FRAMEWORK FOR SCIENCE, TECHNOLOGY AND INNOVATION POLICY

Tan Sri Datuk Dr Omar Abdul Rahman Senior Fellow & Founding President, Academy of Sciences Malaysia; Coordinator, STI Policy Consultative Unit, UNESCOs International Science, Technology and Innovation Centre for South-South Cooperation (ISTIC), Kuala Lumpur, Malaysia; Chairman, Commonwealth Partnership for Technology Management CPTM Ltd., London; Science Advisor to the Prime Minister of Malaysia (1984 2001)

2nd UNESCO-ISTIC Training Workshop on STI Policy Development : Assessment of Industry Needs 21 25 JUNE 2010 - KUALA LUMPUR

FRAMEWORK FOR SCIENCE, TECHNOLOGY AND INNOVATION POLICY

ABSTRACT In assessing the needs of industry in policy development, it is essential to look at the policy structure in its entirety. It is to be noted that policy considerations have evolved overtime from science policy to S&T policy to STI policy. STI policy is all inclusive and intended to drive research, development and commercialization (R,D&C) which is relevant in the context of the Innovation Economy. The Innovation Economy is dependent on the Total National Capacity (TNC) in STI which encompasses the government, the scientific community, industry and the community at large. The involvement of industry in policy development and implementation is therefore crucial. Without industrys buy-in, policy objectives cannot be realized. A number of frameworks, based on Malaysias experience, is presented as generic templates which can be the basis for policy responses in different national situations.
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SCOPE OF POLICY OVER TIME

Science Policy doing good science Science and Technology Policy close relationship between science and technology Science Technology and Innovation Policy wider scope, more integrated; inclusive of all stakeholders

STI POILICY IN THE INNOVATION ECONOMY

THE INNOVATION ECONOMY

The Essence of the Innovation Economy is growth through economic restructuring and diversification into production of manufactured goods and other modern goods and services with high value added. Innovation is the driver.

AREAS OF INNOVATION

Science & Technology Governance policies and implementation Business practices Geo-politics Socio-economic issues Strategies & alliances

TECHNOLOGICAL INNOVATION Vs SOFT INNOVATION

SOFT INNOVATION
Changes in aesthetics more than changes in technology i. ii. Changes in products in the creative industry Aesthetic innovation in goods and services primarily functional in nature Soft innovations significant if economically important

Soft Innovation, NESTA, UK Research Report July 2009

MASS INNOVATION GRASSROOTS INNOVATION NOW EVERYONE CAN INNOVATE !

INTER-RELATION BETWEEN SOFT INNOVATION AND TECHNOLOGICAL INNOVATION

TECHNOLOGY-BASED BUSINESS
BUSINESS DRIVER Sales and Marketing Promotion, Advertisement After sales services Customer loyalty SOFT INNOVATION TECHNOLOGICAL INNOVATION TECHNOLOGY PROVIDER Products Devices Accessories BUSINESS ENABLER Work Force Business Processes Cost cutting and productivity increases Financial management SOFT INNOVATION

Soft innovation often possible only because of Technological Innovation

PRIMARY POLICY CONSIDERATIONS FOR THE INNOVATION ECONOMY

Total National Capacity in Science, Technology and Innovation Integrated Human Capital Development Status of STI in Industry Industrys appetite for STI Information Flow And STI Advisory System

TOTAL NATIONAL CAPACITY IN STI

Economic growth under NEM to be driven by Innovation Economy Innovation Economy dependent on Total National Capacity (TNC) in STI : o A scientific community able to contribute to and draw from the global pool of scientific and technological knowledge. o A government committed to providing a comprehensive STI Infrastructure (soft and hard: institutions, funds, processes, etc) o A private sector capable of creating wealth through application of technology and innovation in all sectors of the economy. o A society imbibed with a culture of creativity, innovativeness and entrepreneurship.

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IMPLICATION OF TOTAL NATIONAL CAPACITY (TNC) in STI

Doing good Science is not good enough. Good Science must translate into innovative technologies at the marketplace TNC in STI therefore requires an STI Policy encompassing Capacity to develop (R&D) and to acquire technology (technology transfer) Capacity to apply and utilize technology and innovation Management of the interface between the two (in both Government and Industry) The above constitute the Core Elements of STI Policy for the Innovation Economy.

