Summary

In the rapid changing world, neither the financial capital nor the human power are the only factors to the continuous progress in the economy, the innovation and the knowledge play nowadays major role in the economic growth. This booklet  will discuss the role of science, technology and innovation on the economical development of the Islamic development Bank “IDB” member countries and the present and future role of  IDB scholarship programme in that direction.

In order to achieve such economical development, the investment in innovation and knowledge- based projects should be supported and the industry awareness of the importance of science should be increased. Besides that, the educational and research systems have to focus on the applied researches to improve the quality of investment outcome. Some approaches that could be adopted to increase the awareness of innovation and the investment in technological related projects will also be introduced.

The status of the innovation system in the IDB member countries will be discussed. Finally, some recommendations on how to improve the economics based on science, technology and innovation in the IDB member countries will be suggested.

1. Introduction

2. Technology, Science and Economy

3. The Innovation system in the IDB countries

4. Promoting investment in innovations

5. Promoting University-Industry linkage

6. The role of IDB scholarship programmes

7. Conclusions and recommendations

References

1. Introduction

“Diffusion of technical know-how does not simply depend on ability to pay. It owes a great deal to personal contacts and discussion, or to the movement of people” (Freeman and Soete,2004).

Although sometimes large amount of money are invested in Science and Technology projects, it has minor effects on the national economy. One of the common problems in such investments is buying the Technology directly instead of developing it. Like in the turn-key projects and information and communication technology “ICT” infrastructure implementation where only the Technology and equipments are transferred without the real knowledge behind them.

This booklet will focus on some approaches in promoting the investment in Technology and Science while supporting the economical progress through Innovation in IDB member countries.

In this context it is important to define some terms before proceeding with the discussion.

“Science is a system of acquiring knowledge based on the scientific method.” (Wikipedia the free encyclopedia, 2007b)

Technology is “the system of knowledge, skills, experience and organization used to produce and utilize goods and services to satisfy human demand.” (UNIDO, 1996)

“Invention is an object, process, or technique which displays an element of novelty.” (Wikipedia the free encyclopedia, 2007a)

The Innovation “is the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organisational method in business practices, workplace organisation or external relations. (...) This includes products, processes and methods that firms are the first to develop and those that have been adopted from other firms or organisations.” (OECD, 2005)

Although  literatures classify innovations into four groups: product innovations, process innovations, organizational innovations and marketing innovations, this booklet will focus only on product and process innovations since they are the most observable category.

2  Technology, Science and Economy

“Innovation is of importance not only for increasing the wealth of nations in the narrow sense of increased prosperity, but also in the more fundamental sense of enabling people to do things which have never been done before. It enables the whole quality of life to be changed for better or for worse.” (Freeman and Soete, 2004)

Both Marx and Smith have considered Technology, Science and Inventions as elements in the economical growth. Empirical studies showed that before the industrial revolution, the difference between industrial and developing countries was small and after that the difference has increased dramatically (Freeman and Soete, 2004). It is important for the developing countries to catch-up with the Technological development to reach the economical growth. The catch-up can be achieved by imitation or innovation.

The Technological change and inventions can be drivers for new investments in new machines, new services or even training the staff. Inventions can attract not only local investment but also foreign direct investment (FDI).

The effect of innovation on productivity and competitiveness improvement on the national and countries level is similar to the effect on firms. The entrepreneurs increase and start to invest in the country which in turns opens new jobs specially in Research and Development (R&D). Moreover, since the innovation is considered as creative destruction, it creates new needs and production qualifications in the country which opens new chances for young people to have new jobs. Not only that, but the Innovations improves the foreign trade through selling new competitive products or services.

According to (Freeman and Soete, 2004) the National Innovation system can be defined as the “interactions between various institutions dealing with science and technology as well as with higher education, innovation and technology diffusion (...) whether public or private” institutes.

