Bitrina Diyamett Science, Technology and Innovation Policy Research Organization (STIPRO) 8th, December, 2015Science Forum South Africa 2015.

Outline  Introduction  The working of the Schumpetarian motor, and how to apply in the African situation  Enabling the Schumpetarian motor: building appropriate systems of innovation. 8th, December, 2015Science Forum South Africa 2015.

I ntroduction  The major idea in the title of the presentation is the fact that radical innovations - which are normally not a common place - are important in the long term growth and competitiveness of companies and nations.  Radical innovation replace current products, creating entirely new product categories and restructure the current market (creative destruction).  Good examples are steam powered railways, which were creatively destroyed by automobiles; and more lately, Microsoft and Intel who destroyed many mainframe computer companies. 8th, December, 2015 Science Forum South Africa 2015.

Introduction cont…  T he above examples of creative destruction brought huge benefits to the companies and society in general.  Those who first to introduce them to the market, will always have a competitive edge, and wider societal benefits.  For continued competitiveness, this should be a never ending process for companies and nations; hence the idea of a motor (borrowed from Kaplinsky, 1990) 8th, December, 2015Science Forum South Africa 2015.

How does the motor work, and how it can be applied to Africa.  The idea of a motor originally came from the distinguished theorist of technological change, Joseph Schumpeter.  He identified the role of the entrepreneur in the translation of inventions into commercial production – leading to marketing of radically new products and use of new processes.  These monopoly profits simultaneously act as a spur to emulation, and therefore a process of technological diffusion sets in. 8th, December, 2015Science Forum South Africa 2015.

How does the motor work, and how it can be applied to Africa cont..  By providing a technological rent, innovation enables the entrepreneurs to escape from the competitive pressure which gradually erode profitability.  This result into continuous bringing in new technologies into economic system ( hence the coining of the concept of a Schumpetarian motor by Kaplisnky)  This motor once set in motion, usually never stop;  the fuel for the motor being entrepreneurship 8th, December, 2015Science Forum South Africa 2015.

How does the motor work, and how it can be applied to Africa cont.. The Schumpetarian motor is fairly established in developed countries, but not Africa!  The situation for the most African countries is characterized by subsistence farming, employing over 70% of the population; exploitation and export of natural resources; and a small manufacturing sector that is largely low tech in nature; and small incremental innovations.  How can Africa move from the current situation and set the Schumpetarian motor in motion?  History tells us there is no short cut; innovation capability building is an evolutionary process and path dependent. 8th, December, 2015Science Forum South Africa 2015.

How does the motor work, and how it can be applied to Africa cont.. 1.First is structural transformation  Increase agricultural productivity,while at the same time facilitate initiation of the non-farm activities in the rural areas, e.g. food processing economic ventures.  Labour shed from the increased agricultural productivity will gradually move into non-farm activities ( in a way, creatively destroying the rural areas).  Such low tech non farm activities generate massive employment for inclusive development – case of Malaysia indicative. 8th, December, 2015 Science Forum South Africa 2015.

How does the motor work, and how it can be applied to Africa cont.. Structural transformation cont..  Value adding to natural resources, e.g. mineral processing.  The same applies to the recently emerging gas and oil sectors in many parts of Africa.  Medicines from medicinal plants – Africa rich in this.  In the long-term, the target should be to move towards a more diversified, sophisticated and internationally competitive national manufacturing sector s–setting the Schumpeterian motor in motion in Africa.  e.g Africa to be a net exporter of novel and high quality drugs and diagnostics. 8th, December, 2015 Science Forum South Africa 2015.

Enabling the Schumpetarian motor: building appropriate systems of innovation.  Setting the Schumpetarian motor in motion for Africa is a process...as indicated above.  It requires appropriate systems of innovation that are gradually built.  The beginning is to build agro-industrial innovation system: strengthening agricultural R&D and linkage with farmers; enhance marketing of agricultural products, including linkage between farmers and agro processors, provide finance; build capabilities for agro processing (entrepreneurs, technology, markets, skills and finance). 8th, December, 2015Science Forum South Africa 2015.

Enabling the Schumpetarian motor: building appropriate systems of innovation cont..  Encourage mineral processing – provide incentive for value adding to minerals rather than raw export or very little value added. FDI can be instrumental here.  Develop innovative clusters that also include local companies around mining sites (including, mining, processing, associated metal sector, and other support organization).  Develop knowledge and physical infrastructure for the clusters.  The same can be done for the gas and oil sectors that are emerging; and new pharmaceuticals. 8th, December, 2015 Science Forum South Africa 2015.

Enabling the Schumpetarian motor: building appropriate systems of innovation cont..  The long term target is to move towards a more diversified, sophisticated and internationally competitive national and regional manufacturing sector.  Here the increased investment in industrial R&D is a must (important for the marketing of radically new products).  Heavy investment in entrepreneurship – especially at the higher learning institutions.  Provision of venture capital.  Overall, facilitate linkage across system actors. 8th, December, 2015Science Forum South Africa 2015.

Enabling the Schumpetarian motor: building appropriate systems of innovation cont..  In all the stages, both supply side and demand side innovation policies are extremely important.  Innovation being largely demand driven, demand side innovation policies are extremely important for poor countries such as those in Africa.  Major purpose of demand side innovation policies is to stimulate demand for innovation. 8th, December, 2015Science Forum South Africa 2015.

Enabling the Schumpetarian motor: building appropriate systems of innovation cont..  They are defined as set of public measures to induce innovations and/or speed up diffusion of innovations through increasing the demand for innovations (Edler, 2006, Breznitz et al ).  Good example of a demand side innovation policy instrument is public procurement.  Here the focus is not on price, but rather incentives for innovation and levels of demand that will eventually sustain lower prices. 8th, December, 2015Science Forum South Africa 2015.

Thank you very much for your kind attention For more information on related issues, visit us at 8th, December, 2015Science Forum South Africa 2015.