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					Science, Technology and Innovation
      (STI) and Development

                   Michael Lim
                Policy Review Section
         Science, Technology and ICT Branch
                    UNCTAD-DTL
               Michael.lim@unctad.org

                     Geneva
                   5 April 2011
                   Outline

•   Technology and economic growth
•   Science, technology and innovation (STI)
•   Innovation systems
•   National policies for developing STI
•   National and global challenges



2
The Global Distribution of Knowledge
           (from UNCTAD LDCR 2007)




3
    The Global Distribution of Poverty
              (from UNCTAD LDCR 2007)




4
    Economic growth and income trends: 3
           big issues to explain
• There is huge variation in per capita
  income across countries. Why?
• There is huge variation in growth across
  countries. Why?
• Global growth was close to zero until
  about 1500, rose slightly until about 1800,
  and has accelerated since 1800. Growth
  patterns varied by region and country (and
  this continues). Why?
5
Technology and economic growth (1)
•   Output (Y) is a function of capital (K), labour (L) and technology (T)
    Y=f(K, L, T) or
    Output (Y) is a function of physical capital (Kp), human capital (Kh),
    labour (L), and technology (T)
    Y=f(Kp, Kh, L, T)

    In standard neoclassical growth theory
    Y =T*f(Kp, Kh, L)
    with technology (T) exogenous (external) ie T=f(?) T is unexplained

    Kp=f(Kpt, It) It is new investment in physical capital
    Kh=f(Kht, Iht) Iht new investment in education and training and health
    L=f(Lt, grL) grL is population growth



6
Technology and economic growth (2)


• Economic growth is directly a function of Kp,
  Kh and improved technologies.
• Controversy over the relative importance of
  each.
• Additional growth determinants: Initial
  conditions; institutions and incentive
  structures; geography; national policies;
  perhaps culture.
7
    Technology as a source of growth

• Since about 1770 technological
  development has been a major source
  of global economic growth. The
  Industrial Revolution in England (1770-
  1800+) was a notable spur to growth
  and the start of intensive application of
  STI to economic production.

8
         What is technology?

• Technology is knowledge applied to the
  production of goods or services.
• Different forms:
  - physical machinery
  -production processes
  -software
  -tacit knowledge
9
               What is innovation?



• Broad definition: The introduction of new or improved
  products, or of new or improved processes and
  organizational methods in the design, production and
  distribution of goods and services.

• Invention: A new, useful process, machine,
  improvement, etc., that did not exist previously and
  that is recognized as the product of some unique
  intuition or genius.


10
           Types of innovation

• All along the production value chain:
  production, design, distribution and
  marketing.
• Technological (related to the introduction of
  new technologies) or non-technological
  (organizational, managerial or institutional).
• Incremental (through small improvements),
  radical (through major breakthroughs) or
  revolutionary (a fundamentally important new
  technology is created).
11
              Is STI important?
     Innovative Capabilities and Income
                     (from UNCTAD LDCR 2007)
        Real per capita income and innovative capabilities, 2001




12
                       STI applications

•    Building strong STI capabilities, accessing foreign technologies and
     building strong national systems of innovation are important for
     economic growth, social welfare and addressing environmental
     challenges.
•    STI applications:
     -improving productivity in manufacturing, agriculture and services
     -preventing food crises (starvation)
     -increasing value added, diversifying production
     -mitigating/adapting to climate change
     -developing new energy sources – renewable energy
     -water management
     -public services (health, education)
     -addressing disease epidemics
     -organizing mega-cities (smart urban planning)
     -early warning systems for natural disasters (tsunamis, hurricanes)
     -slowing desertification etc.
13
     Channels of international technology
                   transfer
• entry and operation of foreign enterprises (includes FDI and
  non-FDI)
• joint ventures or strategic partnerships
• the movement of staff between foreign and domestic enterprises
• domestic enterprises forming linkages with TNCs
• domestic enterprises investing in (or buying) foreign enterprises
• imports of machinery
• Study through reverse engineering and imitation
• licensing agreements
• technical cooperation activities
• accessing technology from technical publications, journals or
  patent databases


14
     STI capabilities: what are they? (1)

• Scientific, technological and innovative
  capabilities.
• Broad definition add capabilities in
  engineering, other technical capabilities,
  entrepreneurship, management and
  organizational capabilities.
• STI capabilities vary by country,
  industry and enterprise.

