2. 9/7/2015 Background  Research Development and Innovation (RDI) is an investment in a company’s future  Highest productivity improvements and hence GDP growth always came from innovation and this since the invention of the wheel  Adapting to fast growing technological innovation is crucial. In open markets, obsoleteness is a wide spread disease  Globalization, open information, and increasing linkages between Universities and Industries facilitate innovation and may one day turn it into a commodity

3. Remember !  For Industry, the principal purpose of business RDI is to develop differentiated products and services to meet the market needs COMPETITEVENESS: competitiveness is the set of institutions, policies, and factors that determine the level of productivity of a country

4. 9/7/20154

5. 5 The Global Competitiveness Index Ranking for ESCWA Member Countries covered by the report CountryRank 2010-2011 (139 countries) Qatar17 Saudi Arabia21 UAE25 Oman34 Kuwait35 Bahrain37 Jordan65 Egypt81 Lebanon 92 Syria97 Lebanon Scores VERY BAD in Competitiveness Index

8. Basic Requirement Macroeconomic Environment  Lebanon has successfully maintained a healthy economy despite the worldwide economic and financial crisis. (8.7% GDP growth in 2009 vs. world average of 1%) HOW CAN WE SUSTAIN IT !?

9. Basic Requirement Health and Primary Education  Good health services exist in Lebanon  Basic Education is of good quality and available to all. Literacy rates are improving  Healthy educated population yields competitive workforce  Resource allocation should remain strong for both sectors in order to sustain competitiveness

10. Efficiency Enhancers Higher Education and Training  The relatively acceptable higher education system of Lebanon should be built on (we score 4.6/7 – still significant room for improvement)  “There is no science w/o scientists, there is no scientists w/o research!”  Efforts should be made on enforcing linkages with industry hence economy (jobs, R&D, etc)

11. Efficiency Enhancers Goods Market Efficiency  The country produces a good mix of goods and services  A wide variety of goods are traded on the market competitively

12. Efficiency Enhancers Financial Markets Development  Banking sector is strong, stable, and well developed.  Stock market is limited and inefficient  Access of funds and capital is low (besides bank loans)  IPOs, private equity and M&As are very low  Investment banking is very weak

13. Efficiency Enhancers Technological Readiness  The technological readiness of Lebanon’s developed industries is average given their partial ability to use the available technologies to improve productivity and efficiency  The country’s labor force is quite qualified and needs to be continuously up-to-date; they have the ability to adopt the available technologies  Are we going to produce technology or remain users?

14. Efficiency Enhancers Market Size  Lebanon’s market size is not limited to its boundaries  The market spans to the Arab and European countries and beyond  Exports have been growing and are crucial

15. Innovation and Sophistication Factors Business Sophistication  Many sectors have high sophistication (mature, efficient, profitable, up-to-date)  Sophistication results also from strong: oLinkages and openness to the world oAmount of expats that are still in close contact with the country oOut-sourcing, sub-contracting, joint ventures, etc

16. Innovation and Sophistication Factors Research Development and Innovation  Four of Lebanon’s top exporter industrial sectors namely: oElectromechanical (about 22% of exports) oAgri-food (about 10% of exports) oChemical (about 8.5% of exports) oTransportation (about 7% of exports) …are by nature conducive to innovation

17. What Research?  Product and Material Research  Manufacturing and Operations Research  Market Research

18. Product and Material Research  Find new product ideas to meet customers’ needs  Research new Materials to develop new products and processes  Improve Material performance  Find new and different products and new uses of existing products or by-products

19. Manufacturing and Operations Research  Development of tools and equipment  Manufacturing methods aimed at improving productivity and reducing costs  Application of information technology for informed decision-making  Study of optimal resource allocation  Predict system behavior

20. Market Research  Collection and analysis of market data oTarget market oCompetition oEnvironment  Crucial for understanding new trends  Very important to analyze competitiveness

21. Development  The most economically feasible method for applying the facts or principles identified  Carried out typically after applied research

22. Innovation  It is the final stage of a development process, representing the final result achieved and implemented successfully  Innovative activities may relate to new products, new services, new methods of production, opening new markets, new sources of supply, and new ways of organizing  Innovation is directly correlated with the performance of firms  Around the world innovation is now recognized as a prime source of national competitive advantage

24. MASTER PLAN for RDI Industrial Innovation  A large improvement can be made on one of the main pillars of competitiveness  Industrial Innovation  We recommend a Master Plan involving 4 major players: oPublic Sector oUniversities oIndustrialists oBanks and Financial Institutions

25. RDI Master Plan: Public Sector  National RDI policy with stakeholders led by CNRS with RDI observatory to measure i/o, impact, foresight, studies  Tax incentives for RDI in private sector (industry, universities, centers)  IRI facilitation and coordinating industrial research and innovation  ALI matchmaker between industry, CNRS, IRI and universities

26. RDI Master Plan: Universities  Participate in national RDI observatory activities  Graduate and post-graduate relevant and connected research  Develop tracks of research priorities needed in country (industry, energy, environment, water, etc)  Establish graduate schools to offer multi- disciplinary programs and activities  Crediting professional activities by faculty members towards promotion (consulting, development, applied research, innovation)

27. RDI Master Plan: Industrialists  Include in their business plans an RDI chapter  Strategy on % of RDI spending per year  Conduct state-of-the-art-product research to confirm need for development  Conduct extensive market research to identify consumer needs  Seek local RDI capacity to solve efficiency and development problems, build local expertise over time, hence, multiplier effect  Ask for help from ALI, CNRS, IRI, and Universities

28. RDI Master Plan: Banks and Financial Institutions  Create Innovation funds (Equity and Loans) to be invested in spin-offs which resulted from innovation  Find strategic partnerships and alliances

29. Productive or Waste: Importance of Cycles!  RDI can result from two cycles:  Market Driven  Research Driven  Any flaw from within one cycle makes the difference between a productive and wasted RDI

32. Practical Recommendations  We should extend the current law of tax incentives on “Tawzifat Zatiyyeh” related to CAPEX, to include RDI expenses.  Industrialists should be ready to have a high failure rate in RDI projects; however, one success out of ten failures will largely compensate all the losses.