State should play role in change

In a recent report in The Economist on innovation, an article had, as a subtitle, the sentence "the best thing that governments can do to encourage innovation is to get out of the way."

This raises the question of the appropriateness of the proactive involvement of GCC governments. What can they do to help research activities and ensure that some knowledge is translated in social welfare and business profits?

Get out of the way is a general prescription of The Economist on a range of questions, not only innovation but markets in general. Well, it was the general prescription until the financial crisis that hit us last summer. With characteristic fair play, the magazine now admits in a cover story published last month that the French way of doing things, typically seen as sclerotic, over-regulated and too state-dominated, looks pretty good with its long-term planning that produced a high-speed train, the TGV, the latest-generation nuclear power plants and internationally recognised researchers.

The reason why the state is relevant to innovation is two-fold. On the demand side, they are the main consumers of innovation to deliver services efficiently to people - public health, e-administration, security and infrastructure. On the supply side, innovation relies on a series of public goods such as educated populations and legal frameworks. The government being one of the main stakeholders in demand and supply, it seems only natural that it plays a major role in designing an effective national innovation system.

Australian economist Henry Ergas differentiates between mission-oriented and diffusion-oriented innovation policies. In essence, the difference is in the way resources are utilised: shifting processes from old to new uses or improving their productivity in existing uses.

In mission-oriented, the focus is on a small number of projects with a high degree of concentration in decision-making and implementation.

Some strategic projects in the region are being selected by the UAE's National Research Foundation, Qatar's National Research Fund and Oman's Research Council. They involve topics whose importance and complexity call for taking advantage of the scale and the sharing of resources that targeted research clusters can provide.

Fossil and solar energy, biotechnologies, health and IT are typically on the list of detailed priorities.

For a diffusion-oriented policy to work, the approach is different: resources must be spread across many actors and many sectors. The government is only acting as a focal point facilitating the process of innovation. Robert Friedel, professor of history of technology at the University of Maryland, argues that improvement means simply that 'things could be done better' and what constitutes improvements depends on individual and group perspectives. Not all societies exhibit a belief in or commit to the value of improvement.

In early 16th century, Islamic societies were roughly comparable to the West in terms of the level of science and technology. Then the West began to outstrip the rest of the world through a culture of improvement.

Here the role of the State needs to be limited to brokerage between different groups in society (researchers, innovators, private financiers, teachers) if they do not do cooperate spontaneously. It must also provide a series of services that by nature private markets would not provide efficiently such as universal education, public infrastructure and intellectual property laws.

Regardless of the approach - centralised or decentralised, the State is shaping the culture of research as well as directing human and financial resources to specific undertakings. In doing so, it is like the Roman god Janus - the god of entrances and exits who is typically depicted as having two faces, one looking forward and another backward. This image describes metaphorically how the State can preserve its core values while responding to the pressures of change from innovation. While governments should not get in the way they must contribute to building the gateway.

- Olivier Renard is an advisor at the Secretariat General of the Research Council of the Sultanate of Oman. The views expressed herein are his own and do not necessarily represent the views of the Research Council or any other individual staff of the Secretariat.