15
     STI capabilities: What are they? (2)
• Scientific capabilities – the ability to learn, understand and
  apply scientific knowledge and skills to solve problems.
• Engineering capabilities – the ability to learn, understand and
  apply engineering knowledge and skills to solve problems.
• Technological capabilities – the ability to learn, understand
  and master the use of existing (both traditional and recent)
  technologies to solve problems;the ability to produce new
  technologies.
• Innovative capabilities – the ability to innovate.

• Technological learning by enterprises (firms and farmers most
  importantly) is important for technological development of a
  country.


16
     Linear models of innovation




17
     A National system of innovation
                                 (from Arnold and Bell (2001))

               Framework conditions
                  ▪ Financial environment                                  ▪ Trust
                 ▪ Taxation and incentives                               ▪ Mobility
     ▪ Propensity for innovation and entrepreneurship               ▪ Education, Literacy



                                                 Demand
                                       ▪ Consumers (final demand)
                                   ▪ Producers (intermediate demand)




        Business                                                            Education and
         system                                                               research
                                                                               system

       ▪ Companies                         Intermediate
                                                                             ▪ Professional
                                           Organizations                      education and
         ▪ Farms                                                                 training
                                        ▪ Research institutes
     ▪ Healthcare, etc                                                          ▪ Higher
                                            ▪ Brokers, etc                    education and
                                                                                 research

                                                                             ▪ Public sector
                                                                                 research




                                           Infrastructure
     ▪ Banking, venture           ▪ IPR and             ▪ Innovation and        ▪ Standards
           capital                information                business               and
                                     system               support system            norms
18
 National policies for STI development (2)

• STI policy (S&T policy, innovation policy,
  S&T/innovation strategies)
• Education and training policies
• Trade policies
• Foreign direct investment (FDI) and TNC policies
• Intellectual property (IP) policies
• Technology transfer policies
• S&T infrastructure policies
• Financial sector policies
• Macroeconomic policies
• Industrial policies

19
 National policies for STI development (3)

• Physical infrastructure policies (esp. energy, physical clusters
  (science parks, S&T parks, ICT parks)
• Migration policies (skilled migrants and brain circulation)
• MSME policies
• Policies to support technology start-ups
• Policies to link SMEs to value chains
• Entrepreneurship policies
• Competition policies
• Metrology, standardization, testing and quality (MSTQ) policies
• Government procurement policies
• Cluster policies (IT in Penang, Malaysia)
• Developing STI indicators to aid policymaking

20
 Stages of technology development by
            innovation effort
           (from UNCTAD, WIR 2005)


                     FRONTIER
                    INNOVATIO
                        N


                 TECHNOLOGY
                IMPROVEMENT &
                  MONITORING




            SIGNIFICANT ADAPTATION




             BASIC PRODUCTION




21
     Typology of STI policy goals at different
            stages of development

• Distant technological laggard countries
  (early stage).
• Technological laggard countries (later
  stage).
• Near technological frontier countries.
• At the technological frontier countries.


22
    National and global challenges

•  Natural resource depletion
•  Food crises – malnutrition, starvation
•  Climate change
•  Energy challenge – fossil fuels and
   RETs
• Growth, employment and natural
   resource sustainability
• Malthusian trap?
23
         STI and climate change

• STI role in adaptation and mitigation (green
  economy)
• Many activities/industries (energy, transport,
  agriculture etc)
• Diffuse existing environmentally sound
  technologies (ToT) (UNFCCC) - RETs
• Develop (and diffuse) new technologies
• Capacity building (for technology absorption)
  in some countries
• Building innovative capabilities for CC
24
     STI and climate change (2)

• Dichotomy of commercial interest
  versus public good (reduced GhG
  emissions)
• Issue of IPRs
• Issue of financing ToT and capacity
  building
• Post-global crisis (2008-9) stimulus
  plans and STI for CC
25
                Conclusions

• Strong STI capabilities, human capital and
   innovation systems, and easy access to
   foreign technologies, are important for growth
   and development, social welfare and facing
   environmental challenges.
• National policy action critical to support each
   of them for optimal growth and development
   impact.
• STI policies should ideally be a coherent part
   of a country’s national development policy
   and strategy (including PRSPs in LDCs).
• There are many challenges; STI badly
26
   needed
          Discussion issues

• What is the purpose of science:
  Conquer nature? Help mankind?
• Is technology always good?
• Is innovation always good?
• Do all countries innovate?
• Can STI prevent a Malthusian trap?
• Do we have the wisdom to manage
  technologies?
27
     End




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