With quite a few large developed global economies faltering inclding USA, nearly the entire Euro-zone with perhaps the only exception of Germany, Japan and UK to only name a few, the recipes being proposed by economic gurus around the world for the revival of such ailing economies tend to focus more and more on reengineering economic activity through mainly two things: a) innovation and b) development of small and medium sized businesses. This is actually now being referred to in its new modified version Micro, Small and Medium sized Enterprises (MSMEs). In order to withstand the ups and downs of the prevailing global economic scenario, governments with sound vision have quickly realized the importance of innovation and promoting small businesses and are already being seen busy in facilitating these in their respective economies – MSMEs arguably remain the most efficient instrument for mass employment generation and of trickling down returns right down to the grassroots level.
i Facilitate technological/business development.
i Act as an incubator for start-ups.
i Provide expert advice across domains to actors and stakeholders.
i Oversee initiatives and capture and share knowledge gathered.
i Help streamline interactions with various government agencies.
i The seriousness of this effort can be gauged by the fact that the first set of such innovation centres, which was launched in December 2011 as a pilot project is now already looking at a national roll-out in May 2012 and the NInC on its part has plans to launch 50 more of such clusters in 2012 alone!
According to a recent World Bank study, the key barriers to innovation in South Asia (Pakistan of course included) are skill shortages, lack of collaborations, insufficient capacity building and the sheer inability to manage any innovation successfully. In the Indian model their CICs will precisely address these issues by creating eco-systems that would have multiple drivers of innovation, bringing together government, research & development (R&D) labs, universities, domain experts and stakeholders. There are several examples of such innovation eco-systems globally. An oft-quoted example is of the Silicon Valley.
The region has been a fertile ground for innovators, housing some of the most successful industries in recent decades. The strength of the Silicon Valley eco-system, apart from the merit and diversity of human capital available, has been the presence of professional services, including lawyers, accountants, venture capitalists and mentors. Along with the existence of relevant stakeholders in geographic proximity, formal and informal learning through various forums of interactions have been among significant strengths. And in some other cases, it has been the sheer presence of vibrant universities that have aided the growth of clusters. Stanford University and Cambridge University are recognized as major contributors in the emergence of Silicon Valley and Cambridge Cluster. Other examples of successful clusters are the biotech clusters in Sweden and Switzerland.
The government of India is rising up to the challenge in taking account of the fact that in India innovation has remained an uphill task for the MSMEs, which contribute almost 40 percent of the total exports from the country. Industrial clusters usually have small entrepreneurs who have scanty resources to spend on research and innovation. Though there are many clusters in India like gems clusters in Surat, brassware in Moradabad, food processing in Tamil Nadu, auto components in Haryana, furniture in Kerala and textiles in Tirupur; most of them do not have adequate access to technology, R&D, risk finance and skills. The CInC in the near-term plans to organize at least 200 such clusters in diamonds, pharma, food processing, bamboo, etc to provide linkages with partners like the CSIR (Council of Scientific and Industrial Research), industry, R&D labs, financial institutions and universities.
Pakistan also needs to learn from its neighbor to unleash similar initiatives at home. Further, we can even go a step further by seeing to it that innovation in such centres is not just limited to product development. Instead in these innovation incubators the ‘innovation per se is also attempted in business models, business processes, capital raisings, etc. Meaning that the centres we establish should actually go a step further by boosting the efficiencies of the existing national clusters in terms of production, sales and marketing. Like India and China, Pakistan should also declare the years 2012-22 as the ‘Decade of Innovation’. The government’s aim should be to herald a mindset change and create a push at the grassroots level so that more and more people in education, business, government, NGOs, urban and rural development engage in innovative activities, are co-opted and are a part of shaping the national level innovation strategy. Obviously in this strategy the major beneficiaries would be the micro, small and medium sized enterprises and which in itself would naturally be a very welcome outcome since this tended to be the main objective to start with. In short, the Cluster Innovation Centres, if established and operated transparently, can be the very game changers that we have been so desperately seeking to take Pakistan forward in this era of heightened global, regional and domestic competition.
n The writer is an entrepreneur and economic analyst.