations across the globe. Since technology parks find their roots in the entrepreneurial, social, economic, and governmental infrastructure and priorities, their „design‟ and implementation must be tailored to the specific needs of a nation. In doing so, important vehicles to foster the growth of the knowledge economy such as incubation centers and technology parks will be addressed in a more adequate manner.
We need to make targeted investments into building incubation centers and technology parks defining their role in a broader framework for economic development identifying technological/industrial sectors as key focus areas to be highlighted in Tech. Parks/Incubators. However, some Parks may still be mixed-use catering to multiple industries.
It is of paramount importance that, for a successful incubation/technology park, the right ‟ecosystem‟ is provided. Preferential policy framework such as taxation, customs duties, funding mechanisms from seed to venture capital, provision of uninterrupted utilities, relocation to industrial estates, etc. requires strong backing by the government without which any such program will not be able to attract private sector and multinational R&D powerhouses. China‟s Torch program put forward by its Ministry of Science & Technology and Malaysia‟s Multimedia Super Corridor along-with its 10 Points Bill of Guarantees by its government are good examples of such a policy framework that were put in place before the brick and mortar structures were constructed. The establishment of China‟s Torch program and Malaysia‟s MSC program was crucial to the development of their innovation structures and to transform their economies. We must benchmark and learn from it!
As per UNESCO Institute for Statistics, our country is spending 0.3% of its GDP on R&D compared to South Korea (the world leader in R&D expenditure as a percent of GDP) which invested 4% of its GDP on R&D. By the same comparison, Malaysia, China, and Japan are spending 1.3%, 2%, and 3.4% respectively. If Pakistan wants to develop its knowledge economy base, then R&D spending has to increase substantially in order to pave the way to systematically fund the development of its knowledge economy as highlighted in this article. Almost 75% of this meager 0.3% spending on R&D covers the bulk of the expenditures of public research institutes while the remainder goes to universities. The government needs to find a way to increase R&D spending manifolds and direct it towards providing attractive incentives for universities and the private sector to undertake applied/adaptive research.
The existing funding mechanism for research and technology development at universities
such as Higher Education Commission‟s NRPU & TDF and Ignite (formerly ICT R&D Fund) are insufficient, lack focus and connect with development priorities of the country which are yet to be effectively defined in light of comparative advantage of the country, the solution to local problems, and export-oriented technology development. At the same time, there are hardly any funding mechanisms for knowledge-based start-ups! The Kamyab Jawan program is a fascinating program that needs to be connected with the development priorities of the country.
While focusing on “state of the art” such as artificial intelligence, big data, the internet of things, etc., more emphasis needs to be provided on a solution to local problems. For example, researching and implementing techniques for improving our agricultural yield and implementing Good Agricultural Practices to orient ourselves for exports, management of water resources, efficient energy utilisation, process improvements in our current industrial base, etc.
Therefore, incentives and encouragement are required to create an enabling environment of self-employment for the budding entrepreneurs to create high-tech start-up companies and doing research that will solve local problems. It may be required to simplify our approach and limit our focus to the following salient enablers for jump-starting Knowledge Economy:
- Define a clear unifying vision with measurable targets. The vision may be “Pakistan should be a leading developing country by the year 2030 with exports volume of US$250 Billion and US$500 billion by the year 2025 and 2030 respectively.” This is a challenging, yet achievable target given that a tiny country like Singapore had exports of over US$370 billion in the year 2017!
- For taking Pakistan into the realm of the k-economy, a high-level Knowledge Economy Authority headed by the Honourable Prime Minister should be put in place. The Authority, being a supreme body for rejuvenating Pakistan’s economy through knowledge-based innovation, enjoys Prime Ministerial powers to call upon any government or semi-government functionary, entity, organisation, body, association, etc. to come to its aid and work under its direction for the provision of information, policy formulation, financial support, k-economy strategic plan development, and its implementation, and monitoring.
- With buy-in from all relevant stakeholders, a comprehensive data (fact, not opinion) driven assessment of the current and desired state must be carried out within six months timeframe. This data collection may be considered the cornerstone of the planning process assessing our strengths, core competencies, comparative advantages, future competitive edge development with the value chain and market analysis, and current and future intellectual and skills capital assessment. While doing this appropriate benchmarking studies may be undertaken to learn from international success stories such as China and Malaysia
- Define the gap between current and desired state, and then develop and implement a strategic masterplan with stipulated timelines and Key Performance Indicators (KPIs). The masterplan ties everything into one objective i.e. the vision provided by the Honorable Prime Minister. The masterplan may encompass:
- overarching government policies to support knowledge economy with other innovation and entrepreneurship policies including tax holidays, relaxation in custom duties, defined funding mechanisms from seed to venture capital, help with the regulatory process, protection from red tape, etc. without which any such program will not be able to support fledgling startups and attract private sector and multinational R&D powerhouses to move into technology parks. The big firms will act as a hub for technology transfer and a solid financial base for the commercially operated technology parks.
