STILL MORE PAPERS ON K4D TOPICS

Financing Education: Investments and Returns: Analysis of the World Education Indicators 2002 Edition
From the Summary: “This volume is the third in a series of publications that seeks to analyse the education indicators developed through the OECD/UNESCO World Education Indicators (WEI) programme. The volume examines both the investments and returns to education and human capital. It begins by looking at the results of a specially commissioned study of the impact of human capital on economic growth in WEI countries which shows new findings relative to those found in studies of OECD Member states. It also sets out the context for trends in educational attainment as well as current levels of educational participation and expenditure in WEI countries. The report addresses the financing of education systems by examining spending and investment strategies in WEI countries from both public and private perspectives. It looks at the rationale for public spending, how public resources are distributed across levels of education and the role of the private sector both as a provider of educational services and a source of educational expenditure. A national statistical profile that sets out selected contextual and finance indicators against both OECD and WEI benchmarks, together with a comprehensive statistical annex covering both WEI and OECD countries, complements the analysis. The countries participating in the OECD/UNESCO WEI programme are: Argentina, Brazil, Chile, China, Egypt, India, Indonesia, Jamaica, Jordan, Malaysia, Paraguay, Peru, the Philippines, the Russian Federation, Sri Lanka, Thailand, Tunisia, Uruguay and Zimbabwe.” February, 2002. (PDF, 232 pages.) This book can be browsed online, or purchased in hard copy or e-book format.

Designing Efficient Institutions for Science-Based Entrepreneurship: Lesson from the US and Sweden
Abstract: “The recent ‘scientification’ of commercial technology has brought the interface between universities and industry into sharp focus. In particular, academic entrepreneurship, i.e., the variety of ways in which academics take direct part in the commercialization of research, is widely discussed. The purpose of this paper is to suggest a framework for identifying the strategic individual decisions involved when educational choice is translated into science-based entrepreneurship. Identifying these decisions also allows us to hypothesize what incentive structures should be crucial. Our suggested framework is informally tested by an in-depth examination of the experiences of Sweden and the US. Despite large levels of R&D spending and comprehensive government support schemes, science-based entrepreneurship has been far less important in Sweden compared to the US. Our analysis points to weaknesses in the Swedish incentive structure in key respects: the rate of return to human capital investment, incentives to become an entrepreneur and to expand existing businesses, and insufficient incentives within the university system to adjust curricula and research budgets to outside demand. Several policy measures during the 1990s have reduced the weaknesses in the Swedish incentive structure. The current emergence of a more vibrant entrepreneurial culture in Sweden in some areas is consistent with these changes. Our analysis suggests that a policy aimed at encouraging science-based entrepreneurship should focus on strengthening individual incentives for human capital investment and entrepreneurial behavior both within universities and in business.” By Magnus Henrekson and Nathan Rosenberg, October 27, 2000. (PDF, 33 pages.)

The following papers are available from the United Nations University Institute for New Technologies (UNU/INTECH):


Deregulation, Entry of MNCs, Public technology procurement and Innovation capability in India's Telecommunications Equipment Industry
Abstract: “India has a sizeable telecom equipment manufacturing industry. The industry, which was originally dominated by just one state-owned corporation, has now been deregulated. Currently the industry consist of twelve SMEs, which manufacture small and medium switches and seven large firms (of which five are TNCs) manufacturing large switches). The country has a history of extreme dependence on foreign technology imports through essentially the licensing route to manufacture large switching equipment. These imported technologies were shown to be inappropriate to the usage pattern prevailing in the country. Consequent to this, considerable investments were effected through in -house R&D to adapt this inappropriate technology to local usage conditions. However some systematic efforts towards building up of local innovation capability through 'green field R&D projects' were initiated only around the mid-1980s. The paper defines innovation capability in telecoms equipment in terms of the ability to conceptualise, design, and manufacture state-of-the-art tecommunications equipment coupled with the ability to keep pace with important technological changes. This definition of innovation capability is operationalised in terms of an index of R&D. By taking three cases of telecoms technologies namely (a) main automatic local exchanges; (b) a Wireless in Local Loop access technology; and (c) telecom software exports, it is demonstrated that the country has a growing innovation capability in this sector. A survey of the various contributory factors identifies public procurement as the main instrument that has stimulated this activity. But with the opening of the telecoms carrier industry to private sector providers, this may become less of an effective instrument in the years to come.” By Sunil Mani, February 2003. (PDF 240 Kb)