The innovation system is a complex system and in order to improve it, multiple fields should be considered. Nowadays the scientific and technical progresses are the main drivers for innovations. Moreover the firms can no longer be able to innovate alone, because the “Innovation now often requires more external and more multidisciplinary knowledge, as many technologies have become extremely complex.” (OECD, 2000b). The firms also are required to save on their internal research and development (R&D) due to the high competition.

Furthermore, the scientific researches are too expensive and tend to be beyond the ability of universities and research institutes. “In addition, the lack of skilled personnel is a key barrier to innovation that needs to be addressed. While a case can be made for greater international mobility of human resources, countries also need to address education, skills up-grading and human resource management at the domestic level.”(OECD, 2000b)

For all these reasons, the demand for cooperation between institute and the establishment of innovation networks become the most common approach to innovate. Links between firms and research institutes and alliances between industrial firms have been established.

In order to explore the innovation system in any region it would be important to measure its main indicators and study the interaction among different institutes. The indicators can be classified as inputs and outputs indicators. The input indicators are: Rseacher and Development “R&D” personnel, education and R&D expenditure, while the output indicators are: patents, scientific publications and technology trade (Lederman and Saenz, 2005; OECD, 2005; Nour, 2005; ESCWA, 2003).

Moreover the investments incentives and ICT infrastructure are of great importance for innovation promotion which could be measured.

3  The Innovation system in the IDB countries

This section will give an outlook at the Innovation system in some of the IDB countries by reviewing the innovation indicators.

Input indicators

The expenditure on education in most of the IDB member countries are too far away from the international standards and even in countries in the same region as the IDB countries.

Table”1” shows the expenditure of some selected countries. Moreover, the expenditure on R&D activities is very low when it is compared to the global average expenditure in 2003 which was 2.4% (Watkins et al., 2005). The industry plays minor role in the R&D expenditure in the Arab states and the African countries while in the USA 66% comes from the private sector (Watkins et al., 2005).

Table 1: The Expenditure on Education and R&D as percentage of GDP in some selected countries

Source: Watkins et al., 2005

* In 2002 ** In 1990

According to (MASTIC, 2005; Qasem, 2003; and Bennani et al., 2003), the Social Sciences and humanities are more popular than S&T related fields in Malaysia and Arab states, which is very similar to the rest of the IDB countries. This is reflected to the number of researchers as indicated in table 2

Table 2:  Number of researchers in 2002

Source: Watkins et al., 2005

* Source: MASTIC, 2005

Output indicators

The weakness in the input indicators is reflected to the outputs. The patents and publications in the IDB countries are too far away from the neighboring countries according to tables 3 and 4.

Table 3:  Registered Patents in USPTO from 1980–2006 of selected countries

Source: Adopted from (USPTO, 2006)

Table 4:  Scientific publications in 2001

Source: (UNESCO, 2005, P.9)

* Source: (MASTIC, 2005, P.10)

* In 2002

The High Technology exports is an important indicator for innovation. In 2003 the average High-technology exports was 2% of the total manufactured exports in the Arab States. This figure in the most IDB countries is lower than the world average which was 18% except Malaysia (Watkinset  al., 2005).

Table 5:  High Technology Exports in 2003

Source: (Watkins et al., 2005, pp.274–277)

4.  Promoting investment in innovations

“Intangible investment in new knowledge and its dissemination are the critical elements, rather than tangible investment in bricks and machines” (Freeman and Soete 2004)

As it has been noticed in the beginning of the article, direct investment in Science, Technology and Innovation should be considered carefully or it will not generate the accumulation of knowledge or technology transfer to the state.

In  IDB countries there is a direct need for investments in the education system improvements specially in the fields of science and technology and to increase the students enrollment in these fields. Moreover, the graduates from these fields should be able to find jobs in their field of the study otherwise the investment in the students will be lost either due to brain drain problem or because they will be working in fields other than their specialty. In order to minimize such problem, the R&D activities should be promoted in both the public and private sectors.

