Planning for innovation: Role of IPRs

M Rokonuzzaman   | Published: May 14, 2018 21:58:06 | Updated: May 14, 2018 22:18:57

Upon graduation from the least developed country status, Bangladesh aspires to be a middle-income country in near future. Thanks to abundant low skilled labour helping Bangladesh to sustain above 6 per cent growth for almost two decades. Due to the growing availability of labour substituting technologies and virtually full employment among low skilled labour force, Bangladesh's economic growth faces the risk of saturation. But fortunately, Bangladesh has more than 40 million students in the education pipeline. The untapped opportunity is to empower and engage this large youth population to unlock innovation-led growth opportunities-opening up endless frontiers of growth.

Designing the innovation mission to leverage this opportunity is a serious development issue for Bangladesh. The goal of planning for innovation is to uplift Bangladesh's per capita income from less than $2,000 to above $10,000 by 2041--a significant jump. In doing so, some pertinent issues to be taken into consideration are mentioned below.

Often, developing countries are advised to increase funding for science and technology research. But research alone does not lead to innovation. A wonderful research capacity is not a sufficient condition for innovation, generating new revenue flow. For example, Canada has impressive academic research institutions, and also rich national laboratories. Despite having industrial success stories like Bombardier or Nortel (defunct), Canada's global reputation in innovation is unimpressive. Particularly, startup scene around exponential technologies is quite bleak in Canada. As reported by National Post, why is Canada falling behind in innovation is a question Canada's successive governments have been facing over the last 100 years.

Innovation pundits, international consultancies and also researchers point to intellectual assets and properties (IA/IP) to focus on for empowering developing countries to innovate. It's well understood that intellectual property rights (IPRs) play an important role in innovation. But unless we transfer IPR into revenue flow whether as a new product or process feature, investment in IP does not produce any return. Although IP licensing to MNCs (multinational corporations) is an option to generate revenue, creating licensable IP from basic research is a very low return on investment, often a risky path for developing countries. How to create complementary capacity in the local economy to transfer generated IA/IP into revenue is an issue for Bangladesh. What are the prevailing opportunities for Bangladesh to develop such complementary capacities? In creating those complementary capacities, should Bangladesh focus on existing industries, or create new industries?  

Often we also cite iconic examples like Stanford University or MIT in the USA in creating jobs through research and fuelling innovations. For example, an estimated 18,000 firms created by Stanford University alumni are based in California, generating annual worldwide sales of about $1.27 trillion and employing more than 3 million people. As of 2012, 39,900 active companies having their roots in Stanford University created an estimated 5.4 million jobs and generated annual revenues of $2.7 trillion across the world. Certainly, such examples are wonderful role models for universities of Bangladesh and other developing countries to follow. But, often such models are perceived to be non-replicable. How we can prove it to be wrong is a serious issue to work on. A long defence-funded journey has created an ecosystem around Stanford and MIT, creating a vibrant chain for generating new knowledge from basic research and transferring it to innovation, often leading to new firms. Trying to replicate it in Bangladesh is a daunting task. Transferring the R&D fund given to universities into profitable revenue flow is a great challenge. There appears to be no such large-scale examples in major developing countries like India or even China.

There are often-cited stories about opportunities for innovation and startups around exponential technologies, like artificial intelligence (AI), machine learning or robotics. Turning startup ideas around such technologies into profitable revenue generating companies often require large risk capital investment-- to the tune of 10s/100s of millions of dollar. For example, startups in Israel around such technologies raised over $5 billion in 2017 alone. How can Bangladeshi startups draw required risk capital to compete in the global space is an issue. Moreover, innovations around exponential technologies have a natural tendency of monopoly. As a result, the ability to compete on the global scale is a significant challenge. Chalking out suitable options for Bangladesh should be seriously considered to empower local ideas and startups to grow around exponential technologies as globally competitive firms. 

Some of the research endeavours in Bangladeshi universities following the recent funding provided by the Higher Education Quality Enhancement (HEQEP) project may have good potential. The challenge is to translate them into profitable revenue-generating innovations. It's worth noting that success rate in product innovation is quite low; often less 10 per cent product ideas succeed in generating profitable revenue. Moreover, revenue growth from new products is also very slow; often it requires a decade or more to show tangible flow. Do we perceive demonstrated success stories as scalable growth models for Bangladesh? What are changes to be brought in to fine tune as well as accelerate it? At the budding stage, government is willing to fund university research. But Bangladesh should be careful to avoid being tapped into the flawed paradigm: that success in the knowledge-based economy is driven by research and ideas that are commercialised into winning products or services. This belief is perpetuated by academic institutions, which are in the research and ideas business--wanting to be continuously funded to do what they like and hope that someone else will find useful things to do with their ideas and research results.

Similarly, there is another trap to avoid: an unlimited need for risk capital finance. There is often the belief that startups are bustling with creative ideas; the only missing element is the collateral free risk capital to enable those ideas takes off, opening a new era of growth out of innovation. But often such belief turns out to be hollow in a weak innovation ecosystem. There are more than a dozen building blocks of the ecosystem having a strong bearing on taking an idea to market at profit. The challenge is to keep improving them in a synchronised manner, facilitating quality idea generation and turning potential ideas into profitable revenue. In the absence of proper synchronisation in an optimised manner, there is a high risk of wasting resources. For Bangladesh, investment in R&D to innovate is a means to uplift the income level of citizens across the board. The challenge is to design a closed-loop growth model for creating the market for R&D and innovation. The flow of public fund should be made in an effective and efficient manner to stimulate such a market creation--to meet Bangladesh's development aspiration.  It's quite a challenging task to come up with smart design of the innovation mission, addressing pertinent challenges in an optimised manner to help Bangladesh design the path for creating new wealth from the intellectual capacity of our 40 million students--making Bangladesh move towards its goal in the shortest time possible.

M Rokonuzzaman Ph.D is academic, researcher and activist on technology, innovation and policy.



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