Moving up or going back the Value Chain: An examination of the role of government with respect to promoting technological development in the Philippines
Abstract: “The Philippines is one of the leading exporters of high technology products from the developing world. However its production of these items is largely based on assembly of imported components. Affiliates of MNCs and small and medium local companies dominate the country's manufacturing sector. Successive governments have been grappling with the problems of moving up the value chain in the economic sense of the term or going back it in the technical sense. The paper undertakes a detailed review of the various policies and instruments put in place by various governmental agencies to hasten this process. Availability of adequate quantity of scientific manpower and financial schemes to encourage technology development at the enterprise-level are identified as the key factor inputs that are required for moving up the value chain. The analysis shows that the country has a serious shortage of scientists and engineers and there are also serious questions about its quality. Further technology financing schemes are insignificant and fragmented. Consequent to this the institutional support that is available for moving up the value chain in most high technology- intensive sectors is under some doubt.” By Sunil Mani, November 2002. (PDF, 446 KB)

Systemic Coordination and Human Capital Development: Knowledge Flows in Malaysia's MNC-Driven Electronics Clusters
Abstract: “Using two MNC dominated electronics clusters in Malaysia, this paper examines the development of human capital from two knowledge and skills acquisition modes - formal education and learning by performing - which were dominant in the successful evolution of industrial districts. Ineffective systemic coordination throughout the country from federal institutions has restricted the supply of high tech human capital from formal institutions of education and training. Hence, firms in Penang and Kelang Valley have faced growing demand-supply deficits. Restrictive immigration policies have hampered firms' options of seeking high tech human capital from abroad. Differential systemic coordination at the regional level has produced different levels of network synergies in Penang and Kelang Valley. Stronger systemic coordination and network cohesion has stimulated greater differentiation and division of labor, engendering the movement of tacit and experiential knowledge embodied in human capital to support industrial dynamism in Penang. Weak systemic coordination and network cohesion has confined MNCs to largely truncated operations without significant levels of differentiation and division of labor in the Kelang Valley.” By Rajah Rasiah, June 2002. (PDF, 299 KB)

Research Capacity Building in Nicaragua: From Partnership with Sweden to Ownership and Social Accountability
Abstract: “This paper analyses the Nicaragua-Sweden partnership to build research capacity in Nicaragua with support from SAREC (the research division of the Swedish International Development Agency). It looks at the history of this twenty-years old partnership and identifies the main outcomes and impacts, based on extensive quantitative and qualitative data collection from various sources. The main intention was to contribute to the direction of the future co-operation between Nicaragua and Sweden both at a local level and at the donor's (SAREC) level. The paper, however, attempts to go further beyond a case study by proposing and developing a general argument. This is that modalities of support to research capacity building in the South need to move from old assumptions concerning knowledge production, utilisation and the nature of development. In order to develop such argument, the paper unveils and discusses the assumptions underlying SAREC's modality of support to Nicaragua and points out their limitations. It finishes by suggesting new assumptions to be taken into account when designing modalities of support to research capacity building, as follows: i) the notion of innovation as a non-linear process involving different stakeholders and forms of knowledge; ii) the need for social relevance and accountability; iii) the idea of self-determination and local ownership.” By Léa Velho, October 2002. (PDF, 341 KB)

R&D in the Public and Private Sector in Brazil: Complements or Substitutes?
Abstract: “The purpose of this paper is to analyse the evolution of the relations between the Brazilian public research sector, particularly the universities, and the productive sector as stimulated, directly or indirectly, by government policies from the 70's up to the present days. Special emphasis is given to the schemes devised by the Ministry of Science and Technology, which was created in 1985. The argument we want to develop is that government actions to bring universities and enterprises closer together may have succeeded in doing so for the duration of a specific project, but were unable to create long-lasting links. The role of university research as complementary to, and not substitute for, industrial research is emphasised in a number of recent studies on innovation, as outlined in the first section. Then, we proceed to the analysis of the evolution of the relations between the public sector research and industry in Brazil. We start with a sketch of the industrialisation by import substitution model adopted in Brazil, highlighting the role played in it by local R&D, when the country was under military rule. Next we tackle the changes in those relations as the country reoriented its development model with the return to democratic regime in 1985. The Ministry of Science and Technology, created in that year, has since then devised and implemented a number of schemes to foster links between public sector research and enterprises. The most significant of those schemes are presented and their results are analysed. We conclude by saying that government actions to stimulate private investment in R&D as well as fostering links between enterprises and public sector research had a very limited success.” By Lea Velho and Tirso W. Saenz, July 2002. (PDF, 315 KB)

