Science, Technology and Innovation
(STI) and Development
Policy Review Section
Science, Technology and ICT Branch
5 April 2011
• Technology and economic growth
• Science, technology and innovation (STI)
• Innovation systems
• National policies for developing STI
• National and global challenges
The Global Distribution of Knowledge
(from UNCTAD LDCR 2007)
The Global Distribution of Poverty
(from UNCTAD LDCR 2007)
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
• 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?
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
Technology and economic growth (2)
• Economic growth is directly a function of Kp,
Kh and improved technologies.
• Controversy over the relative importance of
• Additional growth determinants: Initial
conditions; institutions and incentive
structures; geography; national policies;
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.
What is technology?
• Technology is knowledge applied to the
production of goods or services.
• Different forms:
- physical machinery
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.
Types of innovation
• All along the production value chain:
production, design, distribution and
• 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).
Is STI important?
Innovative Capabilities and Income
(from UNCTAD LDCR 2007)
Real per capita income and innovative capabilities, 2001
• Building strong STI capabilities, accessing foreign technologies and
building strong national systems of innovation are important for
economic growth, social welfare and addressing environmental
• 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
-public services (health, education)
-addressing disease epidemics
-organizing mega-cities (smart urban planning)
-early warning systems for natural disasters (tsunamis, hurricanes)
-slowing desertification etc.
Channels of international technology
• entry and operation of foreign enterprises (includes FDI and
• 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
STI capabilities: what are they? (1)
• Scientific, technological and innovative
• Broad definition add capabilities in
engineering, other technical capabilities,
entrepreneurship, management and
• STI capabilities vary by country,
industry and enterprise.
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
• Innovative capabilities – the ability to innovate.
• Technological learning by enterprises (firms and farmers most
importantly) is important for technological development of a
Linear models of innovation
A National system of innovation
(from Arnold and Bell (2001))
▪ Financial environment ▪ Trust
▪ Taxation and incentives ▪ Mobility
▪ Propensity for innovation and entrepreneurship ▪ Education, Literacy
▪ Consumers (final demand)
▪ Producers (intermediate demand)
Business Education and
▪ Companies Intermediate
Organizations education and
▪ Farms training
▪ Research institutes
▪ Healthcare, etc ▪ Higher
▪ Brokers, etc education and
▪ Public sector
▪ Banking, venture ▪ IPR and ▪ Innovation and ▪ Standards
capital information business and
system support system norms
National policies for STI development (2)
• STI policy (S&T policy, innovation policy,
• 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
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
Stages of technology development by
(from UNCTAD, WIR 2005)
Typology of STI policy goals at different
stages of development
• Distant technological laggard countries
• Technological laggard countries (later
• Near technological frontier countries.
• At the technological frontier countries.
National and global challenges
• Natural resource depletion
• Food crises – malnutrition, starvation
• Climate change
• Energy challenge – fossil fuels and
• Growth, employment and natural
• Malthusian trap?
STI and climate change
• STI role in adaptation and mitigation (green
• Many activities/industries (energy, transport,
• 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
STI and climate change (2)
• Dichotomy of commercial interest
versus public good (reduced GhG
• Issue of IPRs
• Issue of financing ToT and capacity
• Post-global crisis (2008-9) stimulus
plans and STI for CC
• Strong STI capabilities, human capital and
innovation systems, and easy access to
foreign technologies, are important for growth
and development, social welfare and facing
• National policy action critical to support each
of them for optimal growth and development
• 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
• 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