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Multiple Innovation Ecologies and SustainableMultiple Innovation Ecologies and Sustainable
Development: Challenges and Opp...
Q iQuestions
1 What is the old economy & new/innovation economy?1. What is the old economy & new/innovation economy?
2. Wh...
Global Forces: Opportunities & Challenges
Global
Virtual
Worlds
National
Security
Social
Networks
Converging
Technologies
...
Global Forces: Opportunities & Challenges
Global
Virtual
Worlds
National
Security
Social
Networks
Converging
Technologies
...
1a. What is the old economy?
Input-Driven Growth Models
Labour
Capital Output
Technology
Limitations:
1 C t l i l t th1. C...
1b What is the new economy?1b. What is the new economy?
An economy where the socioeconomic development &• An economy where...
2. What is an NIE? [The 7i Ecosystem][ y ]
REACH-factor [Foundation Condition] (Necessary)REACH-factor [Foundation Conditi...
Global Connectivityy
Agents ofg
Transformation
Smart & Strategic
Doing the things you
promise with the best
f bili i
Catal...
7i Framework7i Framework
Innovation is a ProcessInnovation is a Process
A process which leads to the following:
• new products/services; and/orp
• ...
Types of InnovationTypes of Innovation
• Business Model Innovation – eg FranchiseBusiness Model Innovation eg. Franchise
•...
Types of Innovation (cont’d)Types of Innovation (cont d)
• Radical Innovation – existing knowledge
obsolete
• Incremental ...
3. Why is NIE important?
Marathon race in the new economyHighly Marathon race in the new economyg y
Developedctor
tion)
NE...
Highly
Marathon race in the new economyg y
Developedctor
tion)
NESS-fac
rCondit
RICHN
(Drive
Failed States
}I. INFANT
En i...
Marathon race in the new economyHighlyg y
Developedctor
tion)
NESS-fac
rCondit
Few local creative endevours. Few linkages ...
Marathon race in the new economyHighlyg y
Developed
Fusion of clusters in key
sectors of the economy.
‘Adepters’
ctor
tion...
Marathon race in the new economy
Highlyg y
Developed
Leaders in Innovation ;
Formation of next
generation clusters &
Pace-...
Marathon race in the new economy
Highlyg y
Developed
Leaders in Innovation
Formation of next
generation clusters &
Fusion ...
Marathon race in the new economy
Highlyg y
Developed
Leaders in Innovation
Formation of next
generation clusters &
Fusion ...
Marathon race in the new economy
Highlyg y
Developed
Leaders in Innovation
Formation of next
generation clusters &
Fusion ...
Marathon race in the new economy
Highlyg y
Developed
Leaders in Innovation
Formation of next
generation clusters &
INCREAS...
Leapfrogging in the new economy
Highlyg y
Developed
Leaders in Innovation
Formation of next
generation clusters &
Fusion o...
Static to Dynamic Innovation ModelStatic to Dynamic Innovation Model
1. Static Model (Linear) – Production Economy
Researc...
Building Blocks ofBuilding Blocks of
National Innovation Ecosystemy
Governments EnterprisesGovernments Enterprises
Entre
nters
Intellectual
Capital
Infrastructure
epreneu
archCen
NATIONAL In...
InfrastructureInfrastructure
• 1. Physical Infrastructure
– Movement of goods and people (roads, ports and
airports, etc.)...
Broadband penetration rate per 1000 peopleBroadband penetration rate per 1000 people
250 Australia
200
Brazil
Canada
Chile...
2 Intellectual Capital2. Intellectual Capital
• Education – universal access (pre-school
to university)y)
• Training Resea...
Creative Learning & Research Environment in Finland
Living/Learning Environment
•Community Target forCommunity
•Culture
•M...
3 Integrity3. Integrity
• Transparent processes
• Instilling good governanceInstilling good governance
• Best practices
• ...
4 Incentives4. Incentives
• Access to public funded research (2% 4%of GDP)• Access to public funded research (2%-4%of GDP)...
Natu re o f the Schem e Scope an d C o vera ge
Go vernm e nt Gra nts
• Natio nal R esea rch Pro gra m • Established in 1 9...
5 Interaction5. Interaction
C i ti b t t i• Communication between government agencies
• Communication between government a...
Example of Regional Clusters: Greater Grand Rapids
Source: Porter 1998
Kainuu
• Measuring Technique
•Chamber Music
Lapland
• Experience Industry
Oulu
• ICT
M di l Bi d
Innovation Accelerators-F...
Innovation Accelerators
SOUTH KOREA
Chungbuk
•Bio-medical equipments
•New materials & disaster
prevention
Gyeonggi
•Inform...
6 Institutional Coordination6. Institutional Coordination
Science Technology & Innovation Policy Council• Science Technolo...
Institutional Coordination
The Finnish
National Innovation System
Key organisations:
• Academy of Finland
• National Techn...
Korean NIS
KOREAN NIS
Korean NIS
Institutional Coordination of Innovation –
a staged approach in Koreaa staged approach in Korea
1960s 1970s 1980s 1990s 20...
Institutional Coordination of Innovation –
a staged approach in Koreaa staged approach in Korea
1960s 1970s 1980s 1990s 20...
Institutional Coordination of Innovation –
a staged approach in Koreaa staged approach in Korea
1960s 1970s 1980s 1990s 20...
Institutional Coordination of Innovation –
a staged approach in Koreaa staged approach in Korea
1960s 1970s 1980s 1990s 20...
Linkage: Institutional, Social Capital Theories & Sustainable Development
Source: Nair (2009) Source: Nair (2010)
Governme...
Nair (2010)
Innovation Ecology Model
VisionVision
SocietyaluetoSVa
New
Break-
Original Innovation
(Increasing Returns)
Bre...
Innovation Ecology Model
Nair (2010)
VisionVision
SocietyaluetoSVa
Original Innovation
(Increasing Returns)
Ecosystem I
Ti...
Nair (2010)
Innovation Ecology Model
VisionVision
SocietyaluetoS
New Innovation
(Increasing Returns)
Va
Ecosystem I Breakt...
Nair (2010)
Innovation Ecology Model
VisionVision
SocietyaluetoS
New Innovation
(Increasing Returns)
Visioning
Va
Ecosyste...
Nair (2010)
Innovation Ecology Model
Multiple clusters & innovations
Vision
New Innovation
(Increasing Returns)
Vision
Eco...
Case Study 1:Case Study 1:
Sustainable Modern Agriculture & Rural Transformation
(S.M.A.R.T.)(S.M.A.R.T.)
Sustainable Mode...
Suppliers
R l C ti itRural Connectivity
Supply of Used PCs
Distribution
Refurbished PCs
PC in schools
Distribution
Centres...
National Innovation Ecosystem Model
Multiple clusters & innovations
Vision
New Innovation
(I i R t )
Vision
Eco
system IV
...
National Innovation Ecosystem Model
VisionVision
SocietyaluetoSVa
TimeT0
(now)
T1 T2 T3
REACH
National Innovation Ecosystem Model
VisionVision
SocietyaluetoSVa
Refurbished
PC Sector
TimeT0
(now)
T1 T2 T3
REACH
National Innovation Ecosystem Model
Vision
Rural connectivity Export to LDC
Vision
SocietyaluetoSVa
Original Innovation
(I...
National Innovation Ecosystem Model
Vision
Rural connectivity Export to LDC
Vision
SocietyaluetoSVa
ICT
Micropreneurs
In r...
National Innovation Ecosystem Model
Vision
Rural connectivity Export to LDC Entrepreneurs
Vision
SocietyaluetoS
New Innova...
National Innovation Ecosystem Model
Vision
Rural connectivity Export to LDC Entrepreneurs
Vision
SocietyaluetoS
Applicatio...
National Innovation Ecosystem Model
Vision
Rural connectivity Export to LDC Entrepreneurs High Yield
Vision
Supplier
Socie...
National Innovation Ecosystem Model
Vision
Rural connectivity Export to LDC Entrepreneurs High Yield Global Innovation Sup...
National Innovation Ecosystem Model
S.M.A.R.T
Vision
Rural connectivity Export to LDC Entrepreneurs High Yield Global Inno...
• Sustained Rural Development
• Curb Brain-Drain from Rural
Multi-Stakeholder Benefits
Nation
areas
• Reduce rural migrati...
Old Economy New EconomyOld Economy New Economy
Input-output Model Powered by InnovationInput output Model Powered by Innov...
4 H h th t i l f d4. How have other countries leapfrogged
to the new economy?
Econometric Modelling using the 7i Framework...
7i Framework7i Framework
Japan
SwitzerlandPace-Setters
Global Marathon Race in the new economy (2008/2009)
Hot Spots
Strong
Switzerland
Germany
USA...
5. Can developing countries leap-frog
to the innovation economy?
Challenges & DriversChallenges & Drivers
Challenge 1
Japan
SwitzerlandPace-SettersHot Spots
Strong
Switzerland
Germany
USA
Sweden
Denmark
Pace Setters
Australia
Ma...
