Innovation & Technological Capabilities in Developing Countries Xiaolan Fu Oxford University UN General Assembly meeting Fostering science, technology & innovation, New York, Dec 10, 2014
Outline Progress (catch up) has been achieved Gaps that remain Policy actions (both national & international) to address them.
Catch up and Gaps (1) Percentage Composition of Patent application numbers by income levels, 1985-2012 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Low income Middle income High income Source: World Bank
Catch up and Gaps (2) Share of Scientific and technical journal articles across income groups 1986-2012 Pencentage 100% 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.3 0.3 90% 80% 6.7 6.7 6.7 6.9 6.8 6.9 7.0 7.6 7.5 7.7 8.0 8.5 9.0 9.5 10.0 10.8 11.6 12.4 13.5 14.5 15.8 17.2 18.3 19.5 28.3 29.7 70% 60% 50% 40% 30% 93.1 93.1 93.1 92.9 93.0 93.0 92.8 92.2 92.3 92.1 91.8 91.3 90.9 90.3 89.9 89.1 88.3 87.4 86.3 85.3 84.0 82.6 81.5 80.3 71.4 70.0 20% 10% 0% 19861987 1988198919901991 199219931994 1995199619971998 1999200020012002 200320042005 2006200720082009 20102011 High income Middle income Low income Source: World Bank
Global distribution of R&D Expenditure (USD Billion, PPP dollars, 2011) North America + Europe + East&SE Asia = 88% Source: NSF
BRICS countries, especially China, contribute to the catch up in the middle income countries Research and development expenditure (% of GDP) Ratio 2.500 2.19 2.24 2.47 2.000 1.84 1.500 1.000 0.74 0.640.67 1.04 0.60 1.23 1.15 0.97 0.90 0.85 0.74 1.24 1.21 1.09 0.81 0.76 0.500 0.000 1997 2004 2011 OECD members BRICS China India Brazil Russia Fed. South Africa Source: World Bank
Exceptions where LICs show a significant progress: Mobile cellular subscriptions (1986 2013, per 100 people) 140.00 120.00 100.00 80.00 60.00 High income Upper middle income Lower middle income Low income 40.00 20.00 0.00 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: World Bank
Firms in LICs are innovative: Mainly low cost innovations based on learning & management innovations Informal Formal 0.2.4.6.8 0.34 0.51 0.20 0.21 0.60 0.80 0.31 0.40 Product innovation Management innovation Process innovation Marketing innovation Source: DILIC survey, Fu et al (2014)
But face significant constraints Source: DILIC survey, Fu et al (2014)
Benefits from technology transfer not fully realised Top 10 important foreign knowledge sources (1 5, Insignificant=1, Crucial = 5) MEAN A. Imported machinery and equipment 2.18 B. Imported goods in the same industry 1.73 C. Imported goods that input as intermediary goods into your production 1.72 D. Foreign customers 1.64 E. Observing and imitating competitors in export market 1.54 F. New product or quality requirement raised by customers in export market 1.50 G. Foreign firms in the same industry 1.52 H. Foreign firms In downstream industry 1.51 I. Information found via internet 1.55 J. Attending international trade fairs 1.52 Source: DILIC survey, Fu et al (2014)
Low in collaboration & universities linkages 1. During the three years 2011 to 2013, did your enterprise co-operate on any of your innovation activities with other enterprises or institutions? Yes (1) No (0) 8% 92% Yes (1) No (0) 27A. Do you have the intention to collaborate with universities? 30% 70% 2. If you have NOT collaborated with universities, why? Please tick all that apply. A. We do not have such need 205 (43%) B. They are not interested 113 (24%) C. We are not connected 325 (68%) 3. How was the connection with the University established? Personal network (1) 74% University approached us (2) 0% Governmental initiative (3) 26% Source: DILIC survey, Fu et al (2014)
Summary: Innovation & technology in developing countries Uneven development: multiple speed (catch up in a few MICs but not LICs) Firms in low income countries are innovative (in low cost form) but unsupported Lack of finance remains the major constraint, followed by the lack of skills Low in collaboration and international technology transfer
Policy actions (national) Financing for innovation: Public finance is not sufficient. Private sector to participate. Build an innovation financing system with a variety of funding sources working at different stages. Capability building: Education and training system, Collaboration, SME production network (policy) University industry linkage (program, funding) Cultural and institutional change: Change of traditional perspective (leaders, policy & media) IPR protection (differentiated policy)
Policy actions (international) Financing for innovation Official development aid Foreign direct investment (FDI/MNEs) Capability building International collaboration in training & networking Technology transfer International collaboration (South South: appropriate tech.) Use Green technology as the lead driver Private sector: Trade / FDI Infrastructure & Internet for access: Technology Bank