The document discusses promoting innovation and entrepreneurship in Pakistan. It argues that current policies emphasize rent-seeking over risk-taking and innovation. It recommends focusing on developing a "triple helix system of innovation" between government, universities, and industry to foster entrepreneurship. Productivity-led growth is needed that invests in human capital, physical capital, and social capital. Reforms are needed to promote competitive markets, property rights, and remove barriers facing entrepreneurs. Developing creative cities that enhance productivity and social mobility could also support inclusive development.

1. Innovation, Entrepreneurship & Growth
Vaqar Ahmed and Haroon Sarwar
Planning Commission
vahmed@gmail.com
Presentation at Preston University, Islamabad
11th December 2010
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2. Current Model of Entrepreneurship
• Misuse of government incentives
– Public Sector Development Program [Sub-contracting]
– Fertilizer subsidy increased welfare in CIS countries,
– Between 1958-70, 65 percent of total loans disbursed by
PICIC went to 37 monopoly houses (Haq, 2007; Chemin,
2008)
• Emphasis on rent-seeking rather than risk-
taking
– Gadoon Amazai Industrial Estate
– Wheat & Sugar Crises

3. Policy for Entrepreneurship Vs. Investment
• Lobbying for favors
• Protection and subsidy policies
• Cities not entrepreneur-friendly
• Metro
• Zoning Rules & Building Regulations
• Policies are designed for investors and investments – not for
innovation

4. Firms listed on Karachi Stock Exchange?
Software
(1)
Retail (3)
Construction (4)
Sugar Mills (37)
Total: 750 Listed Firms

5. Pakistan Lacks Software of Economic Growth
Hardware
Overall Infrastructure
Quality
Country Score
Indonesia 2.5
India 3.3
China 3.4
Pakistan 3.4
Thailand 5.0
Korea 5.1
Taiwan 5.4
Malaysia 5.7
Hongkong 6.4
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Source: Global Competitiveness Report

6. Pakistan Lacks Software of Economic Growth
Hardware Software
Overall Infrastructure
Quality
Country Score Global Quality of Spending
Indonesia 2.5 Innovation Education on R&D
Country Index (out System
India 3.3
of 132
China 3.4 countries)
Pakistan 3.4 Pakistan 79 99 80
Thailand 5.0 India 30 37 36
Korea 5.1
Indonesia 39 44 28
Taiwan 5.4
Thailand 57 67 47
Malaysia 5.7
Malaysia 24 23 19
Hongkong 6.4
Source: Global Competitiveness Report
China 26 52 23 6

7. Promoting Innovation
• Triple Helix System of Innovation (Etzkowitz, 2002)
Government
University
Industry

8. Issues in Entrepreneurship
Ensuring Stability Reform Regulations Provision of Finance Efficient Workers
and Security and Taxation and Infrastructure and Labor Markets
Control Rent Seeking
Govt. Policies Credibility
Public Trust and
Legitimacy
Ideas
and Opportunities
Capabilities
Source: Risks
Economic Growth
World Development Report,
2005 (World Bank)
Poverty Reduction

9. Are these conventional policies enough?
Are we really thinking out of the box?
– These conventional policies are donor-driven ideas
– Investment has often also increased in many war
economies:
• Israel
• Lebanon
• Sri Lanka
• Iran
• Nepal

10. Enterprises born out of Simple Ideas
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11. Generating Entrepreneurial Ideas
• How many of you are visiting twitter
everyday?