Challenge 2
Japan
SwitzerlandPace-Setters
Strong
Switzerland
Germany
USA
Sweden
Denmark
Pace Setters
Australia
Malaysia
Ch...
Challenge 3
Japan
SwitzerlandPace-SettersChallenge 3
Strong
Switzerland
Germany
USA
Sweden
Denmark
Pace Setters
Australia
...
Gaps in Innovation System
(Developing countries)( p g )
Unable to leapfrog to
the next innovation
Widening
G
y
the next in...
Drivers: Strengths in MalaysiaDrivers: Strengths in Malaysia
P liti l Will d PM• Political Will – under new PM
• Planning ...
6. What are the possible trajectories for a
innovation driven economy?
(Simulation Results)(Simulation Results)
How to move up the global innovation value chain?
Japan
SwitzerlandPace-Setters
Strong
Switzerland
Germany
USA
Sweden
Denm...
Competition from all Directions
Japan
Switzerland
Challenge 3
Strong
Switzerland
Germany
USA
Sweden
Denmark
Leap-frogging
...
Japan
Switzerland
Trajectory 0 - Status Quo (2010-2015)
Strong
Switzerland
Germany
USA
Sweden
DenmarkFall behind
I h
ess
S...
M l i h f ll t 28th itiMalaysia has fallen to 28th position
(from 25th position) in Band 3 (as
predicted) - others are mov...
Can Malaysia leapfrog to a new
I ti T j t ?Innovation Trajectory?
Japan
Switzerland
Trajectory 1- Innovation Diffusion (2010-2015)
Phase I: Innovation Diffusion
Strong
Switzerland
Germany
...
Japan
Switzerland
Trajectory 2- Regional Innovation Hub (by 2020)
Strong
Switzerland
Germany
USA
Sweden
Denmark
Phase II: ...
Japan
Switzerland
Trajectory 3-Leapfrog regional economic super powers
(by 2025)
Strong
Switzerland
Germany
USA
Sweden
Den...
Japan
Switzerland
Trajectory 4- Global Leadership in key innovation areas
(by 2030)
Strong
Switzerland
Germany
USA
Sweden
...
Japan
Switzerland
Tracing the footprints to a Pace-Setter: A Staged Approach
Strong
Switzerland
Germany
USA
Sweden
Denmark...
Summary from the Simulations
• Status Quo Trajectory (Average Per capita GDP Growth Rates)
– 1990 to 2000: 5.0%
– 2001 to ...
Innovation Multiplier Effect:Innovation Multiplier-Effect:
A Staged Plang
ICT Diffusion (2010-2015)
L MSCLeverage on MSC
MSC
By 2015 – Leveraging from MSC:
Innovation DiffusionInnovation Diffusion
MSC
Malaysia
Centres of Excellence
& Innovation Clusters
(By 2015)
Langkawi
Tourism,
Kuala Perlis
Fishery, ICT, Cold-chain pro...
Islamic Banking/finance
Education
Logistic
Smart Aquaculture
Petrochemical/advanced
materials
Logistic
BPO/ICT Serv/creati...
Islamic Banking/finance
Education
Logistic
Smart Aquaculture
Petrochemical/advanced
materials
Logistic
BPO/ICT Services
Ag...
Northern
Corridor
Eastern
Central
Eastern
Corridor
SARAWAK & SABAH
Southern
Corridor
CORRIDORS
CoEs/Clusters &
Corridor De...
Islamic Banking/finance
Education
Logistic
Smart Aquaculture
Petrochemical/advanced
Materials/
Logistic
BPO/ICT Serv/creat...
Advanced Materials
Polymer Fibre Glass Rayony y
Polyacrylonitrile (PAN) Resin
Acrylic Polyvinylcholorida (PVC)
Nanotubes N...
Advanced Materials
Polymer Fibre Glass Rayony y
Polyacrylonitrile (PAN) Resin
Acrylic Polyvinylcholorida (PVC)
Nanotubes N...
Establishing Innovation Clusters
in Pace-Setter countries by 2030
I t ti l N t ki P• International Networking Program
• In...
Summary
Highly What it takes to achieve sustainable development?g y
Developed
Leaders in Innovation
Formation of next
gene...
Innovation Imprinted in our DNA
“Just as energy is the basis
of life and ideas source ofof life, and ideas source of
innov...
Survival of the Fittest
“It is not the strongest of the
species that survives,spec es t at su es,
nor the most Intelligent...
‘True’ Development
“Wh i d bt A l th“Whenever you are in doubt … Apply the
first test. Recall the face of the poorest
and ...
Thank You
ProfMahendhiranNair-InnovationEcologies
ProfMahendhiranNair-InnovationEcologies
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ProfMahendhiranNair-InnovationEcologies

  1. 1. Multiple Innovation Ecologies and SustainableMultiple Innovation Ecologies and Sustainable Development: Challenges and Opportunities for Malaysiafor Malaysia Professor Mahendhiran NairProfessor Mahendhiran Nair School of Business, MONASH University Sunway campus Email: mahendhiran.nair@buseco.monash.edu.my Kuala Lumpur Innovation Forum 2010 3 November, 2010
  2. 2. Q iQuestions 1 What is the old economy & new/innovation economy?1. What is the old economy & new/innovation economy? 2. What is National Innovation Ecosystem/Ecology (NIE)? 3 Wh i th NIE i t t?3. Why is the NIE important? 4. How have other countries leap-frogged to the new economy?economy? 5. Can developing countries (Malaysia) ‘leap-frog’ to the new economy? Challenges & Driversnew economy? Challenges & Drivers 6. Possible trajectories for a new economy ? (econometric simulations)simulations) 7. Concluding remarks (interesting quotes!)
  3. 3. Global Forces: Opportunities & Challenges Global Virtual Worlds National Security Social Networks Converging Technologies Global Outsourcing Intangible Asset Changing Demographics Talent Poaching Globalization, Liberalization, Regionalization & Energy Crisis New Economic Super Powers Regionalization & Digitization Liberalization Globalization/ Regional Bl Rapid Technology Diffusion Super Powers Globalization/ Gobblelization Blocs Diffusion
  4. 4. Global Forces: Opportunities & Challenges Global Virtual Worlds National Security Social Networks Converging Technologies Global Outsourcing Intangible Asset Changing Demographics Talent Poaching Creative Destruction Energy Crisis New Economic Super Powers - Schumpeter Liberalization Globalization/ Regional Bl Rapid Technology Diffusion Super Powers Globalization/ Gobblelization Blocs Diffusion
  5. 5. 1a. What is the old economy? Input-Driven Growth Models Labour Capital Output Technology Limitations: 1 C t l i l t th1. Cannot explain long-term growth. 2. Cannot explain the problem that face poor countries – debt crisis, capital-flight brain-drain & financial crisis. 4 No mention of role of institutions governance and market failures4. No mention of role of institutions, governance and market failures (corruption and lack of transparency)
  6. 6. 1b What is the new economy?1b. What is the new economy? An economy where the socioeconomic development &• An economy where the socioeconomic development & welfare gains are predominantly dependent on the production, diffusion and utilization of information, ideas and innovation.diffusion and utilization of information, ideas and innovation. • Knowledge & Innovation are key factors for societal development & wealth creation - source of increasing returns (productivity gains). • Transformation of traditional factors of production - [LAND] “Places to Spaces”[LAND] Places to Spaces - [LABOUR] “Outsourcing” - [CAPITAL] “Global Financial Markets”[ ]
  7. 7. 2. What is an NIE? [The 7i Ecosystem][ y ] REACH-factor [Foundation Condition] (Necessary)REACH-factor [Foundation Condition] (Necessary) Infrastructure that facilitate connectivity to the global community ‘highway’ for the flow of information andcommunity - ‘highway’ for the flow of information and knowledge. RICHNESS-factor [Driver Conditions] (Necessary & Sufficient) Factors which deepens knowledge intensity in a societyFactors which deepens knowledge intensity in a society (Intellectual capital, Interaction, Incentives, Institutions, Integrity, Innovation). Source: Nair, M. (2007), “The ‘DNA’ of the new economy,” Economic Bulletin, Volume 8, December, 27-59.
  8. 8. Global Connectivityy Agents ofg Transformation Smart & Strategic Doing the things you promise with the best f bili i Catalyst for Creativity Smart & Strategic Partnerships of your abilities Creativity Life-long learning
  9. 9. 7i Framework7i Framework
  10. 10. Innovation is a ProcessInnovation is a Process A process which leads to the following: • new products/services; and/orp • new ways of improving the efficiency of traditional factors of knowledge-buildup modes, invention,factors of knowledge buildup modes, invention, production and commercialization; and/or • New production and diffusion methods of• New production and diffusion methods of knowledge, inventions, products/services; and/or Enhance the reach and richness of goods/services• Enhance the reach and richness of goods/services and knowledge to society.