– invoking structural changes in places of learning, R&D facilities, skills development facilities, industrial estates, and special economic zones to quickly develop a culture of knowledge commercialisation to solve local problems while thinking globally and enhancing the country’s exports.
- promotion of applied and adaptive research culture at Universities and other R&D Centers through actions such as encouraging research commercialization through appropriate incentives and encouraging industrial enterprises to involve in research and development by providing them tax benefits to partially compensate them for research expenses.
- a clear framework for university/R&D organizations‟ role and responsibilities ensuring research commercialization and working of tech. parks/incubators are not bogged down in academic procedures and attitudes and can operate as businesses in their own right.
- availability of government-sponsored funding options at seed, pre-commercialization, and VC levels for building Knowledge-Economy infrastructure. Provision of guarantees for attracting commercial capital.
- good infrastructure; not only physical but establishing a wide pipeline of potential clients. This aspect is essential for the success of the initiative. For this purpose, the following must be considered:
- Universities and other R&D organizations, through the implementation of favoring/sponsoring/rewarding policy guidelines, should promote entrepreneurship amongst researchers, faculty, and students.
- Potential entrepreneurs from the general public should be tempted to start their tech. based businesses by the wide dissemination of preferential policies. For this purpose, organizations promoting SME development should be brought into an established network.
iii. Inculcate a cultural shift to transform a predominantly civil society into an entrepreneurial society. This may be in the form of tiered incubation starting at the school level by offering entrepreneurship awareness/competitions and strengthening it through college/university education. Where possible, use independent public-private partnership governance structures – typically non-profit organizations linked with universities but also with the private and finance sectors
- Form collaborative mechanisms to attract international companies into the technology parks and pave way for local companies to get international exposure/market inroads.
- the role of existing national research centers to support k-economy development.
- professional management that is dedicated, well-funded, and trained in tech. parks/incubator administration through a standard curriculum.
vii. development of local asset management companies to facilitate legal and land lease procedures.
viii. networking support provided to the incubation/tech. parks community e.g. funding an incubation/tech. park association.
– an incentivized program to attract Pakistani diaspora abroad to return and lead projects derived from the k-economy strategic plan. These experts are given matching compensation packages to what they were getting abroad and the freedom to structure their own teams and carry out the implementation of the projects.
The required eco-system supports knowledge-based innovative ideas that can be commercialized as they are the big-ticket items to rejuvenate the national socio-economic landscape.
As we move towards creating a knowledge economy, developing an understanding of intellectual property rights is of paramount importance. In order to protect the inventor‟s rights and produce research that will fuel innovation and commercialization in our universities and R&D organizations, we must generate more and more innovative ideas that are protected through the IP regime. IPO Pakistan is playing a positive role in this regard; however, a number of resident patent applications portrays a dismal number of 204 while 12 patents were granted in 2016. This is in sharp contrast to countries like Malaysia (applications: 1109 – patents granted: 359), China (applications: 1,204,981 – patents granted: 302,136), and Japan (applications: 260,244 – patents granted: 160,643).
For connecting research to market, a deliberate strategy for technology transfer has to be implemented which requires a strong research base, legal and policy framework to manage IP, a culture of innovation cultivated by committed institutional leadership, technology transfer infrastructure, and business development networks. For example, investment in new faculty hiring must be targeted towards strategic educational and economic sectors.
The required eco-system supports knowledge-based innovative ideas that can be commercialized as they are the big-ticket items to rejuvenate the national socio-economic landscape. It must also be a clear understanding that universally universities are a giving hand and may not directly make a profit in monetary terms; however, the socio-economic impact in their region and national level is huge.
About the Author:
The author possesses diverse experience in corporate management, entrepreneurship, business incubation, university teaching, and technology transfer. He is a graduate of the University of Wisconsin-Madison, the USA with double masters’ degrees in Industrial Engineering and Manufacturing Systems Engineering with an emphasis on Engineering Management.
Mr. Khan’s professional experience includes work in the US corporate sector where he successfully implemented leading-edge techniques for quality & productivity improvement in reputed firms, such as Newell-Rubbermaid, Teel Plastics, Inc., Beloit Corporation, Research Products Corporation, etc. He has held key senior-level positions such as Director of Corporate Projects, General Manager, Manager of Quality Assurance, and Senior Quality Engineer.
Now settled in his home country, Pakistan, he has been involved in teaching and strategic management of innovation programs at two of its leading universities, the COMSATS University Islamabad and the NUST. He has worked with several international agencies such as infoDev (World Bank), WIPO, IBI (China), USAID, BIIA, AABI, etc. to develop innovation and incubation programs in Pakistan. Mr. Khan is also a serial entrepreneur involved in start-ups in the USA and Pakistan.
Raza Khan has also received the American Society for Quality’s certifications on quality management and auditing. He has held various membership positions in Pakistan Engineering Council, IIE, SME, and ASQ.