The United Nations Industrial Development Organization (UNIDO, 2007) in its service program for promoting the investment and technology puts several recommendations and activities to focus on. These recommendations will be used as guidelines in this section.

Supporting Foreign Direct investments (FDI)

The main factor in promoting the FDI is the proper policies and incentives structure planned by governments. Establishing business alliances and building cooperation and innovation networks will encourage and increase the FDI.

Although it is important to have FDI in capital accumulation and introduction of new machinery, the most effective approach for the economy that lead investment in knowledge (know-how) transfer. This would be achieved by more involvement of local researchers and engineers in the development process because the normal storage of the knowledge is the human brain and experience.

Supporting Institutional building

Institutions that support training in investment and feasibility studies play great role in investment promotion and its efficiency. Business incubators Technology centers and centers of excellence are some examples of such institutes which aim to implement and improve network of experts.

Moreover Small and Medium Enterprises (SMEs) play great role in Innovation and employment while the investments in their activities are relatively small compared to large firms. That is why lot of economies in the world are based on the investments on SMEs.

Supporting Technology and Innovation Management Systems

Similar to financial management, the Technology and Innovation should be managed carefully to optimize the use of the technology and the innovation process. For example the process of creating new ideas and developing them to reach the level of investment, production and marketing fall within the frame work of innovation management. Such management will increase the productivity of the employees and increase the overall competitiveness in the market.

On larger scale policies for key technologies diffusion in different fields should be implemented. An example of that is the diffusion of the computers and Internet not only in the industry but also in the educational systems (E-learning), the governments (E-Government) and even for books (E-Books). This indicates that buying or developing the technology are not the only keys to the success of investment, its the diffusion and making use of it in several fields and programs lead to more effective investment.

The transfer of ideas and technologies from the science or research institutes to marketable products in the industry is considered a major process to be managed which is known as the Technology Transfer. This will be elaborated later in the next section.

Supporting Technology Foresight

Technology foresight and Capacity building in emerging technologies enable the policy makers to better plan for the future in education, science and several fields. The investment in emerging technology leads to long term and continuous progress.

5.  Promoting University-Industry linkage

“It should be noted that only 60% of university research in the USA is financed with federal funds, the remainder stemming from university partnerships with industry.” (UNESCO ,2005).

The demand on University-Industry cooperation has increased because the technologies are complex nowadays and depend on multidisciplinary knowledge. Through cooperation the R&D and knowledge acquisition costs can be minimized. The “universities seek industry contacts to ensure good job prospects for students, to keep curricula up to date and to obtain research support.”(OECD, 2000)

On the other hand, the firms are interested to get talented employees and get access to knowledge to improve their position in innovation networks.

Technology Transfer is one of the common conventions used in the literature in the context of research and industry relationships. “The conventional conception of technology transfer is that it is a processes through which the results of basic and applied research are put into use by receptors” (Rogers, 2003). This means the investment in science and new technologies in new products and innovations.

The Technology transfer is “recognized to be complex social activities with communication processes at the core of them” (Hodgson, 2002). Figure 1 shows the complexity of a technology transfer model and the approaches for cooperation.

Figure 1:  Technology Transfer Model

Source: (OECD,2000a,p.165)

Cooperation schemes and investment opportunities

The last figure shows several methods of cooperation approaches between the industry and universities. Some of the major discussed and implemented approaches are summarized below

•    Business and Technology Incubators

Where the entrepreneurs reach these incubators to be supported, get the consulting form professionals in implementing their ideas in real products and to markets and in some cases they can get seed fund to start their projects. The investment in such institutes promotes and encourages the innovation and in turns increases the demand on new innovations.

•    Spin-offs from universities

Lot of ideas and research results are generated from universities and many of them could lead to better (or new) products in the market. The universities license their research results to start-up companies that are directly linked to the university through its staff that could be shared between the company and the university. Such kind of start-up companies play major role in connecting the local industry to the universities.