What is the 'Knowledge Economy'? Knowledge Intensity and Distributed Knowledge Bases
Abstract: “In recent years public policies for science, technology and innovation have attracted increased attention as a result of claims that knowledge-intensive industries are now at the core of growth, and that we are now entering a completely new form of 'knowledge society'. The objectives of this paper are firstly to examine what various authors mean by the concept of a knowledge economy or learning economy; secondly to describe quantitatively the creation and use of knowledge across industries; thirdly to develop an approach to understanding the knowledge intensity of mature, 'traditional' or low-technology industries. In exploring this issue, the paper first uses Community Innovation Survey data to describe some empirical dimensions of knowledge creation in Europe. It shows that knowledge investments are economy wide, not confined to high-tech sectors, and not confined to R&D. The paper then turns to concepts and a methodology for mapping the knowledge base of an economic activity. The aim is to generate a more nuanced understanding of the meaning of 'knowledge intensity' in production. The approach rests on what the paper terms 'distributed knowledge bases' that have a systemic and institutionally diffuse location. Knowledge for many key activities is distributed among agents, institutions and knowledge fields, and the problem is to understand the embodied and disembodied knowledge flows between them. An empirical example of such knowledge bases is described, for the food processing industry. The paper concludes by discussing how such 'distributed knowledge bases' might affect our conceptions of the knowledge economy and suggests links to current policy challenges in both developed and developing economies.” By Keith Smith, June 2002. (PDF 227, KB)

Internet Access in Africa: An Empirical Exploration
Abstract: “Using empirical and new field data, this exploratory study investigates the pattern of adoption of constraints to the use of the Internet in Africa. Cross country exercise using regression shows that Internet use is constrained by structural as well as cost-related factors. Field data from interviews of over two hundred academics in ten universities in Kenya and Nigeria confirmed much of the aggregate country level findings. Our study found that initial investment cost of end-user equipment limits the ownership of PCs, compelling academics to seek Internet access in cyber cafes and other public places.” By Banji Oyelaran-Oyeyinka and Catherine Nyaki Adeya, May 2002. (PDF, 294 KB)

Institutional Support for Investment in New Technologies: The Role of Venture Capital Institutions in Developing Countries
Abstract: “An important component of this institutional framework supporting investment in new technologies is venture capital institutions. A group of developing countries, especially from Asia has been rather successful in establishing and nurturing this way of financing new technologies. The present paper attempts to survey the efforts of these countries towards using venture capital institutions as financiers of new technologies. In specific terms, the paper, based essentially on secondary source material, maps out the ways in which these countries have gone about promoting venture capital based new technology firms. In addition, we analyse the VC investments in these countries in terms of stage, technology and source. The paper also develops an index of venture capital development across the selected developing countries. The index allows the ranking of the VC industry in any particular country according to its level of development.” By Sunil Mani and Anthony Bartzokas, May 2002. (PDF, 308 KB)

Manufacturing Response in a National System of Innovation: Evidence from the Brewing Firms in Nigeria
Abstract: “Employing empirical data, this study examines the innovation response of private Nigerian brewing firms to a state-induced crisis. We found that size, ownership, manufacturing skills, and technical affiliation were decisive factors in the innovation success of firms that survived and prospered under a decidedly turbulent industrial environment. State action, which was equally decisive but measured and based on scientific evidence, was accompanied by appropriate incentives and penalties. Firms with superior innovative performance recorded strong economic performance. The large firms with strong technical and financial support from foreign partners were able to tap into wider knowledge bases locally and broad and subsequently prospered.” By Banji Oyelaran-Oyeyinka, April 2002. (PDF, 317 KB)

