By Atta-ur-Rahman and S T K Naim

THE THREE major players in the development of a knowledge economy are universities, industry and the government. (The Triple Helix Model, Loet Leydesdorff, Annual Review of Information Science and Technology 44 (2010) 367-417). All three thrive on the extent of merit-based competiveness that should be inbuilt into the systems and on the efficiency of interaction among all three players. The development of a knowledge economy requires a thorough understanding of the dynamic interplay between research, invention, innovation, and economic growth.
Entrepreneurship, its growth, survival and competitiveness are dependent on innovation and in a developing country context on incremental innovation. Incremental innovation is about sourcing, absorbing, adapting and diffusing already available international technologies and related knowledge. Incremental innovation depends on the absorptive capacity of firms and according to Cohen and Levinthal only firms with advanced human skills and prior relevant accumulated knowledge can successfully convert external knowledge into incremental innovations. Prior related knowledge helps local firms recognise the value of new information, assimilate it and apply it for commercial benefits.
The World Economic Forum, based on Porters classification, has categorised the developmental stages of economies across countries in three distinct categories: i) factor based, where the production and services sector are dominated by low cost labour and resource based inputs. Innovation contributes to less than 5 percent in factor based economies; ii) the efficiency driven stage, which requires modern machinery, better technical and managerial skills and promotion of a culture of firm level learning; iii) innovation and knowledge driven stage.
In the past three decades only, we have witnessed nation after nation achieve economic and social development through structural adjustments of their economies and adopting a path of promoting education, in particular higher education, acquiring and adopting foreign technology for production of high valued goods and services and having diversified their economies from resource based to knowledge based. Public-private partnership and public incentives for encouraging partnerships between local and international firms have played a key role in achieving this transition.
If Pakistans economy is to grow and survive in an increasingly competitive global market then it too has to transition from factor based towards an efficiency driven, innovation and knowledge based economy. This requires not only a major role by the private sector but also public incentives to encourage collaborations between local businesses and universities, between regional businesses and foreign multinational firms. Almost all developed countries have realised the benefits of what has come to be known as collaborative advantage. In USA for example, the best management schools are moving towards teaching students about collaborative rather than comparative or competitive advantage.
There are numerous benefits of collaboration, particularly for developing countries. Collaborating organisations would be able to synergise by sharing their physical, financial and human resources and thereby reducing risks. Collaboration between innovative SMEs helps them grow, achieve economy of scale and enter global value chains. Sharing of capital, tacit knowledge about production techniques and better management and marketing strategies can lead firms towards innovation and knowledge-based production.
Excellent examples of research as well as entrepreneurial collaboration exist within Pakistan. We achieved our goal of ensuring defence security not just by investing in nuclear research but also actively forging collaboration between six laboratories located in different regions of Pakistan. Collaboration between our private entrepreneurs and the Civil Aviation Authority (CAA) resulted in the building of an international airport in Sialkot. Our engineers built the worlds highest highway and manufactured fighter jets in collaboration with China. Policy makers, in Pakistan should draw lessons from these examples, particularly at a time when the nation is facing immense problems related to energy, un-employment and an ever increasing number of people forced to live under the poverty line.
Public incentives can help forge collaborations between enterprises, particularly those working in similar fields to increase productivity, produce value added goods and services and to achieve economies of scale. Incentives help in transfer of technical knowledge from university to industry and to stimulate collaboration between local enterprises and with multinational companies. Incentives may differ in type and form and have to be carefully worked out to suit specific conditions in the industry.
Our knowledge, technology, innovation and entrepreneurship gap with regional competitors is widening. We are grouped among the technologically marginalised, knowledge and innovation deficient countries in the global rankings. This is an insult to a nation of 180 million people that have the potential to advance, share and contribute to the global technical knowledge. The ICT technologies are making the people of Pakistan aware of the global developments whereby they are increasingly realising that their backwardness, hunger, disease and poverty need not be eternal and that the solution to address these problems lies in education, acquisition of scientific knowledge and technology based entrepreneurship. Our policy makers must realise that this awareness can exponentially increase the discontentment of the masses, which can lead to an impending Arab Spring like tsunami.
Prof Atta-ur-Rahman is the President, Pakistan Academy of Sciences. Dr. S.T.K. Naim is an expert on STI Policy and a Consultant at COMSTECH.

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