Technology strategy for developing countries

The developing countries should pursue the technology fusion strategy to improve as well as sustain labour- and raw material-centric productive activities. Moreover, such strategy will create high-paying innovation jobs for a growing number of university graduates, writes M. Rokonuzzaman

Capitalising on raw material and low-cost labour, many developing countries like Bangladesh, Vietnam and Indonesia are aspiring to climb to high middle-income level. But to raise gross national income (GNI) per capita to $10,000 or more, these countries must find ways to turn mental capacity into wealth.

Due to increasing supply of low-cost technology as a substitute to labour in manufacturing, labour-intensive value addition in productive outputs is no longer capable to increase income level in these countries. Moreover, there has been virtually full employment among labour-intensive workforce, while unemployment among university graduates has been increasing.

In certain countries, graduate unemployment has already reached as high as 50 per cent. One of the ways to increase the per capita income further is to engage university graduates to develop technology and innovate solution to improve both products and processes. As opposed to muscle power, mental capability must be translated into improved product features and/or process capability to produce better quality products at lower cost for raising the income level. But what should be the strategy to materialise this potential into profitable revenue is an issue to resolve.

To leverage science and technology (S&T) in accelerating economic growth, the often cited prescription is to increase the research and development (R&D) budget, and the number of S&T graduates. There is no denial that these countries should substantially increase R&D financing. For example, Bangladesh and Indonesia invest less than 0.1 per cent of gross domestic product (GDP) in R&D as against US's 2.74 per cent, Japan's 3.5 per cent and Korea's 4.2 per cent of GDP. But S&T graduates and scientific outputs, already produced  in developing countries, are now under-utilised, or mostly unused. Therefore, in addition to increasing funding, these countries should devise strategy in translating the added fund for R&D and S&T education into economic growth leading to higher per capita income. 

Over the last half a century (since World War II), the USA has become the role model of driving economic growth through investment in S&T. Moreover, due to increasing popularity of higher education of the USA and other western countries like UK, most of the developing countries have silently accepted USA's model of Science and Technology thinking. There is an underlying belief that by following the USA and other western countries, if these countries increase R&D investment, enhance the supply of S&T graduates, and produce more publications and patents, there will be proportionate economic growth. But preliminary data indicate that the reality is different. As a result, growing number of S&T graduates in Bangladesh are facing extreme difficulty to find jobs to turn their knowledge into wealth. Even in India, only a small fraction of S&T graduates is employed in core science and engineering jobs.  How can the developing countries benefit from expanding S&T investment in education and R&D without creating the scope for jobs to turn knowledge of science and technology into wealth? Hardly there is any reference of a graduate thesis or academic publication which is translated into a product to increase revenue as well as profitability of private firms. Even there has been virtually no reference that Government's own development projects are sourcing significant intellectual outputs from institutions like the Bangladesh Council for Scientific and Industrial Research (BCSIR). Often such research establishments express dissatisfaction about the lack of interest of entrepreneurs to commercialise technologies developed by them. Hence, there is an urgent need of devising a strategy of making R&D investment for translating mental capacity of a growing number of S&T graduates into economic growth.

The USA has been following linear model of innovation around defence technology need. USA's most of the public science and technology R&D financing, almost $90 billion per year since World War II, goes to universities and national laboratories to advance science and develop technology to sharpen military edge. Through trade of defence equipment, the USA gets attractive return on this investment. The defence technology inventory in the form of trained human resources, publications and patents are made available for exploitation for civilian purposes. Many successful innovation of US industry such as commercial jets, semiconductors, Internet, or ultrasound imaging are outcome of military-centric science and technology R&D. As stated by Lewis M. Branscomb (former science adviser to US president Johnson) in a Harvard Business Review article, for the USA government the commercial spin-off of military technology is virtually free. As a result, such model of R&D financing is not replicable for developing countries in creating the opportunity of turning mental capacity of S&T graduates into wealth. But, unfortunately advisers, academics, policy makers and intellects of developing countries are often following such models.

Fortunately, there are other demonstrated examples for developing countries to draw lesson from. As Fumio Kodama stated in one of his well-cited article, as opposed to linear model, the alternate option could be to "focus on combining existing technologies into hybrid technologies-the "technology fusion" approach." Instead of starting the journey from scientific discovery, the focus is on understanding the opportunity of improving performances of existing products and processes, or introducing new products through fusion of available component technologies. Successful fusion strategy depends on three major factors-demand articulation, intelligence gathering, and collaborative R&D. By pursuing this fusion strategy, several Japanese companies such as NEC, Fanuc, and Sharp succeeded in high-value innovations without having the ownership of underlying primary technologies. For example, in 1970s Fanuc fused electronic, mechanical, and materials technologies to develop an affordable computerised numerical controller leading to position itself as industrial robot maker. Similarly, Sharp fused electronic, crystal, and optics technologies in 1980s to be market leader in liquid crystal displays. Similarly, many automation solutions from advanced economies, which are entering in killing labour-centric jobs in textile, garments and pharmaceutical industries of developing countries like Bangladesh, are basically fusion of commercially available component technologies.

The developing countries should pursue the technology fusion strategy to improve as well as sustain labour- and raw material-centric productive activities. Moreover, such strategy will create high-paying innovation jobs for a growing number of university graduates. Mapping of commercially available component technologies to existing productive activities should be exercised to detect innovation opportunity through fusion of component technologies for improving competitiveness. Upon doing so, collaborative R&D among universities, research establishments and private firms should be supported. To create the demand for resultin innovations, incentives should also be given to local producers to source and integrate those innovations to improve the quality and reduce the cost of whatever being produced. Such technology fusion strategy will also open the opportunities for developing countries of producing technologically complex products to enter into high value-added productive activities for rapidly increasing per capita income.

M Rokonuzzaman Ph.D is academic, researcher and activist on technology, innovation and policy. [email protected]