Prospects for the Digital Economy in South Africa: Technology, Policy, People, and Strategies
Abstract: ”This chapter explores the on-going development of a global digital economy through a case-study analysis of its impact on and prospects in South Africa. It argues that four factors are key to understanding the impact of the digital economy on a developing country: (1) the level of technology, including its information and communications infrastructure and system of production and distribution; (2) the policy and regulatory framework and initiatives; (3) the human capacity and income distribution; and (4) the strategic approach of the state in response to dramatic global and domestic processes. The chapter explores these four factors in the Republic of South Africa, with a focus on the period 1995-2000. Data for the study are drawn from survey research, published reports from national and international bodies, scholarly journals, structured interviews, and participant observation. Key findings of the study are as follows: an insufficient information and communications infrastructure remains a barrier to growth of the information economy in South Africa, especially in peri-urban and rural areas; awareness of the importance of the information economy is growing, but current human resources and development strategies are insufficient to meet human capital requirements; significant efforts have been made in order to re-orient the South African policy environment into one supportive of growth in a global digital economy; and South Africa's role as a leading African and developing world economy places additional burdens on its need to engage in regional, and global policy formulation activities in support of the emergence of a new regime for global e-commerce that is supportive of the strategic goals of the developing world.” By Derrick L. Cogburn & Catherine Nyaki Adeya, April 2002. (PDF. 250 KB)

Government, Innovation and Technology Policy, An Analysis of the Brazilian Experience during the 1990s
Abstract: “The purpose of this paper is to survey the various ways through which the Brazilian state has intervened in the area of technology development at the enterprise level. Government intervention in technology development has manifested itself in terms of four areas: First it had placed restrictions on the import of foreign technology, but most of these restrictions were removed or diluted as part of the liberalisation strategy of the 1990s. Consequently the cost of purchasing disembodied technology has registered some significant increases during the post-liberalisation phase. Second, it has initiated a number of schemes through which domestic technology development is financed. In terms of instruments, these can be classified into loans and grants, tax incentives and venture capital. Third, the state has intervened to create an adequate supply of extremely well-trained scientific manpower. While there appears to be no supply bottlenecks, the demand for scientists and engineers appears to be very low. The very low density of scientists and engineers indicates this. Finally the Ministério da Ciência e Tecnologia (MCT), the main administrative agency responsible for innovation policy, seems to be aware of the problems faced by the innovation system in the country. It is in the process of giving shape to a new policy on innovation, has introduced new research grants, etc., but it has not addressed itself to the fundamental weakness of the innovation system, namely the low density of scientists and engineers in the country.” By Sunil Mani, December 2001. (PDF, 305 KB)

Innovation Systems, Institutional Change and the New Knowledge Market: Implications for Third World Agricultural Development
Abstract: “This paper uses a simplified version of classical information theory to improve understanding of the dynamic potential of innovation systems in developing countries with a special focus on issues of agricultural poverty. Using examples drawn from emergent knowledge markets in industrialised countries, the paper suggests that such an analytical approach focuses attention directly on the types of institutional reforms necessary to improve the effectiveness of Third World agricultural R&D. Contrast is made with more conventional approaches that take institutional structures as given and focus more on factors such as price regimes, policy weaknesses and political will. The paper argues that so great now are the problems in this area (particularly in Sub-Saharan Africa) that there is a clear need for institutional reform to accompany relevant technological changes. In the absence of such reform innovative (and hence economic) potential is likely to be compromised.” By Norman Clark, December 2001. (PDF 257, Kb)

Working with the Market: The Israeli Experience of Promoting R&D in the Enterprise Sector and the Lessons for Developing Countries
Abstract: “The purpose of this Paper is to analyse the various ways in which the Israeli Government is supporting R&D in industry and draw some lessons from this experience for Developing Countries. The Israeli experience is rather unique in the sense that it uses mainly one financial instrument, namely the research grants scheme implemented by the Office of the Chief Scientist (OCS). The effectiveness of this scheme in raising the nature of and extent of innovative activity in the country has been the subject of a very lively and informed debate in Israel. In this Discussion Paper I not only take stock of this debate but also subject it to a detailed empirical scrutiny. There are two basic conclusions. The phenomenal growth of the Venture Capital (VC) industry (originally promoted by the state) is now becoming a competitor to the research grant scheme. But the main lesson for Developing Countries is the fact that it is the adequate supply of high-quality human resource that has played a part in making the research grant scheme a successful instrument. The research grant scheme is thus an effective way for the state to work with the market in promoting innovations in enterprises.” By Sunil Mani, December 2001. (PDF, 257 KB)