•    Research, Development and Innovation (RDI) Networks or alliances

Such alliances or networks are created for large innovative projects where neither companies nor universities can handle them alone. So they cooperate to gather the talents, knowledge and investment. They will be able to produce joint projects or joint publications.

•    Mobility of scientists

“The mobility of scientists between science and industry is also an important channel of interaction” (OECD2000b, p.5) because they are the main holders of knowledge. When they move form university to the industry and vise versa they help in the knowledge and technology diffusion. To support such activity it is important to invest and cover the salaries of the scientists besides giving the legal framework for their work.

•    Open Source Projects

They are projects that are developed in cooperation volunteers where the results are made available for free on the Internet. Such kind of projects knows no boundaries and is open for all participants. Through Internet the researchers and engineers with specialty in specific field can cooperate together to produce large project no matters where they are. Moreover the open source projects speed up the knowledge transfer between countries and the access to experts from all over the world and from different industries.

The investment in such projects will improve the skills of local researchers and increase the spirit of cooperation which in turns could improve the cooperation between the industry and research institutes.

6  The role of IDB scholarship programme

• Present role

The IDB aims to support the development of the Islamic states. Science and Technology are of the key fields that will support the economical development and the IDB focus on them.

One of the main programmes that support the accumulation of the knowledge is the Science and Technology Scholarship Programme. It  enable students to learn about new fields of knowledge and get them back to their countries or to their field of work.

In order to have such programme effective suitable jobs and work chances for the graduated students must be created. Otherwise they will be overqualified in their work field and may either leave the country for better jobs (brain drain problem) or will stay and not be able to benefit the country with their study.

The IDB has implemented some programmes to support technology and science. Science Development Network (SDN) is one of the major programmes that supports the science and knowledge diffusion among the IDB countries. Establish network of scientists and experts that can cooperate to promote scientific progress and the cooperation between research institutes among the IDB countries.

·       Future role

-         Preparing an annul reports

It will contain all the scientific achievements of the scholars and analysis of the research results obtained by IDB scholars and its role in the economic development of IDB member countries will be prepared and distributed to IDB member countries.

These reports will be used to establish intelligence system for science-based projects for sustainable development in IDB member countries.

-         Preparing an annual book containing the winners of the scholarships and their proposed research projects.

This book which might be entitled “IDB merit scholarship programme:  winners and their problems-solving research projects” would include: A brief CV for the winners and Their research projects and its role in the development of IDB member countries.

It  will be very important as it indicates the role of IDB in the human, socio-economic and scientific development of IDB member countries. In addition, it will help in the networking process between the scholarship winners and other scientists in the Muslim world.

-         Launching “Making the science work for the Ummah“ initiative

Background

Science and technology, in general, can be considered an important key towards solving the problems of socio-economic development and producing a high quality of life in which man has been transformed from a social burden to a productive contributor.

Islamic countries are entering a new phase of economic development with emphasis on the crucial role of the private sector and its potential impact on different branches of economy. Thus, they are urging their private sector to invest in technology in order to maintain their industrial or economic competitiveness relative to the industrialized countries.

Idea          

Rapid technological development has fundamentally altered economic development principles, and technology is rapidly changing the way value is created and transforming the nature of dynamic competitiveness. Techonomics incorporates technology as a core driver of economic changes, and redefines the tools and strategies that can be adopted by firms, industries, or regions to improve competitive advantage and build success.

On the path to development many emerging nations focused on importing scientific and technical knowledge from other countries. Following that, they tried to copy and master it. Working and re-working existing knowledge rather than creating new knowledge through research is a predominant activity in innovation.

Many technologies and much knowledge are either proprietary in nature and form the subject matter of patents owned by foreign entities or published as research articles in scientific journals and is free to use.

