Innovation in Mongolia and innovative ways to support them

1. Innovations in Mongolia
and innovative ways to
support them
BCM Meeting 2016.09.22
Ch.Khashchuluun

2. Innovations as a part of knowledge
economy (Knowledge economy index
KEI, World bank)
4 pillars of measuring KEI
An economic and institutional regime to provide incentives for the
efficient use of existing and new knowledge and the flourishing of
entrepreneurship;
An educated and skilled population to create, share, and use
knowledge well;
An efficient innovation system of firms, research centers, universities,
consultants and other organizations to tap into the growing stock of
global knowledge, assimilate and adapt it to local needs, and create
new technology;
Information and communication technology to facilitate the effective
creation, dissemination, and processing of information.

3. Mongolia’s performance over
years

4. Comparing to
other CA
countries,
for example
Kyrgyzstan

5. Global innovation index 2016
Mongolia is 55th in the world

6. Institutions

12. Pretty much sums the real
situation
• Access for credit is probably much more difficult
than estimated in the GII index
• Overall, pretty grim situation
• Policies: Innovation Law 2012 (not so effective)
• what to do?

13. Chile: a mining economy
• Chile: 38 percent of the world’s copper reserves
• largest copper producer: 33.6 percent of the world’s
copper in 2009
• a leading supplier of molybdenum, rhenium, silver,
gold, iron, natural nitrates and others.
• biggest source of income comes from the state-
owned companies, the Chilean National Copper
Corp. (CODELCO) and National Mining Co. (ENAMI)

14. Policies
• import substitution policies generated a meager 2.1 percent average growth
level from 1934 to 1973
• Liberalizatoin reforms gave a pivotal role to the private sector - generated only
0.1 percent annual growth due to inadequate macroeconomic management
• Fundación Chile played a key role: find venture capitalists to invest in
innovative projects promoting technology transfer and new business
models that could benefit the country as a whole
• 1985 Reintegro simplificado (simplified reintegration): export subsidy to
nontraditional exports in which exporters would receive a credit of up to 10
percent of the free on board (FOB) price.
• benefited nontraditional products that contained at least 50 percent of
imported components. It allowed exporters to recover the dues paid to import
those inputs

15. Success: pine trees, berries,
salmons
• Specific target industries: pine trees/cash subsidies for up to 75 percent
of the start-up costs, direct credit lines and other subsidies - now most
important forestry export
• Fundación Chile adapted Norwegian technology in 1981 to grow
salmon.
• From 1985 to 1986 salmon exports reached more than $1 million dollars,
which rapidly increased to almost $159 million in 1991.
• Today Chile is the second largest salmon exporter in the world, having
exported an all-time high of $2.4 billion FOB in 2008
• blueberries: Chile is the leading exporter of the fruit in the Southern
Hemisphere and the main exporter to the Northern Hemisphere, having
exported $164 million FOB

16. Openness
• FTA with 57 countries
• Chile-United States FTA: tariff exemption - an increase in Chilean
exports to the United States of 31.75 percent from 2003 to 2004,
the year the agreement began. By 2006 total exports had more
than doubled, reaching $8.9 billion.
• China—Chile’s main export market since 2007— exports increased
by almost 100 percent to $9.6 billion
• Although most of the exports to the United States and China are
mining products, the industrial and agriculture sectors have
increased exports to these markets as well
• Stable, transparent legal environment

17. • wine quality program 55 private companies
• grape quality program 8 companies and 3
universities
• 24 consortiums in different fields
Innovation strategy and public private partnership

18. Financing
• Total financing of all RD clusters was 147 million USD
• Fisheries program 10 million dollars
• Wine research 5.5 milllino dollars,
• Fruits quality program 5.7 million dollars
• Today Chile exports 5 billion dollars of fish
• fruits 4.7 billion
• wood pulp 3.9 billion
• wine 2 billion dollars
• Most amazingly, it exports fruits to India, wine to France and fish
to UK

19. Fundación Chile
• Fundación Chile (FCh) is a non profit corporation created in
1976 through a joint agreement between the Chilean
government and ITT Corporation.
• worked successfully to foster Chilean business and industry
growth through technological innovation and implementationis
• considered to be a “true institutional innovation” that played a
major role in the export discovery process
• the importance of government support and public policies,
the relevance of fostering entrepreneurship, the role of the
private sector and industry associations

20. Implications for Mongolia
• FTA with Japan, soon possible FTA with Korea
• Lack of financing, venture funds, startup funds,
etc

21. Innovations
Innovations financing will be equal to by 2020
2% of GDP,
by 2025 it will reach 2,5%,
by 2030 it will reach 3% of GDP becoming a
source of economic growth and productivity
increase
But every jump starts with a small step..
Innovation funding has been removed from
the Innovation law (however it is specified in
the Investment Fund law)

22. Innovation fund Mongolia: MIF
Seed financing: 10 mln dollars
One way to ensure no losses for angel investors: government guarantee
Foundation revenue: startup financing, office/laboratories rent
Activities:
• Mentoring
• Investment banking
• Innovation startup funding
• Business planning advise
• Ensuring university, business and government linkages
• Startups’ fair
• Business ideas meetings
• Open lounge office for startups based on private offices

23. Possible model: Kashiwa
business center