  11. 11. Types of InnovationTypes of Innovation • Business Model Innovation – eg FranchiseBusiness Model Innovation eg. Franchise • Process Innovation – eg. Lean Six-Sigma P d t/S i I ti• Product/Service Innovation • Systemic Innovation (new industrial sectory ( & social networks) • Social Innovation – changes in society/cultureSocial Innovation changes in society/culture • Position Innovation – changes in the context in which product/services reputation and locationproduct/services, reputation and location • Paradigm Innovation – changes in the underlying mental models (eg. Look East Policy under Dr. Mahathir)models (eg. Look East Policy under Dr. Mahathir)
  12. 12. Types of Innovation (cont’d)Types of Innovation (cont d) • Radical Innovation – existing knowledge obsolete • Incremental Innovation – knowledge to build on existing knowledgebuild on existing knowledge
  13. 13. 3. Why is NIE important? Marathon race in the new economyHighly Marathon race in the new economyg y Developedctor tion) NESS-fac rCondit RICHN (Drive Weak HighlyREACH f tWeak Highly Developed Source: Nair (2008) REACH-factor (Foundation Condition)
  14. 14. Highly Marathon race in the new economyg y Developedctor tion) NESS-fac rCondit RICHN (Drive Failed States }I. INFANT En ironment to s pport kno ledge creation non e istent Weak Highly }Environment to support knowledge creation non-existent. Disincentive for foreign firms to bring in technology and knowledge. Serious brain-drain and capital flight. REACH f tWeak Highly Developed Source: Nair (2008) REACH-factor (Foundation Condition)
  15. 15. Marathon race in the new economyHighlyg y Developedctor tion) NESS-fac rCondit Few local creative endevours. Few linkages and fragmented. Most innovation by foreign entities. Starters Adopters II. IMITATION RICHN (Drive Very few local creative endevours and very few linkages with foreign entities. Number of foreign enterprises undertaking innovation low. } Failed States I. INFANT En ironment to s pport kno ledge creation non e istent Weak Highly }Environment to support knowledge creation non-existent. Disincentive for foreign firms to bring in technology and knowledge. Serious brain-drain and capital flight. REACH f tWeak Highly Developed Source: Nair (2008) REACH-factor (Foundation Condition)
  16. 16. Marathon race in the new economyHighlyg y Developed Fusion of clusters in key sectors of the economy. ‘Adepters’ ctor tion) Attraction of Innovation-driven people and enterprises. M li k F ti f l t sectors of the economy. Innovation transcend national border Adapters III. INTEGRATION NESS-fac rCondit Few local creative endevours. Few linkages and fragmented. Most innovation by foreign entities. Many linkages. Formation of clusters. Starters Adopters II. IMITATION RICHN (Drive Very few local creative endevours and very few linkages with foreign entities. Number of foreign enterprises undertaking innovation low. } Failed States I. INFANT En ironment to s pport kno ledge creation non e istent Weak Highly }Environment to support knowledge creation non-existent. Disincentive for foreign firms to bring in technology and knowledge. Serious brain-drain and capital flight. REACH f tWeak Highly Developed Source: Nair (2008) REACH-factor (Foundation Condition)
  17. 17. Marathon race in the new economy Highlyg y Developed Leaders in Innovation ; Formation of next generation clusters & Pace-Setters IV. INNOVATION Fusion of clusters in key sectors of the economy. generation clusters & Knowledge centers. ‘Adepters’ O O ctor tion) Attraction of Innovation-driven people and enterprises. M li k F ti f l t sectors of the economy. Innovation transcend national border Adapters III. INTEGRATION NESS-fac rCondit Few local creative endevours. Few linkages and fragmented. Most innovation by foreign entities. Many linkages. Formation of clusters. Starters Adopters II. IMITATION RICHN (Drive Very few local creative endevours and very few linkages with foreign entities. Number of foreign enterprises undertaking innovation low. }En ironment to s pport kno ledge creation non e istent Failed States I. INFANT Weak Highly }Environment to support knowledge creation non-existent. Disincentive for foreign firms to bring in technology and knowledge. Serious brain-drain and capital-flight. REACH f tWeak Highly Developed Source: Nair (2008) REACH-factor (Foundation Condition)
  18. 18. Marathon race in the new economy Highlyg y Developed Leaders in Innovation Formation of next generation clusters & Fusion of clusters in key sectors of the economy. generation clusters & Knowledge centers ctor tion) Attraction of Innovation-driven people and enterprises. M li k F ti f l t sectors of the economy. Innovation transcend national border NESS-fac rCondit Few local creative endevours. Few linkages and fragmented. Most innovation by foreign entities. Many linkages. Formation of clusters. RICHN (Drive Very few local creative endevours and very few linkages with foreign entities. Number of foreign enterprises undertaking innovation low. }En ironment to s pport kno ledge creation non e istent Weak Highly }Environment to support knowledge creation non-existent. Disincentive for foreign firms to bring in technology and knowledge. Serious brain-drain and capital flight. REACH f tWeak Highly Developed Source: Nair (2008) REACH-factor (Foundation Condition)
  19. 19. Marathon race in the new economy Highlyg y Developed Leaders in Innovation Formation of next generation clusters & Fusion of clusters in key sectors of the economy. generation clusters & Knowledge centers ctor tion) Attraction of Innovation-driven people and enterprises. M li k F ti f l t sectors of the economy. Innovation transcend national border NESS-fac rCondit Few local creative endevours. Few linkages and fragmented. Most innovation by foreign entities. Many linkages. Formation of clusters. RICHN (Drive Very few local creative endevours and very few linkages with foreign entities. Number of foreign enterprises undertaking innovation low. }En ironment to s pport kno ledge creation non e istent Weak Highly }Environment to support knowledge creation non-existent. Disincentive for foreign firms to bring in technology and knowledge. Serious brain-drain and capital flight. REACH f tWeak Highly Developed Source: Nair (2008) REACH-factor (Foundation Condition)
  20. 20. Marathon race in the new economy Highlyg y Developed Leaders in Innovation Formation of next generation clusters & Fusion of clusters in key sectors of the economy. generation clusters & Knowledge centers ctor tion) Attraction of Innovation-driven people and enterprises. M li k F ti f l t sectors of the economy. Innovation transcend national border NESS-fac rCondit Few local creative endevours. Few linkages and fragmented. Most innovation by foreign entities. Many linkages. Formation of clusters. RICHN (Drive Very few local creative endevours and very few linkages with foreign entities. Number of foreign enterprises undertaking innovation low. }En ironment to s pport kno ledge creation non e istent Weak Highly }Environment to support knowledge creation non-existent. Disincentive for foreign firms to bring in technology and knowledge. Serious brain-drain and capital flight. REACH f tWeak Highly Developed Source: Nair (2008) REACH-factor (Foundation Condition)
  21. 21. Marathon race in the new economy Highlyg y Developed Leaders in Innovation Formation of next generation clusters & INCREASING RETURNS TO Fusion of clusters in key sectors of the economy. generation clusters & Knowledge centers RETURNS TO SCALE ! ctor tion) Attraction of Innovation-driven people and enterprises. M li k F ti f l t sectors of the economy. Innovation transcend national border NESS-fac rCondit Few local creative endevours. Few linkages and fragmented. Most innovation by foreign entities. Many linkages. Formation of clusters. RICHN (Drive Very few local creative endevours and very few linkages with foreign entities. Number of foreign enterprises undertaking innovation low. }En ironment to s pport kno ledge creation non e istent Weak Highly }Environment to support knowledge creation non-existent. Disincentive for foreign firms to bring in technology and knowledge. Serious brain-drain and capital flight. REACH f tWeak Highly Developed Source: Nair (2008) REACH-factor (Foundation Condition)
  22. 22. Leapfrogging in the new economy Highlyg y Developed Leaders in Innovation Formation of next generation clusters & Fusion of clusters in key sectors of the economy. generation clusters & Knowledge centers ctor tion) Attraction of Innovation-driven people and enterprises. M li k F ti f l t sectors of the economy. Innovation transcend national border NESS-fac rCondit Few local creative endevours. Few linkages and fragmented. Most innovation by foreign entities. Many linkages. Formation of clusters. RICHN (Drive Very few local creative endevours and very few linkages with foreign entities. Number of foreign enterprises undertaking innovation low. }En ironment to s pport kno ledge creation non e istent Weak Highly }Environment to support knowledge creation non-existent. Disincentive for foreign firms to bring in technology and knowledge. Serious brain-drain and capital flight. REACH f tWeak Highly Developed Source: Nair (2008) REACH-factor (Foundation Condition)
  23. 23. Static to Dynamic Innovation ModelStatic to Dynamic Innovation Model 1. Static Model (Linear) – Production Economy Research Development Commercialization 2. Dynamic National Innovation Ecosystem (NIE) – New Economy Government Enterprises Entrepreneurs Research Centers Innovation E tEcosystem Associations Social Networks FinanciersKnowledge Transfer Centers Social Networks