Thus, the initiative “Making the science work for the Ummah“ (MSWU) will establish a mechanism for screening science and technology information and cooperate with the private sector to set up commercially viable projects in the area of technology as well as providing marketing support.

Aims

The main aims of the initiative “Making the science work for the Ummah“ (MSWU) is increasing excess to scientific research results related to industrial development that are originating from research centers in Islamic states, patents and scientific journals.

This will enhance innovative research among Muslim scientific community and encourage private sector for investing in science and technology sector, which, in turn, will provide solutions for problem facing Islamic States, and help in improving the quality of life of the people.

Objectives

MSWU will serve as the eyes and ears of the Islamic countries on the latest technological developments to lay the foundations for science and technology-based industry with the aim to:

·         Assist with the acquisition and mastery of imported technology

·         Provide the scientific underpinning of regulations for environment and safety

·         Provide advice to government on policy issues requiring an understanding of science

·         Solve social problems like disease and malnutrition

·         Develop technologies appropriate to local conditions

·         Solve scientific problems unique to Islamic countries

Vision

“To Harness science & technology for Islamic countries economic development, to assist industrial key players such as academic, scientific and business communities, and to function as the Islamic Technomic Brain Trust”

Mission

“To provide an institutional set up for Islamic countries to promote the "Techonomic" approach that captures the fusion of technology and economic development.”

Beneficiaries

Despite all the hype about the potentials of Science and Technology for sustainable socio-economic development, currently organised, research and development (R&D) systems especially in poor Islamic countries do not respond well to its needs. Very often poor and marginalised people across the global south do not end up benefiting from science and technology (S&T).

Thus, MSWU will assist private and public sector clients in finding solutions to an array of economic issues, ranging from building stronger economic foundations to improving industrial competitiveness, focusing on technology infrastructure and human resource development.

This initiative will be useful for the following:

IDB scholars

It will help IDB scholars to work on innovative research relevant to the Ummah needs.

Private sector

It will provide investors with new opportunities for setting up new companies as well as upgrading their production processes

Scientists and technologists

It will provide Muslim researchers with the opportunity to transfer their ideas into products

Programmes and activities

-         Setting up database containing the results of research projects carried out by the IDB scholars, which have industrial applications in the Islamic countries.

-         Preparing a database for scientific researches that is relevant for socio-economic development in Islamic world.

-         Preparing a monthly bulletin to be called “ science means business”

-         Offering help to other science-based IDB programmes such as “early harvest” and Malaria …etc.

-          Organising annual conference for promoting new scientific ideas for investors and the private sector

7.  Conclusions and recommendations

The booklet has discussed the role of Science and Technology for the economical development and the status of IDB countries. In order to promote the science and technology, investment in these fields must be carried on. The key factor to success in investment is not the amount spent on technology import but it is how and where the investment goes and how much knowledge it generates.

The IDB plays major role in the investment in technology and science in its member countries. It has several programmes in that field.

Moreover there should be more focus on supporting studies on the economics of innovation. The IDB should try to invest in non-conventional methods like open source projects.

Finally the IDB has to support the establishment of institutes that provides direct support to researchers and investment.

References

• Farida Bennani, Hoda Elsadda, Nader Fergany, Fahmi Jadaane, and Atif Kubursi. The Arab Human Development Report 2003: Building a knowledge society. United Nations Development Programme (UNDP), New York, USA , 2003. URL http://hdr.undp.org/reports/detail_ reports.cfm?view=712. Last accessed September 2006.

• United Nations Economic & Social Commission for Western Asia ESCWA. New Indicators for Science, Technology and Innovation in the KNOWLEDGE BASED Society. United Nations Economic & Social Commission for Western Asia (ESCWA), New York, USA , 2003.

• C. Freeman and L. Soete. The Economics of Industrial Innovation. Thomson Learning, UK , third edition, 2004.

