Science, technology and innovation are key to Sri Lanka’s future
Slovakia’s announcement today aims to shift from low – and middle-income countries to high-income countries in the next two decades. One problem facing this goal is what economists call a “middle-income country trap”.
A poor country with abundant Labour resources can produce labour-intensive products for the rest of the world and rise to middle-income countries. Yet, for two reasons, it will always be in the middle of a middle-income country. The first is that due to higher wages, the corollary of the middle-income level is no longer able to compete with the newly entered labor-intensive product market.
The other is that it cannot compete with the rich world, because it does not have the high technology required to do so. Therefore, the availability of advanced technology is a key factor in determining whether Sri Lanka can join the club of high-income countries in the next two decades. The way to do this is to accumulate a certain number of scientific bases at home. Such a base would produce new inventions, the seeds of future economic growth.
But invention alone is not enough to make a country go forward. In his book The Theory of Economic Development, The Austrian economist Joseph Schumpeter subdivided invention and innovation. Invention is a new idea, product or service creation. People with brainpower are constantly engaged in research and development. Therefore, scientific research is the foundation of new inventions. But invention itself does not help a country.
These inventions must be turned into commercially viable goods and services for people to use. The task was done by a group of people called entrepreneurs. Schumpeter says the process of converting an invention into a viable commodity and service is called innovation. Innovators will examine the market feasibility of the invention, mobilize the resources required, take risks and produce available goods or services. Therefore, without innovators, the invention will become a point of view or a prototype product that can be copied from the manufacturing process.
Only two recent examples can clarify this. The first Apple Macintosh desktop was created by engineer – inventor Stephan Wozniak. It would have been a prototype, if not for an entrepreneur named Steve Jobs. He mobilised resources through venture capital financing, organized production processes in the form of enterprises, developed supply chains and market chains, and built brands for apple products. The result is to create new products by destroying existing manufacturing processes. Schumpeter called this creative destruction.
Another example relates to what apple later called the iPhone, the smartphone that Steve jobs introduced to the market in 2006. The phone has a screen, and when the user is using his finger, he must use his finger refresh. Therefore, the screen should have no scratches and no damage. When Steve jobs asked, she found another American company called corning in 1960 created a glass, called “gorilla glass” for the use of in the United States air force fighter jets.
However, the air force did not use it and has been a prototype since 1960. When innovator Steve jobs discovered that gorilla glass was the ideal glass for the iPhone screen, inventor corning began making it on a huge scale. So an invention that had been idle for 45 years was put into use by a innovator named Steve jobs. Of course, all smartphone makers are now using Gorilla Glass to make phone screens. This has given birth to a global emerging industry.
Therefore, innovation should be invented to serve people. The invention was done by scientists, people working in places like ITI or university. They are the product of scientific research. That scientific research creates new technology. Therefore, science and technology and innovation are inseparable brothers. That was evident when South Korea recently hosted a world science and technology BBS sponsored by the oecd. That is “technology innovation creates the future”. In today’s situation, this is also Sri Lanka’s slogan.
Sri Lanka’s current production mix is based on simple technology. The economic complex, compiled by harvard and the Massachusetts institute of technology, has made Sri Lanka a simple product producer since 1995. So over the years, about 98 percent of Sri Lanka’s exports have been based on simple technology. The risk of this product mix is twofold. First, any other simple product manufacturer can compete in the world market for Sri Lanka.
This is already reflected in Sri Lanka’s garment industry, which is facing stiff competition from newcomers from Bangladesh or myanmar. Second, Sri Lanka will not be able to escape the trap of middle-income countries, with only simple technology. Therefore, scientific research not only produces new inventions, but also produces complex inventions which are not easily replicated by others. This is a major challenge for the country’s research institutions today.
In a recent economic policy statement from congress, Sri Lanka is working to create wealth by increasing its export capacity. ‘it must produce a larger market than the domestic market,’ the statement said. This is the policy theme of a generation of east Asian countries including South Korea, Singapore, Taiwan and Hong Kong. They can successfully avoid the trap of middle-income countries.
But how? By devoting more and more resources to research and development each year, a huge research library is established. According to the world bank, the two tech powers, Singapore and South Korea today, have continued to account for about 2 per cent of GDP in both public and private sector research and development. That should be equivalent to about 0.1 per cent of GDP in Sri Lanka. It is clear that Sri Lanka will have to increase its r&d spending to a higher level to achieve a larger production target than the domestic market. It is suggested that the government should spend 2% of its GDP on research and development in the next decade, when it will gradually increase its funding to 6% of GDP.