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CORE ELEMENTS OF STI POLICY

Technology Generation and Acquisition

Technology Utilization And Management

(Interface)

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STI POLICY FRAMEWORK

Enhancement of science advisory and consultative system and processes. Enhancement of capacity to generate and acquire STI. Enhancement of capacity to evaluate, acquire, utilize and manage STI. Development of human capital. Creation of the right environment (Ecosystem) for the Innovation Economy. (all the above apply to both government and industry)

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THE ECOSYSTEM OF INNOVATION ECONOMY

Smart Partnership Practices K-Intensive Governance (Public/Private sectors) K-Generation and Acquisition K-Utilization and Management

Human Capital Development Capacity and capability building Entrepreneur development Culture of Creativity and Innovation Science Ethics Practices 14

THE INNOVATION ECOSYSTEM MUST BE SUPPORTED BY:

Creativity Ecosystem Innovation Ecosystem Entrepreneurship Ecosystem Commercialization Ecosystem AND Smart Partnership Practices Science Ethics Practices Human Capital Development

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SMART PARTNERSHIP

Partnering based on respect, trust, transparency and tolerance. Long-term, with evolving common objectives; goes beyond strategic alliance. Cooperation to succeed vs. cooperation to compete. Outcome: prosper thy neighbor; win-win, equitable; balance between business and social benefits.

Smart Partnership framework - applicable in the specific context of Total National STI capacity for the Innovation Economy. Smart Partnership - preferred framework for the conduct of business and Government nationally and internationally.

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SCIENCE ETHICS PRACTICES

Principles according to which scientific activity should be conducted and the mechanisms by which conformity to such principles is promoted, fostered and ensured COMEST, May 09 UNESCO 1974 Recommendations on Status of Scientific Research: Integration of science ethics in science policy 1999 Declaration on Science and the Uses of Scientific Knowledge Ethics to be included in all Science teaching at universities

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HUMAN CAPITAL DEVELOPMENT

Is the holistic approach to the development of the full human potential. The objective is to create human capital i.e. productive assets in the form of human competencies or a portfolio of different skills and assets required by both industry and government to create a nation of high competitiveness in the knowledge society.

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HUMAN CAPITAL DEVELOPMENT

Human Capital development encompasses the practices and the environment to develop: intellectual capital, skills capital, social capital, entrepreneurial capital, psychological capital and spiritual capital within individuals.

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HUMAN CAPITAL DEVELOPMENT

Intellectual Capital Nurtured through formal and informal education logical, strategic thought processes. Skills Capital Codified and tacit knowledge; technical skills from training or acquired through experience. Social Capital Social skills, communication, cooperativeness, networking, smart partnership principles enhances social capital. Entrepreneurial Capital Creativity, innovativeness and entrepreneurship. Psychological Capital Commitment, passion, dedication, confidence, belief in self (Malaysia Boleh). Spiritual Capital - Ethical values and principles. - Right and wrong. - Smart partnership ethos. BY DESIGN AND/OR BY DIFFUSION
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HUMAN CAPITAL DEVELOPMENT

The product of human capital development is a knowledge-worker or knowledge manager par excellence.

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HUMAN CAPITAL DEVELOPMENT

A knowledge worker is more than just ICT literate. A knowledge worker is characterized by: Ability to provide solutions, working alone or in a team Possession of a core competency which is enhanced by mastery of ICT Being creative, innovative and entrepreneurial High motivation; adaptable and open to learning, including self-learning and re-learning and prepared to master new skills Being a risk taker, able to work boundaryless and borderless Work ethics based on Smart Partnership values (respect, trust, tolerance and transparency) and science ethics (professional, social, environmental, moral and ethical obligations)

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HUMAN CAPITAL DEVELOPMENT

A knowledge-manager possesses or is capable of developing the following assets: General management human capital Strategic human capital Domain-specific human capital (industry or public sector specific expertise) Relationship human capital Company/institution-specific human capital
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PROCESS OF HUMAN CAPITAL DEVELOPMENT

Home: The environment at home must be conducive to the learning process at an early age, encourage inquisitiveness and creativity New approach to learning process, teacher-pupil relationship, new subjects that promote creativity , innovativeness and entrepreneurship, assessment system that encourages thinking out of the box. Development of social skills, racial mix as an asset, communication skills: debate, negotiations, consultation; smart partnership ethos. University: As above plus:Fostering a culture of life-long learning, unlearning and relearning; commitment to R&D. Workplace: Open, flexible system that encourages team work, rewards creativity and entrepreneurship; wellness culture

School:

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STI POLICY MALAYSIAS EXPERIENCE

Rukun Negara 5 years Development Plans starting 5th Plan (1986 1990) National Science and Technology Policy I (1986) and Policy II (2003) Action Plan for Industrial Technology Development 1990 Vision 2020 February 1991 Industrial Master Plan I (1986 1995); II (1996 2005); III (2006 2020) K-Economy Master Plan 2002 Sub-sectors IT, Biotechnology, Aerospace, etc Various grant and support schemes to promote R&D and Commercialization The New Economic Model (NEM) - 2010
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ASSESSMENT OF OUTCOME - I

Negative press reports and analysis Failure to migrate to the Innovation Economy?

