Innovation Policy supplies the dynamism for inclusive development 333.0

In the immediately previous post on October 4, Inclusive development needs an innovation and entrepreneurship policy, I introduced a definition of inclusive development.

I argued that the two solutions suggested by static analysis and equilibrating snapshot from macroeconomics – public-private partnership focused on infrastructure as target for investment and conditional cash transfer as safety net – that are the flagship programs of the Aquino administration are not sufficient for inclusive development.

Proposed additional policy areas for inclusive development

I proposed additional dynamic solutions provided by entrepreneurship and innovation policy.

Support for these dynamic solutions from innovation and entrepreneurship were given, respectively, from Schumpeter and evolutionary economics and from the Kauffman Foundation research and Babson College’s GEM surveys.

In the previous post, I suggested two points of policy intervention beyond the two macro-based flagships as:

1. Incentivizing the growth of small new businesses – beyond being livelihood business undertaken as necessity – is one key area of entrepreneurship policy intervention.
2. These new businesses, furthermore, are incentivized as the ideal policy focus of innovation policy intervention.

The last post suggests enough details for entrepreneurship policy point #1. This post details additional innovation policy point #2.

National innovation systems (NIS) as suggested by Bengt Ake Lundvall

Research by Lundvall on national innovation systems lies at the core of SYNTHESiST that I first noted in Post #17 on March 23 2009. I rewrote this post as Learning Interactions Make for National Innovation Systems.

An NIS, as suggested by Professor Lundvall, is summarized in the diagram below as producing innovations from the continuous interaction between science and technology (STI) and learning by doing, using and interacting (DUI).

To develop the environment described in the focusing diagram above, an innovation policy is needed to group and nurture institutions into the STI-learning and DUI-learning components.

Science, Technology and Innovation Policy

The final chapter in the Handbook of Innovation (2005, Oxford) is on Science, Technology and Innovation Policy by Professor Bengt Ake Lundvall and Susan Borras.

In the Chapter, the authors defined the relationship between the three policy areas as to purpose:

1. Science policy: Production of scientific knowledge,
2. Technology policy: Advancement and commercialization of sectoral technical knowledge, and
3. Innovation policy: Overall innovation performance of the economy

The Chapter further enumerate the differentiate tools available for each policy area.

Finally, by definition, the three policy areas also differ as to:

• the internal customers and beneficiaries,
• the physical and processing locus in the value chain,
• the type of skills and expertise needed to achieve the respective purpose,
• the metrics of success and,
• the time frame and gestation period for the successful completion of project in each area

Thus, focused institutions needed to implement the policy areas must likewise be aligned to the purposes and to other goals of government.

Science, Technology. and Innovation in the Philippines

Unfortunately, even a cursory review over the past few decades will show that science, technology and innovation have a secondary importance among the departments of the government from budgets allocated to personnel complement assigned.

This Philippines situation is similar with Thailand and Indonesia and different from Japan, South Korea, Singapore and Malaysia and particularly from Technology sectors.

This Technology institution is particularly a troublesome institution because many industry sectors with technology unique needs need to be served.

I am inclined to think that the focused Science, Technology and Innovation institutions need to be headed by executives who report directly to the President. This because of the proven importance that the roles science, technology and innovation policy in development in the success of First World and the inclusive growth of the emerging markets.

For example, from the purposes and other considerations above, industry is hallowed out by the relative importance of trade in the DTI, long-term science is forgotten in the relatively more immediate needs of technology in the DOST, and there is no lead agency for innovation.

Realignment of focused government institutions along the clear lines outlined here for science, technology and innovation policy will go a long way to achieving a dynamic implementation of inclusive development.