12. Generating Entrepreneurial Ideas
• How many of you are visiting twitter
everyday?
• 3 idiots

13. The Demographic Challenge

14. Need for Rapid Economic Growth
(i) Rapid population growth increases demand:
– Pakistan adds:
• Every 1 year a New Zealand to its population;
• Every 2 years a Switzerland;
• Every 3 years a Greece;
• Every 4 years a Chile or a Netherlands; and
• Every 5 years an Australia.
– It does not accumulate capital assets at the same pace.
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15. Demographic Dividend?
Projected Population by Age Groups
• A bulge in the working age 2050 85 236 31
groups in coming 40 years 85 224 25
2040 85 210 20
84 195 16
2030 83 178 13
• This increases potential 83 160 11
productive capacity 2020 80 142 9 0-14
77 125 8 15-64
2010 71 110 7
67 95 6 65=
• BUT also raises challenges: 2000 63 81 5
– UNEMPLOYMENT without 0 60 120 180 240 300 360
adequate investment
– ASSETS & SKILLS for bulge
– COMPETING South Asian
countries also have young
populations
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16. Demographic Dividend?
• Chinese Vs. Indian
Reform
• Missing link in Past Human
Plans Capital
Physical Social
Capital Capital
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17. Productivity-led Growth
Human Capital Physical Capital Social Capital
• Education • Markets • Governance &
• Knowledge • Competitive Markets Institutions
• Global Experiences • Domestic Commerce • Deregulation
• Focus on Women • Law and security
• Contract enforcement
• Creative Cities
• Youth • Dense Clustering • Public Goods
• Skills • Connectivity • Accessibility
• Opportunities • Inclusive Zoning • Service delivery
• Entrepreneurship
• Community
• Innovation Empowerment
• Idea Generation • Community Centers
• Academia- Industry Nexus • Access to educational and
• Management Practices business networks

18. Productivity as Driver of Growth
Entrepreneur
Ideas Innovation Productivity
ship
Issues Reforms
• The misuse of incentives • Limit government’s role in markets
• Rent-seeking rather than risk-taking • Focus on better capacity utilization
• Blind eye to collusion and anti- and organization
competitive practices. • Move towards competitive markets
• Policies favor big business, not • Protect property rights and enforce
entrepreneurs contracts, swiftly
• Current education system not • Encourage innovation and foster
harnessing quality of skills enterprise development
• No adaptability to changing scenarios • Triple Helix system of Innovation
(new risks and opportunities). • Embedding entrepreneurship in
education
• Stop ‘sector-picking’

19. Creative Cities for Inclusive Development
Large & ready Generate social Invest in cultural
markets mobility services
Ø Creative cities – [Richard Florida / Jane Jacobs]
Ø Focus on the software side (Talent à Technology à Tolerance)
Ø Creative Cities enhance individual productivity
Problems with our Cities Reforms for Cities
• Downtown/city centre • Development of city centers for
development discouraged dense mixed use
• City zoning remains unfriendly. • Focus of policy, research and
Where will the poor go? thinking on the role of cities as
• Commercialization fee hinders engines of growth
entrepreneurs • Strengthened decentralization
• Lack of sports and recreation • Promote Vertical expansion of cities
facilities for the low income group • Allow places for new ideas and
• Cantonments within city limits innovation- coffee shops, libraries
hinders commercial activity etc.

20. Youth & Community Development
Community Linking Youth with
Youth Mentoring
Infrastructure Community
ISSUES REFORMS
Lack of awareness and motivation Increased role of private sector
Lack of productivity and vision Accepting new ideas and creating inclusive markets
Relationship of trust Organizing mass action and increasing trust
Flexibility & adaptability Modernize cities for increased opportunity and space
Ethical code of conduct Effective communication, and information sharing
Diverse interest and needs Promote youth entrepreneurship
Cultural diversity Supervision and consensus through local members
Improving social networking through connectivity
Collective action
and outsourcing
Acceptability of used to doing things Providing space for poor and changing zoning laws
Historical mistrustful relationship Prioritizing ethical & cultural values
Women participation Increasing productivity through inclusion of women

21. Agenda for Entrepreneurship
Ideas-led
Minimum Domestic
role of Entrepreneurship Demand
Government First !!
Energetic Youth
& Community
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22. Thank You
www.pc.gov.pk