  24. 24. Building Blocks ofBuilding Blocks of National Innovation Ecosystemy
  25. 25. Governments EnterprisesGovernments Enterprises Entre nters Intellectual Capital Infrastructure epreneu archCen NATIONAL InteractionIntegrity rs Resea NATIONAL INNOVATION ECOSYSTEM InteractionIntegrity Systems As rks ssociatio alNetwor Incentives Institutions ons Socia Knowledge Transfer Centers Financiers Source: Nair(2008)
  26. 26. InfrastructureInfrastructure • 1. Physical Infrastructure – Movement of goods and people (roads, ports and airports, etc.) – Schools, libraries, laboratories • 2. Infostructure – Affordable Instantaneous and global connectivity – Broadband and ‘quadruple-play’ is the standard. – Bridging the digital divide
  27. 27. Broadband penetration rate per 1000 peopleBroadband penetration rate per 1000 people 250 Australia 200 Brazil Canada Chile China 150 Finland Germany India Ireland J Korea Leapfrog other OECD countries 100 Japan Korea, Rep Malaysia Mexico New Zealand 50 New Zealand Norw ay Singapore Sw eden Sw itzerland 0 1999 2000 2001 2002 2003 2004 Sw itzerland Taiw an United Kingdom United States Data Source: EarthTrends, World Resources Institute
  28. 28. 2 Intellectual Capital2. Intellectual Capital • Education – universal access (pre-school to university)y) • Training Research Personnel (HDR programs)programs) • Entrepreneurship development programs in Institutions of Higher Learning • Creative Learning Environment• Creative Learning Environment Ideas Incubation Invention Society
  29. 29. Creative Learning & Research Environment in Finland Living/Learning Environment •Community Target forCommunity •Culture •Management Target for Multidisciplinary Learning research Individual Learning •Biology Organizational Learning•Biology •Brain + Human Mind •Psychology Learning • Knowledge Creation Processes • Networks & Partners Technology IT tools Supportingpp g Individual Learning & Knowledge creation Sharing technologies/ Social Software • Internet• Internet •Wikis, blogs, etc. •Tools supporting the creation of organizational knowledge Source: Finsight 2015: The Outlook of Science, Technology and Society TEKES (2006)
  30. 30. 3 Integrity3. Integrity • Transparent processes • Instilling good governanceInstilling good governance • Best practices • Global benchmarks & standards • Safety and Security• Safety and Security
  31. 31. 4 Incentives4. Incentives • Access to public funded research (2% 4%of GDP)• Access to public funded research (2%-4%of GDP). • Policy to enhance resource to support R&D, patenting and commercialization.and commercialization. • Fiscal and non-fiscal policies to encourage R&D activities among firms. • Target policy to enhance resources (priority areas and target clusters). Private funding (Angel funds VCs)• Private funding (Angel funds, VCs) • Equity markets to fund technology and knowledge- intensive companiesintensive companies • Innovation futures market
  32. 32. Natu re o f the Schem e Scope an d C o vera ge Go vernm e nt Gra nts • Natio nal R esea rch Pro gra m • Established in 1 982 Desig ned to p rom ote joint R& D bet we en• Desig ned to p rom ote joint R& D bet we en private firm s an d pu blic R&D institutions • Focussed on basic technolo gy de vlop m ent • Large com p anies: up to 50% funding suppo rt • Sm all enterprises: up to 8 0% fu nding suppo rt - Comprehensive Fiscal Incentives to support Innovation I K suppo rt • In dustrial Basic Techn ology D e velo pm e nt Prog ram • Established in 1 987 • Desig ned fo r the com m e rcialization o f locally de velo ped tech nolo gies • Large com p anies: 40-5 0% • Sm all com pa nies: 50-60% In Korea Go vernm e nt’s Loan Prog ram : • In dustrial Prom otio n Fun d Go vernm e nt fu nds whic h are utilized to • In dustrial Tech nology Prom otion F und Pro vide firm s with lo ans at concession al rate • SM I Restructurin g Fun d • Natio nal In vestm ent Fu nd • Special Facilities Fund In fo rm atio n an d Co m m u nication• In fo rm atio n an d Co m m u nication Technology D e velo pm e nt Fund • Science and Techn ology Prom otio n Fun d • M anu factu rin g In dustry Co m petitiven ess Prom otio n Fun d • Alternative Ene rgy Tech nology De velopm e nt Fun dDe velopm e nt Fun d • Excellent Dem o nstratio n Prototype Su pp ort Fund • SM I Start-Up Fu nd Loa n Fina ncing o f Special Fina ncial Institutions • Kore a De velopm ent Bank Pro gram • In dustrial Ba nk of Ko rea Prog ram • Citizens Natio nal Ba nk Prog ram Ne w Techn olo gies Fina ncing a nd Start -U p Financin g • Kore a Techn olo gy Bank and th ree othe r new tech nology fin ancin g com p anies • Kore a Techn olo gy In vestm e nt Corpo ratio n and 5 2 othe r start-u p supp ort fina ncing com paniescom panies Technology C re dit Gua rant ee Fu nd • Cre dit gu ara ntee is pro vide d to firm s de velo pin g ne w technology
  33. 33. 5 Interaction5. Interaction C i ti b t t i• Communication between government agencies • Communication between government agencies d i t tand private sector • Communication to the general public and social groups • Role of bringing organizations and knowledge t TEKES I ti E h icenters – e.g. TEKES, Innovation Exchange in Malaysia & Australia E h i I d t i l Cl t d i l• Enhancing Industrial Clusters and regional Industrial clusters (as part of the Regional Innovation System)Innovation System)
  34. 34. Example of Regional Clusters: Greater Grand Rapids Source: Porter 1998
  35. 35. Kainuu • Measuring Technique •Chamber Music Lapland • Experience Industry Oulu • ICT M di l Bi d Innovation Accelerators-Finland Image from: http://visibleearth.nasa.gov Kuopio Region • Pharmaceutical Development H lth d •Medical-, Bio- and environmental technology Raahe-Nivala-Tornio • Metal and Maintenance services • Health care and Agrobiotechnology North Carelia W d T h l services Kokkola Region • Chemistry Western Finland • Wood Technology & Forestry • Polymer Technology & Tooling Jyvaskyla Region • Energy technology Seinajoki Region • Food industry & embedded systems Jyvaskyla Region • IT, Control of Paper making •Energy & environmental technology Tampere Region • Engineering & automation, ICT, •Media services & healthcare •technology Mikkeli Region • Composite & Coatings Lahti Region • Design Quality and Satakunta • Materials & distance technology South-West • Biomaterials diagnostics Design, Quality and Ecology South East • High Tech Metal Structures,, Process and Systems for Biomaterials, diagnostics, •Phrmaceuticals development, •Surface technology of materials, •ICT and cultural content production •Chamber Music y forest Industry Logistics and expertise on Russian tech. Hame • Vocational Expertise & E-learning Hyvinkaa Region • Lifting & Transfer machines Helsinki Region • Active materials and Microsystems, Gene technology, Software product business, digital media, e-learning and cultural industry, health care technology & logistics
  36. 36. Innovation Accelerators SOUTH KOREA Chungbuk •Bio-medical equipments •New materials & disaster prevention Gyeonggi •Information & telecommunication •Life, Cultural Contents, •International logistics Seoul •Digital contents, •Information & telecommunication, •Bio SOUTH KOREA prevention •Culture & tourism Chungu •Bio, •Semiconductor Incheon •Logistics Automobile, •Machinery & metal •Bio •Financial corporation support •Semiconductor, •Mobile communication •Next generation battery Gyeongbuk •Electronics & information Chungnam •Electronics & information devices •Machinery & metal •Informtion & telecommunication Daejeon Electronics & information devices, •New materials & parts •Biology & herbal medicine •Culture & tourism devices •Automobile parts, •High-end culture •Agriculture & stock bio Daegu •Mecatronics •Electronics & information devices •Textile & biology •Information & telecommunication •Bio •Cutting edge parts & materials •Mechatronics •Textile & biology Ulsan •Automobile •Urban maritime P i i h i t Jeonbuk •Automobile & Machinery •Biology •Alternate energy Mechatronics •Precision chemistry, •Environment Busan •Seaport logistics, •Machine parts Jeju •Tourism Gyeongman •Knowledge-based Jeonnam •Biology Chungbuk •Bio-medical equipments •New materials & disaster Alternate energy •Culture & tourism •Machine parts •Tourism contents, •Video IT •Tourism •Health & beauty •Friendly agriculture •Digital contents Knowledge based machinery •Robot, •Intelligent home, •Bio Biology •New materials ship building •Logistics •Culture & tourism •New materials & disaster prevention •Culture & tourism
  37. 37. 6 Institutional Coordination6. Institutional Coordination Science Technology & Innovation Policy Council• Science Technology & Innovation Policy Council (General Policy Framework) • Relevant ministries and agencies for STI formulation,g regulating, financing and coordination • RDC facilitating and modulating institutions (technology transfer & advice agencies)transfer & advice agencies) • R&D performers • Knowledge & technology transfer centers • Goods and service providers • Chambers of Commerce S i P k / t h l• Science Parks / technopoles • Associations, Social Networks, Groups and NGOs
  38. 38. Institutional Coordination The Finnish National Innovation System Key organisations: • Academy of Finland • National Technology Agency of Finland (TEKES) P bli h & d l t• Public research & development organisations • Technology transfer agencies Capital providers• Capital providers Souce: Nieminen, M. and Kaukonen, E. (2001), “Universities and R&D Networking In a Knowledge-based Economy – A Glance At Finnish Development”, SItra Report Series 11, Helsinki.