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STATUS OF STI IN INDUSTRY

The Economist March 1st 2008 The tigers that lost their roar --- after all this time the regions five main economics Indonesia, Malaysia, Philippines, Singapore and Thailand are still notable for the near absence of companies that could truly be called world-class. --- the regions business scene, . . ., remains dominated by old-fashioned, mediocre, sprawling conglomerates, run at the whims of aging patriarchal owners. if they need technology, they buy it from abroad . . . . . The region has no indigenous, large-scale companies producing world class products and services whereas the export led growth of South Korea and Taiwan comes mainly from indigenous firms making globally competitive goods with their own technology much of South East Asias high value exports are made by foreign companies. These companies dont have strategies, they do deals. 27

STATUS OF STI IN INDUSTRY

Dr. Mahani Zainal Abidin ISIS New model needed to spur economy NST 2 April 2009 . . . . The economic gap between Malaysia and countries like Taiwan, Hong Kong and Singapore . . . .is now widening instead. We are also losing out to them in terms of per-capita income growth, technological capability and human capital development. . . .Malaysia remains a low-wage, low-skill and resource-based economy. Malaysia is in danger of not meeting its own target of being a developed country by 2020. There is an urgent need for us to address critical economic crisis, particularly human capital, technology and innovation and our approaches to it . .... We should continue to invest in technology driven innovation by supporting research and development works. At the same time Malaysia should acquire technologies and improve them to meet market demand
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STATUS OF STI IN INDUSTRY

Anna Ting Positioning Malaysia for long term sustainable growth - The Edge Malaysia, 6th April 2009 - Malaysia is once again an economy in transition. In the past 50 or more years, Malaysia has successfully transformed from a low-income economy to a middle-income one where its growth base was moved from primary factors of production such as primary commodities and unskilled labor, to that of imported technology mainly through foreign direct investment.

. . .toughest transitional phase for any economy moving to develop into a high income economy, which involves becoming technology generating instead of technology importing where innovation is the key. . . . .in fostering a high rate of innovation and skills improvement the government must focus on providing top quality education with emphasis in science and mathematics . . . . .

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STATUS OF STI IN INDUSTRY

Quah Boon Huat (MIER) : Deindustrialiting for the wrong reasons? Starbiz , 20 April 2009 - - - - one could conclude - - - the manufacturing sector appears to be losing out as a crucial component of the economy. - - - - the results do suggest that the manufacturing sector appears to be losing its shine and deindustrialization seems to be in the cards in Malaysia - - - (where deindustrialization is defined) as - - - a steady decline in the - - - sectors share of employment.
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- - - - according to data from the Economic Report published by the Finance Ministry, the manufacturing sectors share of GDP had increased from 26.9% in 1990 to 32.3% in 2000, but fell to 30.1% in 2007

- - - - the growth rate of its share (the manufacturing sector) of total employment has moderated considerably. It only managed to increase its share from 2000 to 2007 by a mere 1.3 percentage points to 28.9%

Deindustrialization can be viewed as the norm in successful economic growth. As per capita income rises during the course of economic development the share of employment in manufacturing rises at the expense of agriculture until a relatively high level of development is achieved.

- - - negative deindustrialization can be caused by - - - like high labour costs and failure or inability of firms to respond to changing market conditions. It results in a slow-

down in manufacturing output and productivity and prevents nations from achieving their full economic potential.

Beyond a certain threshold of per capita income, however, the share of services in employment starts to rise at the expense of manufacturing - - - [due to] (i) higher productivity growth rates - - - and (ii) a systematic change in consumption patterns. This deindustrialization is considered form of positive

because of its associated with rising real incomes and full employment not because of failure of the manufacturing sector.
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Malaysias manufacturing sector is being affected by - - - rising production costs arising from tightening of labour market and cheap exports (from China and Vietnam). The sector has failed to

The problems - - - can be traced back to a lack of industrial deepening - - - - -

What needs to be done now is not the creation of more organization, but

make the transition to higher value added activities.

effective implementation of an appraisal, reward and penalty system to improve coordination of activities among the relevant institutions to ensure industrial deepening.

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ASSESSMENT OF OUTCOME - II

Deindustrialization lack of industrial deepening? What happens to manufacturing ++?

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INDUSTRIAL MASTERPLAN II

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ASSESSMENT OF OUTCOME - III

Policy Failure? Implementation Failure? Coordination Failure? What is the reality? partial success?

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Tim Hartford Financial Time Magazine July 4/5 2009 Why getting complicated increases the wealth of nations. . . . . There are probably 10 billion one of the defining characteristics of the modern economy is that its awfully complicated. even a fairly humble product such as a shirt might incorporate cotton from West Africa, oil from Indonesia to make the polyester in the button (manufactured in China) and designs sketched out by an Italian using an American computer software. distinct products and services available in a modern economic environment such as London, Tokyo and New York.

