Innovating inclusive growth
Professor Tan Sri Dato' Dzulkifli Abdul Razak
Learning Curve: Perspective
New Sunday Times - 26-1-2014
THE World Bank and the Growth Dialogue drew on international experience to collectively elucidate interventions significant to innovation as an important instrument of growth in an inclusive way at the recent High-level Symposium on Innovation and Growth.
This included strengthening embryonic innovation systems in the process of development, reviewing incentives, and embedding institutions and building resources that can increase the growth potential of developing countries' core economic activities.
In particular, discussions were focused on the importance of services in global value chains; service/manufacturing clusters; and the role of SMEs as the new creative growth drivers in the service and manufacturing sectors.
One of the dimensions was the issue of policy and technical innovations from the private sector and the successful adaptation for lower income consumers' needs -- through the so-called "inclusive innovation" -- and the question of better harnessing the efforts of the private sector to support inclusive growth.
Related to this is the issue of higher education as another important aspect that can enable, empower and facilitate the dissemination of innovation at various levels, internationally and locally.
Finally, it comes down to relating to successful cities, large and mid-sized, to build local innovation capabilities to scale the income ladder by attracting resources from across the national economy and overseas, and to use them productively.
The symposium added valuable new dimensions to forge a local innovation system, especially in lower middle-income countries, and highlighted the range of actions required.
New ideas surfaced and were incubated based on experiential learning. Common challenges were discussed, free of ideological and institutional influence.
Productivity in services will be essential as a driver of economic growth with the shift in global composition of the Gross Domestic Product to the services sector. The buzzword "innovation" is, therefore, key to unlocking this change, but not just any innovation.
At the first meeting of the Commission on Growth and Development, Professor Robert Solow said: "We know what the essential ingredients are for growth, but we are unsure as to the exact recipe." In fact the recipe is increasingly elusive as the disparities worldwide are at the greatest. Notably, the increasing complexity and scale of knowledge seem to reduce the productive lifespan of researchers and that of innovation in creating equitable quality of life.
The evidence for this is indicative as the World Economic Forum opens this week. In today's world, the richest one per cent reportedly controls US$110 trillion (RM330 trillion).
And 85 individuals own as much as 3.5 billion poor people, so much so it is said that "the wealthy elite threatens democracy". Extreme urban poverty has increased from almost 20 to about 30 per cent in the last decade. Under such circumstances, it is hard to imagine development being sustainable in improving the lives of the majority of the world's population.
The dialogue, therefore, aimed "to assist policymakers in the trenches, those dealing with development challenges in poor and emerging economies, in order to equip them with independent, unfiltered advice from other regions, the latest thinking on new policy challenges, and applied academic findings that will help them carry out the task of growing their economies".
In this context, the role of cities in becoming more efficient providers of services is imperative. More so, the way they promote services innovation.
This invariably raises the question as to whether we have the right mix of education for a future that promotes inclusive growth without being totally reliant on economics but rather paying equal attention to aspects of ecology and socio-cultural issues that are fast impacting growth in a significant way.
Matters raised included a shift from an "OECD-type" to a more "inclusive developing countries-type" of innovation that is more inclined to promote shared prosperity that is affordable, sustainable and of high quality with a massive outreach. It is about empowering the poor who, otherwise, have little or no meaningful participation in innovation.
The case for this may be gleaned from the fact that there are now more Fortune 500 companies emerging from the developing South: from 16 in 2006 to 62 -- about four-fold -- in 2008.
The Growth Dialogue emphasised that economic growth lessons should be subjected to continuous re-calibration and wide promulgation, particularly in a global environment where growth paradigms are allegedly changing and new policy challenges emerge with "inclusive innovation" take centre stage.