• R.M. Hodgson. The development and transfer of advanced technology from universities to industry. In Electronic Design, Test and Applications, 2002. Proceedings. The First IEEE International Workshop on, pages 197–202, 29-31 Jan. 2002.

• Daniel Lederman and Laura Saenz. Innovation and development around the world, 1960-2000. World Bank Policy Research Working Paper 3774, November 2005.

• Malaysian Science and Technology Information Center MASTIC. Malaysian Science and Technology Indicators: 2004 report. Ministry of Science, Technology and Innovation (MOSTI), January 2005. URL http://www.mastic.gov.my. Last accessed July 2007.

• Samia Satti O. M. Nour. Science and technology development indicators in the arab region: A comparative study of gulf and mediterranean arab countries. August 2005.
• OECD. Oslo Manual: GUIDELINES FOR COLLECTING INNOVATION DATA. OECD Publishing, 3rd edition, 2005.

• Organisation for Economic Co-operation and Development OECD. OECD Science, Technology and Industry Outlook 2000. France , 2000a.

• Organization for economic co-coperation and development OECD. Science, technology and innovation in the new economy. Policy Brief: OECD Observer, September 2000b. URL www.oecd.org/publications/Pol_brief. Last accessed July 2007.

• S. Qasem. Strategy for the development of science and Technology in the Arab world, volume I, chapter 1, pages 11–94. The Arab League Educational, Cultural and Scientific Organization (ALECSO), Tunis, 2003.

• Everett M. Rogers. Diffusion of Innovations. Free Press, New York, USA , fifth edition, 2003.

• United Nations Educational Scientific and Cultural Organization UNESCO. UNESCO Science Report 2005. UNESCO Publishing, Paris, France , 2005. URL http://www.unesco.org/science/psd/publications/science_report2005.shtml. Last accessed September 2006.

• United Nations Industrial Development Organization UNIDO. Manual on Technology Transfer Negotiation. General Studies Series. Vienna, 1996.

• United Nations Industrial Development Organization UNIDO. Service module 2: Investment and technology promotion overview, 2007. URL http://www.unido.org/doc/5067. Last accessed July 2007.

• United States Patents and Trademarks Office USPTO. United States patents & trademarks office (uspto), 2006. URL http://www.uspto.gov. Last accessed June 2007.
• Kevin Watkins, Haishan Fu, Ricardo Fuentes, Arunabha Ghosh, Chiara Giamberardini, Claes Johansson, Christopher Kuonqui, Andrés Montes, David Stewart, Cecilia Ugaz, and Shahin Yaqub. Human Development Report 2005. United Nations Development Programme (UNDP), New York, USA , 2005. URL http://hdr.undp.org/reports/global/2005/. Last accessed September 2006.

• Wikipedia the free encyclopedia. Invention, 2007a. URL http://en.wikipedia.org/wiki/Invention. Last accessed July 2007.

• Wikipedia the free encyclopedia. Science, 2007b. URL http://en.wikipedia.org/wiki/Science  Last accessed July 2007.

Some websites for further information about science investment in IDB member countries

Palestine:
www.picti.ps

Jordan :
http://www.ipark.jo/
www.jic.jo

Qatar :
Qatar Science and Technology Park

Bahrin:
Business Incubators in Bahrain

Egypt:
Technology Incubators in Egypt
Technology Parks in Egypt

Egypt Smart Village

Kawit:
The Kuwait Technology Incubator

Lebanon:
Berytech

Oman:
Muscat Knowledge Oasis

KSA:
King Abdul Aziz City for Science and Technology
Saudi Organization for Industrial Estates and Technology Zones
Prince Abdalla bin Abdul Aziz Science Park
Jeddah BioPark
AL-Shumaissi Science and Technology City

Syria:
Information and Communication Technology Incubator

UAE:
Dubai Internet City
Arab foundation for science and technology
Dubai Silion Oasis Authority

Yemn:
Communication and Information Technology City