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one obvious measure of complexity is how many types of products a country exports in significant quantities . . . . Exports are a meaningful indicator

Malaysia and Pakistan seem, at first glance, equally complex couple, each exporting 104 product types. But many Malaysian exports are also exported by mighty Japan, where Pakistans exports have very little in common with those of Japan. In general

because if you export a product it means someone else is willing to pay for it A further measure of complexity is whether a countrys export are

Malaysia tends to export some of the products that very complex, diversified countries export suggesting that it has a more complex economy than Pakistan. . . . . The top six most complex economies: Japan, Germany, Sweden, UK, Finland and the USA. Malawi, Cameroon and Western Samoa bring up the rear. . . . It seems that economies that are more complex than their level of income would suggest, have a tendency to catch up with a spurt of fast growth.
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uncommon (many countries export Tshirts, few aircraft parts.

INFORMATION FLOW AND THE STI ADVISORY SYSTEM

In the context of Innovation Economy holistic approach to policy formulation is important; not separating STI Development policy from National Development policy or Industrial Development or any other sectoral policies. The concept of Policy for STI and STI for Policy or Development of STI and STI for Development becomes evermore important and information flow between sectoral systems must be facilitated. Information flow between all stakeholders especially between government, technology generators and private sectors to get buy-in. An integrated and inclusive STI Advisory System is crucial. Moving the STI agenda requires Champions in public and private sectors and champions require advice. Advisory mechanism must have legitimacy, authority, capacity and linkages to deliver objective, neutral and timely advice.

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PROPOSAL FOR POLICY RESPONSES

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Intensifying the capacity for knowledge generation and acquisition Increasing knowledge intensity in traditional economic sector Increasing productivity, innovative capacity and competitiveness in manufacturing and k-economic sectors Education and human capital development Intensifying knowledge content in governance Enhancement of Entrepreneur Development Innovative Financing mechanism and support system for commercialization of technology and innovation Creating a national culture of creativity and innovation Enhancing knowledge management Promoting science ethics and smart partnership ethos and practices Securing private Sector Buy-In Enhancing the STI Advisory System
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MEASURING ACHIEVEMENT PUBLIC AND PRIVATE SECTOR

Technology Management Best Practice Framework The technology management best practice framework, developed and promoted by CPTM, may be used as a template for policy formulation and implementation strategies. This framework consists of the following: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Political Commitment Policy Integration S&T Advisory System S&T Development Planning and Coordination S&T Infrastructure Funding & Management of R&D Mechanism for Commercialization of Research & Technology Integrated Human Resource Development Mechanism for S&T Enculturisation Smart Partnership and Science Ethics Principles and Practices
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MOVING THE STI AGENDA THE STI HUMAN RESOURCE PYRAMID

CHAMPIONS ADVISORS POPULARISERS PLANNERS MANAGERS EDUCATORS PRACTITIONERS

Science &

-Entrepreneurs -Industry leaders

technology professionals Researchers

SCIENCE IS TOO IMPORTANT TO BE LEFT TO SCIENTISTS AND TECHNOLOGISTS ALONE !

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UNESCOS NEW INITIATIVE FOR STI DEVELOPMENT

ISTIC - International Science, Technology and Innovation Centre for South-South Corporation (launched 22nd May, 2008) - UNESCO MALAYSIAN GOVERNMENT (MOSTI)

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ISTIC PRIORITY ACTION PROGRAMME

STI policy for development Capacity building Collaborative initiatives with existing STI Network WEHAB (Water, Energy, Health, Agriculture and Biodiversity) New Technologies

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STI POLICY FOR DEVELOPMENT

STI Policy Consultative Unit (SPCU) To assist UNESCO member countries in developing capacity to formulate and implement a sound STI policy in support of national development objectives. SPCUs approach to STI Policy Development is based on Total National Capacity in STI. Template for policy formulation and implementation is CPTMs Technology Management Best Practice framework.

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PHASES OF ENGAGEMENT
1. 2. 3. 4. Sensitization, commitment and preliminary assessment Review priorities of needs in government and industry Status review of priority areas Development of Action Plan ISTIC Team = National Core Team National Core Team : (responsible for final formulation of STI Policy and implementation programs) Note: Request for SPCUs services to be made by governments directly to UNESCO

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SPCU TEAM
Coordinator : Tan Sri Datuk Dr Omar Abdul Rahman Collaborating Organizations: IEMP@MUST, Malaysia PRIMA Consulting, Malaysia Commonwealth Partnership for Technology Management CPTM, London website : http://www.istic-unesco.org

ISTIC email : info@istic-unesco.org

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THANK YOU
Omar Abdul Rahman tsomar@bostonwebacademy.com
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