Conditions for Successful Technology Policy in Developing Countries - Learning Rents, State Structures, and Institutions
Abstract: “The paper develops an analysis of the economic, political, and institutional conditions for successful design and implementation of technology policy in developing countries. After a brief introduction (section 1), we discuss contending economic theories of technological change and technology policy (section 2). It is concluded that, despite many pro-market arguments, market imperfections inherent in the process of technological change make the creation of learning and innovation rents by the state potentially very beneficial, especially in developing countries. The next section (section 3) analyses the political and institutional factors that determine how effectively such rents can be created and managed. Then we discuss how the scope of technology policy in developing countries is affected by the recent changes in domestic and international policy contexts such as domestic deregulation and the emergence of a "liberal" world order represented by the WTO (section 4). The paper ends with a brief conclusion (section 5).” By Ha-Joon Chang and Ali Cheema, December 2001. (PDF, 325 KB)

Technological Change and Corporate Strategies in the Fertiliser Industry
Abstract: “A major restructuring process is taking place in the international fertiliser industry driven by the introduction of stricter environmental regulation in Advanced Countries and the expansion of local production capabilities in Developing Countries. The paper will analyse patterns of corporate adjustment in the fertiliser industry. The emphasis is on the unique characteristics of the fertiliser industry as the producer of a final product and a supplier of intermediate inputs to agriculture. These producer-user linkages will be examined in the context of Advanced and Developing Countries. It will be argued that the fertiliser industry has incorporated the specific characteristics of these linkages in its adjustment processes in both Developed and Developing Countries - but in very different ways. This analysis suggests significant implications for the design of policies, which could facilitate the introduction of cleaner production techniques in the fertiliser industry and the adoption of environmental-friendly production techniques in agriculture.” By Anthony Bartzokas, October 2001. (PDF, 286 KB)

A Framework for Policy-Oriented Innovation Studies in Industrialising Countries
Abstract: “This paper argues that there is increasing need for the integration of policy considerations in the formulation of research questions and in the development of analytical work in policy-oriented innovation studies. Despite the fact that Evolutionary and Innovation Studies theories have offered new ways of incorporating policy, little explicitness in this regard has yet been achieved and there is a risk that academic research following the new perspectives will be of little relevance for policy. Rather than a 'linear process' starting with empirical research aimed at linking competitiveness and economic performance to technological capabilities (in a comparative perspective and aimed at identifying 'best practice'), followed by very abstract and un-grounded 'policy implications', a new type of link between positive and normative economics in the field is required. Our approach suggests a new structure for policy-oriented and policy-relevant research, i.e. the integration of research on technological change and industrial transformation, with research on policy and the development of a conceptual framework for the design and implementation of innovation policies.” By Anthony Bartzokas and Morris Teubal, September 2001. (PDF, 286 KB)

Networks and Linkages in African Manufacturing Cluster: A Nigerian Case Study
Abstract: “Employing survey data, this paper investigates the basis for long-term sustainable development of industrial clusters in Lagos, Nigeria. We compare these metropolitan clusters with the Nnewi cluster, located within a rural setting in a homogeneous ethnic community. The characteristics of clustering examined are: the forms and intensity of inter-firm linkages, including the formation of trade networks, and the role of business associations. We found a significant level of collaboration among firms in sharing utilities and modest forms of subcontracting non-core activities among Lagos firms, but this is less so at Nnewi. The Lagos clusters have relatively high proportions of educated manpower but this important asset is underemployed in a situation of low grow rate of demand for quality products. The firms at Nnewi on the other hand are owned by seem-illiterates who came from trading backgrounds into manufacturing. Networks such as Industry associations are playing vital roles as information providers and as links into the global market although the benefits are yet to fully manifest. Ethnic and kinship ties play a prominent role at Nnewi while social networks and non-family ties are more important in the Lagos clusters. This study suggests that non-economic factors exert profound influence on the evolving forms industrial organisations in late industrialisation.” Bb Banji Oyelaran-Oyeyinka, September 2001. (PDF, 297 KB)

