Universities, Competitiveness and the National Innovation System Alfred Watkins S&T Program Coordinator Education Department Human Development Network Regional Higher Education Conference Strategic Choices for Higher Education Reform Kuala Lumpur, Malaysia December 3-5, 2007

2 Plan of Presentation 1.Innovation and Competitiveness – The role of Higher Education (and basic, secondary, vocational, technical and life- long learning) 2.Benchmarking Exercise

3 Universities, Competitiveness and the National Innovation System National goals are to accelerate growth, reduce poverty, achieve the MDGs, and improve the competitiveness of local industry, thereby creating higher wage, higher-skilled jobs that generate rising standards of living for all In today’s global economy, tertiary education and innovation are indispensable tools for achieving those goals

4 Innovation, Competitiveness and Higher Education

5 Growth and Poverty Reduction are the Objectives; Education, Innovation, and PSD Are Means to Achieve These Objectives

6 The Pieces Must Fit Together PSD Innovation Higher Educatio n

7 Why Worry About All This?

8 WHAT KIND OF KNOWLEDGE? WHERE DO YOU GET IT? HOW DO YOU FIND IT?

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10 Capacity Building Occurs at Different Levels of the Economy National policy organizations S&T organizations universities, R&D institutes Enterprises – both users of knowledge and creators of new knowledge Labor Force

11 National Technological Learning S&T learning capacity S&T learning opportunities Knowledge generation capacity Capital imports Inward FDI S&T co- operation + Knowledge absorption capacity Education R&D Licensing Diaspora and Expats Internet Export Customers

12 Groups of Firms According to Technological Capability

13 Getting the Balance Right is Important! 

14 BENCHMARKING (CURRENT BENCHMARK RANKING IS NOT DESTINY!!)

15 Benchmarked Countries Bangladesh Cambodia Fiji India Indonesia Malaysia Mongolia Nepal Pakistan Philippines Sri Lanka Timor-Leste Thailand and Vietnam

16 Rankings on indices differ significantly UNCTAD (117 countries) UNIDO (87 countries) Competitiveness (131 countries) Bangladesh Cambodia India Indonesia Korea Malaysia Mongolia Nepal Pakistan Philippines Sri Lanka Singapore 2617 Thailand Timor-Leste Vietnam 82-68

17 Different Benchmarking Indices Measure Different Dimensions of Innovation Capacity and Competitiveness UNCTAD’s Innovation Capability Index—underlying technological capacity with a focus on inputs to innovation (education and R&D) UNIDO’s Competitive Industrial Performance Index—revealed technological capacity in industry with a focus on manufacturing competitiveness WEF’s Global Competitive Index—to see how institutions, innovation, education, etc. contribute to competitiveness World Bank’s Knowledge Economy Index (KEI)—knowledge economy readiness with focus on innovation and education  World Bank’s Doing Business Indicators—how conducive the business environment is for enterprises

18 Global Competitiveness Rankings– Out of 131 Countries Source: The Global Competitiveness Report 2007

19 Knowledge Economy Index Source: Knowledge Economy Index 2007, World Bank

20 Knowledge Economy Index EDUCATION: - Adult literacy rate - Secondary Enrollment - Tertiary Enrollment INFORMATION INFR.: -Tel. Lines per 1000 people - Computers per 1000 people - Internet hosts per 10,000 people ECON. INCENTIVE REGIME: -Tariff & Non-tariff barriers -Property Rights -Regulation INNOVATION: -Researchers in R&D - Manuf. Trade as % of GDP - Scient. & Tech. Pub. per million people Source: WBI KAM

21 Basic KE Scorecard LATVIA Source: WBI KAM

22 Human Capital for Knowledge Economy

23 Human Capital for Knowledge Economy-II

24 UNCTAD –Innovation Capability Index Human capital Index Technological Activity index Literacy rate as % of population X 1 R&D personnel per million population Secondary school enrolment as % of age group X 2 US patents granted per million population Tertiary enrolment as % of age group X 3 Scientific publications per million population

