Knowledge Forum | http://www.noor.org.sa | Day 3 - Panel 2 - Human Capacity And Diffusion Of Innovation Amidst Globalization By Dr.Musadik Malik, Noor

1. Human Capacity and Diffusion of Innovation amidst Globalization: Development or Demise? Noor – Madinah The Kingdom of Saudi Arabia 24 June 2008 Dr. Musadik Malik Managing Director Boston Innovation Partners

2. Diversification, private sector participation, enabling environment and world-class human capital are the building blocks of prosperity

3. Innovation is empirically linked with prosperity … Source: MONE Income and science & technology capacity Western Europe, Australia, USA, parts of Asia Africa and North Korea KSA USA 6

4. … because innovation is the only way of sustainable productivity improvement

5. Innovation ecology is grounded in strong innovation capacity, excellence in a few clusters and an enabling environment

7. The FDI and MNC driven innovation ecology has produced mixed results!

8. When the differential in human and intellectual capacity between MNCs and the host country is low, diffusion of innovation leads to fierce competition Multinational Corporation Government Policies and Regulations Suppliers Buyers Foreign Affiliates Knowledge Contract Research Organization Spill-Over Competitors Competitors Competitors Competitors Demonstration Labor Turnover Competition

9. When the differential in human and intellectual capacity between MNCs and the host country is huge, crowding out leads to colonization of local industry Multinational Corporation Suppliers Buyers Competitors Foreign Affiliates Centralized / concentrated Research Knowledge Government Policies and Regulations Hurray … No Competition Crowd Out! Warning: The innovation capacity of KSA is weak !!!!

10. Nevertheless, KSA can build an edge by focusing its innovation strategy on building capacity, clusters, linkages and an enabling environment

11. This strategy will create a knowledge based boom in emerging economic cities leading to rapid productivity improvement and fierce competition