  39. 39. Korean NIS KOREAN NIS Korean NIS
  40. 40. Institutional Coordination of Innovation – a staged approach in Koreaa staged approach in Korea 1960s 1970s 1980s 1990s 2000 2002-2025 Scientific Institution Scientific Infrastructure R&D and Private Leading role in strategic areas Nationwide innovation Global InnovationInstitution Building Infrastructure Setting Private Research Lab Promotion strategic areas innovation creation Innovation creation • Establishing of MOST • Establishment of GRIs • National R&D Funds • HAN Project • CyberKorea 21 (1999- 2002) • e-Korea Vision 2007 2002) • S&T(2007) • S&T Promotion Laws • R&D Promotion Law • Promotion of establishme nt of private labs • Enhancing university research capability • Goals by 2025 labs capability • Human Resource Development • Highly Qualified Personnel Development • Promotion of industrial R&D • University- industry-GRI linkages
  41. 41. Institutional Coordination of Innovation – a staged approach in Koreaa staged approach in Korea 1960s 1970s 1980s 1990s 2000 2002-2025 Scientific Institution Scientific Infrastructure R&D and Private Leading role in strategic areas Nationwide innovation Global InnovationInstitution Building Infrastructure Setting Private Research Lab Promotion strategic areas innovation creation Innovation creation • Establishing of MOST • Establishment of GRIs • National R&D Funds • HAN Project • CyberKorea 21 (1999- 2002) • e-Korea Vision 2007 2002) • S&T(2007) • S&T Promotion Laws • R&D Promotion Law • Promotion of establishme nt of private labs • Enhancing university research capability • Goals by 2025 labs capability • Human Resource Development • Highly Qualified Personnel Development • Promotion of industrial R&D • University- industry-GRI linkages Phase I (~2005) Leapfrog other Asian Nations • Increase R&D Expenditures & efficiency • Expend Infrastructure • Reform S&T Education • Perform Future oriented frontier• Perform Future-oriented frontier research
  42. 42. Institutional Coordination of Innovation – a staged approach in Koreaa staged approach in Korea 1960s 1970s 1980s 1990s 2000 2002-2025 Scientific Institution Scientific Infrastructure R&D and Private Leading role in strategic areas Nationwide innovation Global InnovationInstitution Building Infrastructure Setting Private Research Lab Promotion strategic areas innovation creation Innovation creation • Establishing of MOST • Establishment of GRIs • National R&D Funds • HAN Project • CyberKorea 21 (1999- 2002) • e-Korea Vision 2007 2002) • S&T(2007) • S&T Promotion Laws • R&D Promotion Law • Promotion of establishme nt of private labs • Enhancing university research capability • Goals by 2025 labs capability • Human Resource Development • Highly Qualified Personnel Development • Promotion of industrial R&D • University- industry-GRI linkages World class information Phase I (~2005) Leapfrog other Asian Nations Phase II (~2015) Research Hub in Asia-Pacific • Increase R&D Expenditures & efficiency • Expend Infrastructure • Reform S&T Education • Perform Future oriented frontier • World class information • Embrace globalization & promote global networking system • Establish and diffuse a novel S&T culture • Foster New Knowledge based• Perform Future-oriented frontier research • Foster New Knowledge-based industries • Advanced Basic-Science & Nurture World Class Scientists
  43. 43. Institutional Coordination of Innovation – a staged approach in Koreaa staged approach in Korea 1960s 1970s 1980s 1990s 2000 2002-2025 Scientific Institution Scientific Infrastructure R&D and Private Leading role in strategic areas Nationwide innovation Global InnovationInstitution Building Infrastructure Setting Private Research Lab Promotion strategic areas innovation creation Innovation creation • Establishing of MOST • Establishment of GRIs • National R&D Funds • HAN Project • CyberKorea 21 (1999- 2002) • e-Korea Vision 2007 2002) • S&T(2007) • S&T Promotion Laws • R&D Promotion Law • Promotion of establishme nt of private labs • Enhancing university research capability • Goals by 2025 labs capability • Human Resource Development • Highly Qualified Personnel Development • Promotion of industrial R&D • University- industry-GRI linkages World class information Establish a system for production, utilization and distribtuion of Phase I (~2005) Leapfrog other Asian Nations Phase II (~2015) Research Hub in Asia-Pacific Phase III (~2025) Global Leader in Specific S&T • Increase R&D Expenditures & efficiency • Expend Infrastructure • Reform S&T Education • Perform Future oriented frontier • World class information • Embrace globalization & promote global networking system • Establish and diffuse a novel S&T culture • Foster New Knowledge based sophisticated information • Increase public awareness of cutting-edge S&T. • Establish a science-based National Management System C t ib t ti l t th W ld• Perform Future-oriented frontier research • Foster New Knowledge-based industries • Advanced Basic-Science & Nurture World Class Scientists • Contribute actively to the World Scientific Community • Enhance the technological integration capacity between South & North Korea
  44. 44. Linkage: Institutional, Social Capital Theories & Sustainable Development Source: Nair (2009) Source: Nair (2010) Government Enterprises Entrepreneurs Research ty Innovation (Increasing Source: Nair (2009) Source: Nair (2010) Innovation Ecosystem Research Centers uetoSocie Returns) Associations Financiers Social Networks Knowledge Transfer Centers Time Valu Breakthrough a s e Ce te s Adler-Kwon Model Market Relations SOCIAL STRUCTURE Opportunity Task & symbolic contingencies Social Relations Motivation Ability Social Capital: benefits & risks Value Hierarchical Relations Complementary capabilities
  45. 45. Nair (2010) Innovation Ecology Model VisionVision SocietyaluetoSVa New Break- Original Innovation (Increasing Returns) Break- Through Time ( g ) T0 (now)
  46. 46. Innovation Ecology Model Nair (2010) VisionVision SocietyaluetoSVa Original Innovation (Increasing Returns) Ecosystem I TimeT0 (now)
  47. 47. Nair (2010) Innovation Ecology Model VisionVision SocietyaluetoS New Innovation (Increasing Returns) Va Ecosystem I Breakthrough Original Innovation (Increasing Returns) Visioning TimeT0 (now) T1 Visioning
  48. 48. Nair (2010) Innovation Ecology Model VisionVision SocietyaluetoS New Innovation (Increasing Returns) Visioning Va Ecosystem II Visioning Ecosystem I Original Innovation (Increasing Returns) Visioning TimeT0 (now) T1 Visioning
  49. 49. Nair (2010) Innovation Ecology Model Multiple clusters & innovations Vision New Innovation (Increasing Returns) Vision Eco system IV New Innovation Society ( g ) New Innovation (Increasing Returns) aluetoS Eco system III New Innovation (Increasing Returns) Va Ecosystem II Original Innovation (Increasing Returns) Ecosystem I Time ( g ) T0 (now) T1 T2 T3
  50. 50. Case Study 1:Case Study 1: Sustainable Modern Agriculture & Rural Transformation (S.M.A.R.T.)(S.M.A.R.T.) Sustainable Modern Agriculture & Rural Transformation (S.M.A.R.T.)( )
  51. 51. Suppliers R l C ti itRural Connectivity Supply of Used PCs Distribution Refurbished PCs PC in schools Distribution Centres Export to LDC Skills Developmentp and Certification (Colleges/Polytechnics/ Giat MARA)
  52. 52. National Innovation Ecosystem Model Multiple clusters & innovations Vision New Innovation (I i R t ) Vision Eco system IV New Innovation Society (Increasing Returns) Visioning (Increasing Returns) Visioning aluetoS Eco system III New Innovation (Increasing Returns) Visioning Va Ecosystem II Original Innovation (Increasing Returns) Visioning Ecosystem I Time Visioning T0 (now) T1 T2 T3
  53. 53. National Innovation Ecosystem Model VisionVision SocietyaluetoSVa TimeT0 (now) T1 T2 T3 REACH
  54. 54. National Innovation Ecosystem Model VisionVision SocietyaluetoSVa Refurbished PC Sector TimeT0 (now) T1 T2 T3 REACH
  55. 55. National Innovation Ecosystem Model Vision Rural connectivity Export to LDC Vision SocietyaluetoSVa Original Innovation (Increasing Returns) Refurbished PC Sector Time ( g ) T0 (now) T1 T2 T3 REACH
  56. 56. National Innovation Ecosystem Model Vision Rural connectivity Export to LDC Vision SocietyaluetoSVa ICT Micropreneurs In rural areas Original Innovation (Increasing Returns) Refurbished PC Sector Time ( g ) T0 (now) T1 T2 T3 REACH
  57. 57. National Innovation Ecosystem Model Vision Rural connectivity Export to LDC Entrepreneurs Vision SocietyaluetoS New Innovation (Increasing Returns) Va ICT Micropreneurs In rural areas Original Innovation (Increasing Returns) Refurbished PCs Sector Time ( g ) T0 (now) T1 T2 T3 REACH
  58. 58. National Innovation Ecosystem Model Vision Rural connectivity Export to LDC Entrepreneurs Vision SocietyaluetoS Applications for rural communities New Innovation (Increasing Returns) Va ICT Micropreneurs In rural areas Original Innovation (Increasing Returns) Refurbished PCs Sector Time ( g ) T0 (now) T1 T2 T3 REACH
  59. 59. National Innovation Ecosystem Model Vision Rural connectivity Export to LDC Entrepreneurs High Yield Vision Supplier Society Supplier Networks New Innovation (Increasing Returns) aluetoS Applications for rural communities New Innovation (Increasing Returns) Va ICT Micropreneurs In rural areas Original Innovation (Increasing Returns) Refurbished PCs Sector Time ( g ) T0 (now) T1 T2 T3 REACH
