The document discusses the importance of national innovation ecosystems for sustainable development. It defines the old economy as driven by inputs like labor, capital and resources, while the new economy is knowledge-based and driven by innovation. A national innovation ecosystem consists of factors that deepen knowledge intensity like intellectual capital, interaction, incentives and institutions. It also discusses how countries can progress through different stages from imitation to innovation leadership. Developing strong national innovation ecosystems is important for countries to compete in the global new economy and achieve increasing returns through innovation.

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. 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. 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. 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. 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. 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. 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. 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. 7i Framework7i Framework

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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. Building Blocks ofBuilding Blocks of
National Innovation Ecosystemy

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. 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. 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. 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. 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. 3 Integrity3. Integrity
• Transparent processes
• Instilling good governanceInstilling good governance
• Best practices
• Global benchmarks & standards
• Safety and Security• Safety and Security

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. 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. 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. Example of Regional Clusters: Greater Grand Rapids
Source: Porter 1998

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. 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. 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. 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. Korean NIS
KOREAN NIS
Korean NIS

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. 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. 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. 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. 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. Nair (2010)
Innovation Ecology Model
VisionVision
SocietyaluetoSVa
New
Break-
Original Innovation
(Increasing Returns)
Break-
Through
Time
( g )
T0
(now)

46. Innovation Ecology Model
Nair (2010)
VisionVision
SocietyaluetoSVa
Original Innovation
(Increasing Returns)
Ecosystem I
TimeT0
(now)

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. 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. 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. 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. 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. 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. National Innovation Ecosystem Model
VisionVision
SocietyaluetoSVa
TimeT0
(now)
T1 T2 T3
REACH

54. National Innovation Ecosystem Model
VisionVision
SocietyaluetoSVa
Refurbished
PC Sector
TimeT0
(now)
T1 T2 T3
REACH

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. 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. 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. 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. 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. 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. 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. • 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. Old Economy New EconomyOld Economy New Economy
Input-output Model Powered by InnovationInput output Model Powered by Innovation

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. 7i Framework7i Framework

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. 5. Can developing countries leap-frog
to the innovation economy?
Challenges & DriversChallenges & Drivers

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. 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. 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. 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. 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. 6. What are the possible trajectories for a
innovation driven economy?
(Simulation Results)(Simulation Results)

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. 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. 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. 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.

80. Can Malaysia leapfrog to a new
I ti T j t ?Innovation Trajectory?

81. 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

82. 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

83. 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

84. 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

85. 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

86. 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

87. Innovation Multiplier Effect:Innovation Multiplier-Effect:
A Staged Plang

88. ICT Diffusion (2010-2015)
L MSCLeverage on MSC
MSC

89. By 2015 – Leveraging from MSC:
Innovation DiffusionInnovation Diffusion
MSC

90. 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

91. 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

92. 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

93. Northern
Corridor
Eastern
Central
Eastern
Corridor
SARAWAK & SABAH
Southern
Corridor
CORRIDORS
CoEs/Clusters &
Corridor Development
By 2020

94. 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

95. 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

96. 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

97. 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

98. 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)

99. 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’.

100. 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

101. ‘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

102. Thank You