25 Source: UNCTAD World Investment Report 2005; Rankings out of 117 countries UNCTAD –Innovation Capability Index

26 Patents, Journals, Researchers in R&D Investment in R&D (% of GDP)

27 Korea R&D (% of GDP) Source: Korea Science and Technology Policy Institute; WDI, 2007

28 Korea Patent Trends ( ) Source: United States Patent and Trademark Office (USPTO), 2007

29 UNIDO - Competitive Industrial Performance Index 1. Manufacturing value added (MVA) per capita 2. Manufactured exports per capita 3. Share of medium and high-tech activities in MVA 4. Share of medium and high-tech products in manufactured exports

30 Source: UNIDO Industrial Development Report 2004; Rankings out of 93 countries UNIDO - Competitive Industrial Performance Index

31 High Tech Not Automatically Equal to High Income Source: World Development Indicators, 2007

32 GDP per capita in 2006 (constant 2000 US$)

33 Export Structure by Technology Category Producing “what” vs. producing “how”

34 Agriculture Value-Added Per Worker (Constant US Dollar) Source: World Development Indicators, 2007

35 Manufacturing Value-Added Per Capita (Constant US Dollar) Source: UNIDO, 2005

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39 Ease of Doing Business Rankings Source: Doing Business Report, 2007

40 Doing Business-Top 30 Performers in 2007

41 Regional trends in rankings Average rank, ease of doing business High income OECD Latin America & Caribbean East Asia & Pacific Middle East & North Africa Eastern Europe & Central Asia South AsiaSub Saharan Africa

42 Lessons to Learn from Neighbors: Best and Worst Performers on Ten Indicators of Doing Business Indicator Highest Ranking Performer in the Group Lowest Ranking Performer in the Group Starting a BusinessSri Lanka (Rank 44)Cambodia (Rank 159) Dealing with licenseVietnam (Rank 25)Cambodia (Rank 159) Employing WorkersMalaysia (Rank 38)Nepal (Rank 150) Registering PropertyMongolia (Rank 16)Bangladesh (Rank 167) Getting CreditMalaysia (Rank 3)Cambodia (174) Protecting InvestorsMalaysia (Rank 4)Vietnam (Rank 170) Paying TaxesCambodia (Rank 16)India (Rank 158) Trading Across BorderMalaysia (Rank 46)Mongolia (Rank 162) Enforcing ContractsMongolia (Rank 41)Bangladesh (Rank 174) Closing a BusinessPakistan (Rank 46)Indonesia (Rank 136) Excludes Korea and Singapore

43 “Crystals of S&T Learning” - graphical/statistical illustrations

44 “Crystals of S&T Learning” - graphical/statistical illustrations The most accessible, passive opportunities for learning from foreign sources created by capital goods imports and FDI (indicators 9, 10) Human capital accumulated / human capability for S&T learning (see indicators 11, 12, 1) The more demanding opportunities for learning from domestic and foreign sources through domestic R&D (indicators 2, 3) The most demanding opportunities for learning through knowledge markets and international S&T cooperation (indicators 4, 5, 6) Success in using S&T knowledge for improving technological structures of a country’s MVA and manufactured exports (indicators 7, 8).

45 ‘Crystals’ can ‘grow’, but only in the right (learning) environment

46 6 models of national technological learning: Traditionalist slow learning, Passive FDI-dependent, Active FDI-dependent, Autonomous, Creative-isolated, Creative-cooperative.

47 Passive FDI-dependent learning passively relying on FDI to bring in new technologies, low S&T learning capacity, no or weak government technological strategy, limited opportunities for technological learning, high risk of losing in economic competition with poorer, lower-wage countries.

48 Active FDI-dependent learning relatively high S&T learning capacity, active government strategy aimed at building national human capital and accelerating national technological learning from FDI, active targeting of the most beneficial FDI, much wider opportunities for technological learning from FDI, lower risk of losing in economic competition with lower-wage but lower-skill countries.

49 Crystals of sample Passive and Active FDI-dependent learners

50 ‘Crystals’ assessment – Malaysia

51 THANK YOU Alfred Watkins Science and Technology Program Coordinator