  60. 60. National Innovation Ecosystem Model Vision Rural connectivity Export to LDC Entrepreneurs High Yield Global Innovation Supply Chain N Vision Supplier Society New Innovation (Increasing Returns) Supplier Networks New Innovation (Increasing Returns) aluetoS Returns) Applications for rural communities New Innovation (Increasing Returns) Va ICT Micropreneurs In rural areas Original Innovation (Increasing Returns) Refurbished PCs Sector Time ( g ) T0 (now) T1 T2 T3 REACH
  61. 61. National Innovation Ecosystem Model S.M.A.R.T Vision Rural connectivity Export to LDC Entrepreneurs High Yield Global Innovation Supply Chain N Vision Supplier Society New Innovation (Increasing Returns) Supplier Networks New Innovation (Increasing Returns) aluetoS Returns) Applications for rural communities New Innovation (Increasing Returns) Va ICT Micropreneurs In rural areas Original Innovation (Increasing Returns) Refurbished PCs Sector Time ( g ) T0 (now) T1 T2 T3 REACH
  62. 62. • Sustained Rural Development • Curb Brain-Drain from Rural Multi-Stakeholder Benefits Nation areas • Reduce rural migration (Urban- poor) • Increase literacy & technology savvy population • Raise labour competitiveness • Access to good physical infrastructure Access to technology & • More diversified rural economy • Reduce the wealth gap • Access to technology & information service • Access to knowledge & transferable skills S.M.A.R.T. Enterprises Rural & Marginalized C iti Enterprises •Minimize economic & financial risks • Reduce market failures • Reduce cost of production • Increase supply of dedicated k orkersEnterprisesCommunities pReduce market failures (intermediaries, moral- hazard & rent-seeking) • Empowerment of rural & marginalized dedicated k-workers • Lower staff turn-over • CSR Program rural & marginalized communities • Increase social status • Joint beneficiary of community based innovation projects (joint IPs & patents) • Raise the hope and motivation •Higher & stable income employment IPs & patents) • Create internal demand for higher value products/services
  63. 63. Old Economy New EconomyOld Economy New Economy Input-output Model Powered by InnovationInput output Model Powered by Innovation
  64. 64. 4 H h th t i l f d4. How have other countries leapfrogged to the new economy? Econometric Modelling using the 7i Framework – 2 stage estimation: Stage 1: Fuzzy Pattern Recognition Method Stage 2: Impact model – random effects ordered probit model Data Sources: WDI, World Bank, IMF, WEF, IMD & Digital Planet & Various country R t f EIUReports from EIU. Data Period:Data Period: 2007-2010
  65. 65. 7i Framework7i Framework
  66. 66. Japan SwitzerlandPace-Setters Global Marathon Race in the new economy (2008/2009) Hot Spots Strong Switzerland Germany USA Sweden Denmark Pace Setters Australia Malaysia Developed Hot Spots ess Singapore UK Iceland Finland Austria France Netherlands Taiwan Puerto-Rico New Zealand Spain Czech Rep Slovenia etitivene Norway Belgium Hong Kong Canada Luxembourg Korea Israel Slovenia South Africa UAE Chile India Tunisia Estonia Kuwait Malta Costa Rica ofCompe Luxembourg Ireland Italy Tunisia Saudi Arabia Portugal Brazil China Costa Rica Lithuania Jordan Barbados Turkey Degreeo Qatar Indonesia Bahrain Panama Oman Philippines Slovak Rep Weak Highly D Development Stage of NIE Weak Highly Developed
  67. 67. 5. Can developing countries leap-frog to the innovation economy? Challenges & DriversChallenges & Drivers
  68. 68. Challenge 1 Japan SwitzerlandPace-SettersHot Spots Strong Switzerland Germany USA Sweden Denmark Pace Setters Australia Malaysia Developed Hot Spots ess Singapore UK Iceland Finland Austria France Netherlands Taiwan Puerto-Rico New Zealand Spain Czech Rep Slovenia etitivene Norway Belgium Hong Kong Canada Luxembourg Korea Israel Slovenia South Africa UAE Chile India Tunisia Estonia Kuwait Malta Costa Rica Challenge 1 ofCompe Luxembourg Ireland Italy Tunisia Saudi Arabia Portugal Brazil China Costa Rica Lithuania Jordan Barbados Turkey Challenge 1 Gap Widening Degreeo Qatar Indonesia Bahrain Panama Oman Philippines Slovak Rep Weak Highly D Development Stage of NIE Weak Highly Developed
  69. 69. Challenge 2 Japan SwitzerlandPace-Setters Strong Switzerland Germany USA Sweden Denmark Pace Setters Australia Malaysia Challenge 2 Lower end countries ess Singapore UK Iceland Finland Austria France Netherlands Taiwan Puerto-Rico New Zealand Spain Czech Rep Slovenia Pursuing leap-frogging strategies etitivene Norway Belgium Hong Kong Canada Luxembourg Korea Israel Slovenia South Africa UAE Chile India Tunisia Estonia Kuwait Malta Costa Rica ofCompe Luxembourg Ireland Italy Tunisia Saudi Arabia Portugal Brazil China Costa Rica Lithuania Jordan Barbados Turkey Degreeo Qatar Indonesia Bahrain Panama Oman Philippines Slovak Rep Weak Highly D Development Stage of NIE Weak Highly Developed
  70. 70. Challenge 3 Japan SwitzerlandPace-SettersChallenge 3 Strong Switzerland Germany USA Sweden Denmark Pace Setters Australia Malaysia Leap-frogging strategiesess Singapore UK Iceland Finland Austria France Netherlands Taiwan Puerto-Rico New Zealand Spain Czech Rep Slovenia etitivene Norway Belgium Hong Kong Canada Luxembourg Korea Israel Slovenia South Africa UAE Chile India Tunisia Estonia Kuwait Malta Costa Rica ofCompe Luxembourg Ireland Italy Tunisia Saudi Arabia Portugal Brazil China Costa Rica Lithuania Jordan Barbados Turkey Degreeo Qatar Indonesia Bahrain Panama Oman Philippines Slovak Rep Weak Highly D Development Stage of NIE Weak Highly Developed
  71. 71. Gaps in Innovation System (Developing countries)( p g ) Unable to leapfrog to the next innovation Widening G y the next innovation frontier Gap oSociety Widening Widening Gaps due to: • Slow in investing in the 7is (poor technology/ knowledge visioning) – late mover. Valueto Widening Gap • Institutions managing innovation are uncoordinated. • Innovation implementation not holistic, a lot of master plans and roadmaps, but they lack integration •Targets and signpost not tracked and reviewed on a Hit diminishing returns regular basis. • Turf wars between agencies managing innovation. •Lead agencies managing innovation lack clout to drive state/national innovation agenda. • Innovation policies more reactionary than strategic. • Policy inconsistencies (e.g. language policy for education). Time
  72. 72. Drivers: Strengths in MalaysiaDrivers: Strengths in Malaysia P liti l Will d PM• Political Will – under new PM • Planning system is good.g y g • Emphasis on S&T – especially Mahathir's leadership (good foundation)leadership (good foundation). • High investment in education. C & C• Collaboration & Cooperation with regional economies (Korea and Japan) • Gateway to ASEAN, Asia-Pacific and OIC
  73. 73. 6. What are the possible trajectories for a innovation driven economy? (Simulation Results)(Simulation Results)
  74. 74. How to move up the global innovation value chain? Japan SwitzerlandPace-Setters Strong Switzerland Germany USA Sweden Denmark Pace Setters ess Singapore UK Iceland Finland Austria France Netherlands Taiwan Leapfrog? How? Australia Malaysia Puerto-Rico New Zealand etitivene Norway Belgium Hong Kong Canada Luxembourg Korea IsraelEstonia Kuwait Malta Costa Rica How? Enhance th NIE e ea a d Spain Czech Rep Slovenia South Africa UAE ofCompe Luxembourg Ireland Italy Costa Rica Lithuania Jordan Barbados Turkey the NIE - The REACH & RICHNESS UAE Chile India Tunisia Saudi Arabia Degreeo Panama Oman Philippines Slovak Rep FactorsPortugal Brazil China Qatar Indonesia Weak Highly D Bahrain Development Stage of NIE Weak Highly Developed
  75. 75. Competition from all Directions Japan Switzerland Challenge 3 Strong Switzerland Germany USA Sweden Denmark Leap-frogging strategies Challenge 2 Lower end countries ess Singapore UK Iceland Finland Austria France Netherlands Taiwan Pursuing leap-frogging strategies Australia Malaysia Puerto-Rico New Zealand etitivene Norway Belgium Hong Kong Canada Luxembourg Korea IsraelEstonia Kuwait Malta Costa Rica Challenge 1 e ea a d Spain Czech Rep Slovenia South Africa UAE ofCompe Luxembourg Ireland Italy Costa Rica Lithuania Jordan Barbados Turkey Challenge 1 Gap Widening UAE Chile India Tunisia Saudi Arabia Degreeo Panama Oman Philippines Slovak Rep Portugal Brazil China Qatar Indonesia Weak Highly D Bahrain Development Stage of NIE Weak Highly Developed
  76. 76. Japan Switzerland Trajectory 0 - Status Quo (2010-2015) Strong Switzerland Germany USA Sweden DenmarkFall behind I h ess Singapore UK Iceland Finland Austria France Netherlands Taiwan In the race Australia Malaysia Puerto-Rico New Zealand etitivene Norway Belgium Hong Kong Canada Luxembourg Korea IsraelEstonia Kuwait Malta Costa Rica e ea a d Spain Czech Rep Slovenia South Africa UAE ofCompe Luxembourg Ireland Italy Costa Rica Lithuania Jordan Barbados Turkey UAE Chile India Tunisia Saudi Arabia Degreeo Panama Oman Philippines Slovak Rep Portugal Brazil China Qatar Indonesia Weak Highly D Bahrain Development Stage of NIE Weak Highly Developed
  77. 77. M l i h f ll t 28th itiMalaysia has fallen to 28th position (from 25th position) in Band 3 (as predicted) - others are moving at a faster pace. N l d f B d 4 t B d 3New players moved from Band 4 to Band 3.