Financial Markets and Technological Change: Patterns of Technological and Financial Decisions by Manufacturing Firms in Southern Europe
Abstract: “In this paper we suggest that technological acquisition and innovation by firms involve new investment, and thus require a financial decision as well as a technological one. The level of analysis is the southern European countries and the impact of the European integration process on sectoral innovation and industrial restructuring processes. The paper suggests that technological development goes beyond incentives for technological investment projects. It depends on the quality of investment decisions and in the long run on the profitability of these projects. In consequence, as the structure and behaviour of the capital market strongly affects investment decisions, it will also affect technological development.” By Anthony Bartzokas, August 2001. (PDF, 208 KB)

Role of Government in Promoting Innovation in the Enterprise Sector An Analysis of the Indian Experience
Abstract: “The purpose of the paper is to analyse the role of the Indian state in promoting innovations in enterprise or manufacturing sector. The country's manufacturing sector is dominated by the Chemicals and pharmaceutical sector which also accounts for the largest share in R&D investments and in the number of patents granted. The paper begins by mapping out the broad external environment within which innovative activities of firms are encouraged. This environment consists of a series of policies. A detailed analysis of them showed that policies lack specificity in targets, the time dimension and budget. Four possible dimensions of the innovation system are considered, namely the (a) policies with respect to the supply of technically trained human resource for R&D; (b) the physical technological infrastructure; (c) fiscal incentives for encouraging innovation; and (d) promotion of technology-based ventures through venture capital funds. The country suffers from a chronic shortage of research scientists and engineers of the type that is required for R&D. The basic cause of this could be traced to the quality of science and engineering education in the country and to the ever-increasing brain drain. A network of government research institutes, which have been undergoing a major restructuring, specifically since 1996, dominates the physical technological infrastructure. However they continue to depend upon governmental grants and projects for their sustenance and their interaction with the domestic manufacturing sector is very limited. India does not have any major research grant schemes and even the one that it has, in actual operation, is directed largely at public sector enterprises. Most of the schemes are research loan schemes. In other words the extent of public subsidies for private sector R&D is quite low in the country. The country has a variety of direct and indirect tax incentives for R&D. However both a macro and micro exercise revealed that most enterprises do not perceive its existence as important. In most cases the level of R&D performed would be the same even in the absence of direct tax incentives. Finally an examination of the operation of venture capital funds showed that they conform to the ideal model of providing, by and large, equity support to technology-based ventures in their early stages. The paper also makes some critical comments on the quality of India's R&D statistics and makes suggestions for their improvement.” By Sunil Mani, April 2001. (PDF, 390 KB)

Government and Innovation Policy An Analysis of the South African Experience since 1994
Abstract: “South Africa used to follow a policy of import substitution, necessitated by subscription to apartheid. However, following the democratic elections of 1994, the country abandoned this policy and put in place a whole host of measures to increase its industrial competitiveness. Policy makers gave specific attention to achieving this goal through technological development. The country has shown considerable sophistication in framing the necessary policies and institutions to hasten this process of domestic technology development coupled with a better absorption of imported technologies. However, South Africa has not shown as much sophistication in implementing and evaluating these otherwise laudable policies. For instance, a significant number of research grants have been made available to its innovation system comprising the higher education sector, the science, engineering and technology institutions(SETIs) and the business enterprise sector. But this has not resulted in desirable results, as the R&D intensity and the number of patented innovations continues to be low. An analysis of the real weaknesses of the innovation system shows that the country suffers from a severe shortage of scientists and engineers who can engage in R&D. The reason for this is a near stagnant enrolment in science and engineering subjects and possibly migration abroad. Without addressing this basic lacuna in its innovation system, the country has put in place three sizeable research grants. Given the limited number of researchers, these research grants run the risk of "crowding" themselves out. Thus the South African case once again confirms our hypothesis that countries may not be successful in stimulating R&D in their enterprise sectors by merely fine-tuning financial instruments such as research grants and tax incentives. For financial instruments to be very effective, there has to be a critical mass of research scientists and engineers.” By Sunil Mani, February 2001. (PDF, 301 KB)

Do the Least Developed Countries need Science and Technology for Sustainable Development?
By Lynn Mytelka, Prepared for the Third UN Conference on Least Developed Countries, Round Table: "Education for All and Sustainable Development in LDCs" 16 May, 2001. (PDF, 6 pages.)