  78. 78. Can Malaysia leapfrog to a new I ti T j t ?Innovation Trajectory?
  79. 79. Japan Switzerland Trajectory 1- Innovation Diffusion (2010-2015) Phase I: Innovation Diffusion Strong Switzerland Germany USA Sweden Denmark • Opening up the economy to global competition in key service/tech. sectors. • Free access to basic internet & speedy broadband World class education system enhance ess Singapore UK Iceland Finland Austria France Netherlands Taiwan Australia Malaysia Puerto-Rico New Zealand • World class education system – enhance competence in English & nurture world class creative thinkers, explorers & entrepreneurs. (Diffusion of a novel innovation culture). • 85 % ICT Adoption including rural areas etitivene Norway Belgium Hong Kong Canada Luxembourg Korea IsraelEstonia Kuwait Malta Costa Rica e ea a d Spain Czech Rep Slovenia South Africa UAE • 85 % ICT Adoption including rural areas • Increase R&D spending and acculturate SMEs to research & creating value. • Establish CoEs/Innovation Accelerators in priority areas (new engine of growth) in strategic geographical areas (Corridors) ofCompe Luxembourg Ireland Italy Costa Rica Lithuania Jordan Barbados Turkey UAE Chile India Tunisia Saudi Arabia in strategic geographical areas (Corridors) • Industrial/knowledge clusters around the CoEs. Degreeo Panama Oman Philippines Slovak Rep Portugal Brazil China Qatar Indonesia Weak Highly D Bahrain Development Stage of NIE Weak Highly Developed
  80. 80. Japan Switzerland Trajectory 2- Regional Innovation Hub (by 2020) Strong Switzerland Germany USA Sweden Denmark Phase II: Regional Innovation Hub • Fully globalized economy. • World class physical infrastructure & ess Singapore UK Iceland Finland Austria France Netherlands Taiwan Australia Malaysia Puerto-Rico New Zealand p y infostructure. • Advanced basic science and industrial research architecture and support system. • Some of the CoEs become regional etitivene Norway Belgium Hong Kong Canada Luxembourg Korea IsraelEstonia Kuwait Malta Costa Rica e ea a d Spain Czech Rep Slovenia South Africa UAE Some of the CoEs become regional Innovation centers in key areas – source of new generation frontier discoveries & new knowledge-based industries. F ti f ti l t ofCompe Luxembourg Ireland Italy Costa Rica Lithuania Jordan Barbados Turkey UAE Chile India Tunisia Saudi Arabia • Formation of generation clusters in other regions in the country • Export of technology & knowledge to other developing nations . (Asia-Pacific & leader among the Degreeo Panama Oman Philippines Slovak Rep Portugal Brazil China Qatar Indonesia Ummah/OIC). Weak Highly D Bahrain Development Stage of NIE Weak Highly Developed
  81. 81. Japan Switzerland Trajectory 3-Leapfrog regional economic super powers (by 2025) Strong Switzerland Germany USA Sweden Denmark Phase III: Leapfrog Regional Economic Superpowers • Increased convergence of technology and knowledge systems will foster ess Singapore UK Iceland Finland Austria France Netherlands Taiwan Australia Malaysia Puerto-Rico New Zealand and knowledge systems will foster fusion of clusters. • Some of fused clusters will become global innovation centers of excellence, contributing to new knowledge to the global community etitivene Norway Belgium Hong Kong Canada Luxembourg Korea IsraelEstonia Kuwait Malta Costa Rica e ea a d Spain Czech Rep Slovenia South Africa UAE knowledge to the global community (World Scientific Community & industries). • Fusion of cluster will result in new technological breakthroughs and new ofCompe Luxembourg Ireland Italy Costa Rica Lithuania Jordan Barbados Turkey UAE Chile India Tunisia Saudi Arabia emerging sectors. • A new system of production, utilization and diffusion of new discoveries is in place. • High public awareness & utilization of Degreeo Panama Oman Philippines Slovak Rep Portugal Brazil China Qatar Indonesia High public awareness & utilization of new innovation. Weak Highly D Bahrain Development Stage of NIE Weak Highly Developed
  82. 82. Japan Switzerland Trajectory 4- Global Leadership in key innovation areas (by 2030) Strong Switzerland Germany USA Sweden Denmark (by 2030) Phase IV: Global Hub in Specific Areas of Innovation • Malaysia is a member of the OECD. ess Singapore UK Iceland Finland Austria France Netherlands Taiwan Australia Malaysia Puerto-Rico New Zealand • Malaysian Innovation Clusters are established in OECD nations. • Leading international enterprises establish global innovation clusters in Malaysia and are part of Malaysian innovation cluster etitivene Norway Belgium Hong Kong Canada Luxembourg Korea IsraelEstonia Kuwait Malta Costa Rica e ea a d Spain Czech Rep Slovenia South Africa UAE a e pa t o a ays a o at o c uste program. • Malaysian researchers and enterprises are involved in cutting-edge international research & scientific programs. • Malaysian research universities are ofCompe Luxembourg Ireland Italy Costa Rica Lithuania Jordan Barbados Turkey UAE Chile India Tunisia Saudi Arabia • Malaysian research universities are ranked top 40 in the world. • 90% of the economic wealth is from knowledge-intensive sectors. • Malaysians experience a high standard Degreeo Panama Oman Philippines Slovak Rep Portugal Brazil China Qatar Indonesia and quality of life – Malaysia is rated the top 10 places in the world to live. • Nobel Laureates, Leading Scientists Designers, Thinkers and Innovators relocate to Malaysia Weak Highly D Bahrain relocate to Malaysia Development Stage of NIE Weak Highly Developed
  83. 83. Japan Switzerland Tracing the footprints to a Pace-Setter: A Staged Approach Strong Switzerland Germany USA Sweden Denmark Trajectory IV: Global Hub In Specific Areas of Innovation 2025-2030 ess Singapore UK Iceland Finland Austria France Netherlands Taiwan Australia Malaysia Puerto-Rico New Zealand Trajectory III: Leapfrog Regional Economic Super- etitivene Norway Belgium Hong Kong Canada Luxembourg Korea IsraelEstonia Kuwait Malta Costa Rica e ea a d Spain Czech Rep Slovenia South Africa UAE Trajectory II: Regional Innovation Powers 2020-2025 ofCompe Luxembourg Ireland Italy Costa Rica Lithuania Jordan Barbados Turkey UAE Chile India Tunisia Saudi Arabia Trajectory I: Innovation Diffusion 2010-2015 Hub 2015-2020 Degreeo Panama Oman Philippines Slovak Rep Portugal Brazil China Qatar Indonesia 2010 2015 Weak Highly D Bahrain Development Stage of NIE Weak Highly Developed
  84. 84. Summary from the Simulations • Status Quo Trajectory (Average Per capita GDP Growth Rates) – 1990 to 2000: 5.0% – 2001 to 2010: 2.7% D i R t t S l Decreasing Returns to Scale – 2011 to 2020: 2.2% N (I i ) T j (A P i GDP G h R ) Decreasing Returns to Scale • New (Innovation) Trajectory (Average Per capita GDP Growth Rates) – 1990 to 2000: 5.0% 2001 to 2010: 2 7% Decreasing Returns to Scale – 2001 to 2010: 2.7% – 2011 to 2020: 6.5% g Increasing Returns to Scale Ongoing research work on linking National Innovation Ecosystem & QualityOngoing research work on linking National Innovation Ecosystem & Quality Of Life and Economics of Happiness in Malaysia & other countries
  85. 85. Innovation Multiplier Effect:Innovation Multiplier-Effect: A Staged Plang
  86. 86. ICT Diffusion (2010-2015) L MSCLeverage on MSC MSC
  87. 87. By 2015 – Leveraging from MSC: Innovation DiffusionInnovation Diffusion MSC
  88. 88. Malaysia Centres of Excellence & Innovation Clusters (By 2015) Langkawi Tourism, Kuala Perlis Fishery, ICT, Cold-chain process, halal food Alor Setar Agriculture bio-technology, precision farming machinery Agriculture ICT & Information systems mechatronics Kota Baru Fishery, ICT, Cold-chain process, halal food hub, tourism, cultural content , Arabic/religious digital content (By 2015) P. Pinang Seaport logistics, nanotech.,, IT & Health & Beauty, Finance Creative industry Kulim Automobile E&E, robotics, solar technology, new fuel-cell/batteries, mechatronics, smart auto tech Agriculture ICT & Information systems, mechatronics, halal food industry, and rural BPO. Kuala Terengannu Petrochemical Plastics advanced Sandakan Agriculture, Biotech., smart- agriculture, bio- diesel,,fishing Kudat Rural BPO Kota Kinabalu Logistics, Ipoh ICT for mining, content Industry, BPO for ICT telecommunication devices, bio-synthetic sensor Cognitive science & smart computing Cameron Highlands Tourism, agriculture biotech, flower & flora, Halal food production, food industry embedded system Petrochemical, Plastics, advanced materials and fishing, energy tech. Dungun Agriculture, biotechnology, smart-agriculture technologies (sensors & Agriculture Information Systems), rural BPO, tourism Taman Negara & Cherating education, Tourism, education, healthcare Industry, BPO for ICT Services, robotics Tj. Malim MSC New generation ICT& Telecommunication Sabak Bernam Agriculture biotechnology Experience Industry & eco-tourism & Hospitality Kuantan Fishing, acquaculture, ICT, Telecommunications, content Temerloh Agriculture biotechnology and AIMS Lahad Datu AIMS, environmental technology & Forestr G. Kinabalu Experience industry Pekan FIMS and rural BPO. Maritime Tj. Malim Auto Industry devices, education, Financial services BPO, Islamic banking & finance, digital content, E-learning, medical tourism Pel. Kelang Sepang Airport logistics, and AIMS Kluang & Kulai Agriculture bio- technology, bio-sensors AIMS and rural BPO Forestry Samporna Labuan Banking & finance and BPO Kuala Lumpur Culture & Tourism, Tourism content, Finance Education g Seaport logistics Johor Bahru Education Phamecetucal Biotechnology Culture & Tourism, Tourism content Shah Alam Automobile & machinery, solar technology Education, Tourism & Hospitality AIMS and rural BPO. p Fishing, telecomunications, Tawau Agriculture ICT BPO Miri Agriculture, biotech., Bio-infomatics, education , logistics hub, petrochemical and advanced Taman Negara Gua Mulu Tourism Long SeridanOya Mukah Education, Phamecetucal, Biotechnology Medical services & healthcare technology, gene technology, Electronic devides and sensor technology,Halal food technology, Islamic banking services and tourism. Pasir Gudang& Tanjung Pelepas Agriculture ICT, Halal products and services Bintulu Forestry industry logistics materials g Lifting & transfer machines, distance technology, mobile communications Kapit Sibu Agriculture,biotech Telecommunication, precision farming Sarikei Forestry and furniture industry y Fishing & acquaculture Seaport logistics hub Kapit Process & systems for forestry industry, advanced fibre & materials f or construction industry, tourism precision farming. Kucing Creative content, halal products & services, education,. Sri Aman Wood technologyPrefabricated construction materials Intelligent homes
  89. 89. Islamic Banking/finance Education Logistic Smart Aquaculture Petrochemical/advanced materials Logistic BPO/ICT Serv/creative cont. Agri-bio, Precision Farm Advanced manufacturing Forest technology Automobile/machinery parts Bioinformatics/gene tech./ pharmaceutical Global CoEs/Clusters By 2020By 2020
  90. 90. Islamic Banking/finance Education Logistic Smart Aquaculture Petrochemical/advanced materials Logistic BPO/ICT Services Agri-bio, Precision Farm Advanced manufacturing Forest technology Smart Auto/machinery parts Bioinformatics/gene tech./ pharmaceutical Emerging/Regional CoEs/Clusters By 2020
  91. 91. Northern Corridor Eastern Central Eastern Corridor SARAWAK & SABAH Southern Corridor CORRIDORS CoEs/Clusters & Corridor Development By 2020
  92. 92. Islamic Banking/finance Education Logistic Smart Aquaculture Petrochemical/advanced Materials/ Logistic BPO/ICT Serv/creative cont. Agri-bio, Precision Farming Advanced manufacturing Forest technology Smart auto/machinery parts Bioinformatics/gene tech./ pharmaceutical Fusion between CoEs/Clusters By 2025
  93. 93. Advanced Materials Polymer Fibre Glass Rayony y Polyacrylonitrile (PAN) Resin Acrylic Polyvinylcholorida (PVC) Nanotubes Nanocrystals E&E Smart VehiclesNEMS MEMS Solar panels/cellsNEMS MEMS Semiconductor Nanomachines/robots/nanites Photolithography New-generation sensors Synthetic molecular motors/Nanomotors Solar panels/cells Carbon-based vehicle body & parts SLIMSENS (Short & Long Range Integrated Multifunction Radar Sensor) vehicles Renewable energy vehicles (Environmental Friendly Vehicles) Agriculture/ New generation sensors Radar Sensor) vehicles. Agriculture/ Aquaculture/Medical Surgical/medical instrumentations Drug-delivery micro-devices Precision farming devices An Example of Fusion of Clusters Cold-chain systems Fusion of Clusters
  94. 94. Advanced Materials Polymer Fibre Glass Rayony y Polyacrylonitrile (PAN) Resin Acrylic Polyvinylcholorida (PVC) Nanotubes Nanocrystals E&E Smart VehiclesNEMS MEMS Solar panels/cellsNEMS MEMS Semiconductor Nanomachines/robots/nanites Photolithography New-generation sensors Synthetic molecular motors/Nanomotors Solar panels/cells Enhance Development Renewable energy vehicles (Environmental Friendly Vehicles) Carbon-based vehicle body & parts SLIMSENS (Short & Long Range Integrated Multifunction Radar Sensor) vehicles Agriculture/ New generation sensors & Integration of the 7i (Creation of an eco-system that foster multi cluster innovation) Radar Sensor) vehicles. Agriculture/ Aquaculture/Medical Surgical/medical instrumentations Drug-delivery micro-devices Precision farming devices An Example of Fusion of Clusters Cold-chain systems Fusion of Clusters
  95. 95. Establishing Innovation Clusters in Pace-Setter countries by 2030 I t ti l N t ki P• International Networking Program • International Research Lab Program • Leading Scholar Mobility Program between Malaysia & OECD and other Pace-Setters
  96. 96. Summary Highly What it takes to achieve sustainable development?g y Developed Leaders in Innovation Formation of next generation clusters & What it takes to achieve sustainable development? Enhance the development and integration of Fusion of clusters in key sectors of the economy. generation clusters & Knowledge centers ctor tion) g the building-blocks (7is) of the multiple ecosystems In the economy. Attraction of Innovation-driven people and enterprises. M li k F ti f l t sectors of the economy. Innovation transcend national border NESS-fac rCondit Few local creative endevours. Few linkages and fragmented. Most innovation by foreign entities. Many linkages. Formation of clusters. RICHN (Drive Very few local creative endevours and very few linkages with foreign entities. Number of foreign enterprises undertaking innovation low. }En ironment to s pport kno ledge creation non e istent Weak Highly }Environment to support knowledge creation non-existent. Disincentive for foreign firms to bring in technology and knowledge. Serious brain-drain and capital flight. REACH f tWeak Highly Developed REACH-factor (Foundation Condition)
  97. 97. Innovation Imprinted in our DNA “Just as energy is the basis of life and ideas source ofof life, and ideas source of innovation, so is innovation the vital spark of all humanthe vital spark of all human change, improvement and progress ”progress. - Theodore LevittTheodore Levitt American Economist & the Harvard University Professory who coined the term ‘Globalization’.
  98. 98. Survival of the Fittest “It is not the strongest of the species that survives,spec es t at su es, nor the most Intelligent that survives. It is the ones that is most adaptable to change” - Charles Darwin
  99. 99. ‘True’ Development “Wh i d bt A l th“Whenever you are in doubt … Apply the first test. Recall the face of the poorest and the weakest man whom you have seen, and ask if the step you contemplate isand ask if the step you contemplate is going to be any use to him. Will he gain anything from it? Will it t hi t t l hiWill it restore him to a control over his own life and destiny? True development puts those first thatp p society puts last” - Mahatma Gandhi
  100. 100. Thank You

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