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  • Don't make a fetish out of R&D spending


R&D is not a magic wand to boost economic growth, argues Banji Oyelaran-Oyeyinka, and focusing on it can crowd out other key activities.

For too long, policymakers and their advisers have held up investment in research and development (R&D) as the key to rapid economic growth.

The notion all too often appears in recommendations to poor developing countries, who are continually advised to chart their economic progress by increasing levels of R&D spending as a percentage of total funding.

There is no doubt that R&D can be used as a tool for learning and increasing competitiveness. But it is not the only source of knowledge or basis for industrial production. In fact, other activities — such as design, production and incremental changes to products and processes — are far more important to the industrialisation of poor developing countries, particularly those in sub-Saharan Africa.

These activities demand more policy attention than they currently receive. As a result, policymakers should not merely be advising sub-Saharan African countries to increase their R&D funding, but should instead advise these nations to support innovation through a range of activities, using R&D selectively.

Unhelpful comparisons

One reason that an emphasis on R&D spending can be misleading is that, in prescribing a national policy for science, technology and innovation, it is unrealistic to compare countries at different levels of development, or with different industrial structures.

The role scientific and technological knowledge plays in a country can depend on both of these factors. For countries at lower levels of technological development, for example, traditional and resource-based sectors still dominate the production landscape.

Even the economies of India and China — where great progress has been made in manufacturing and high-tech services, respectively — are still highly dependent on agriculture. In both countries it accounts for over half the gross domestic product (GDP).

Much of the manufacturing in Africa consists of informal or traditional low-tech activities by artisans, craftsmen and technicians. These centre round diverse but structurally uniform traditional products and production processes, such as indigenous knitwear or shoemaking. Efforts by policymakers to improve industrial production in sub-Saharan Africa should focus on raising the capability of these sectors.

R&D in these contexts is mostly informal — largely made up of activities on the shop floor rather than in formal laboratories. It is not until countries reach more complex stages of production that formal R&D assumes centre stage in knowledge creation.

For example, R&D funding is highest in member nations of the Organisation for Economic Co-operation and Development. Some Asian countries, such as China, also spend substantial amounts in this area. But using R&D to raise the knowledge stock in these nations is a relatively recent phenomenon, dating only from the 1990s — and this development was preceded by an intense period of learning how to use and assimilate imported technologies.

In sub-Saharan Africa, R&D spending remains low in both absolute and relative terms. In 2005, the total GDP of the region (excluding South Africa) was US$375 billion — just over half what the United States alone spent on R&D in the same year. Sub-Saharan African countries spend less than one per cent of their GDP on R&D, most of which goes into salaries and wages rather than core research.

Invention is not innovation

There is another problem with the prevailing overemphasis on R&D spending. The quest for novelty, which leads to invention, should not be confused with innovation. An invention is a new model or idea, but not one that inevitably leads to the supply of knowledge.

Innovation is the process by which organisations master and implement the design and production of goods and services that are new to them, irrespective of whether they are new to their competitors, their country or the world. Invention does not become innovation until it has run the gauntlet of financial and technical tests that culminates in a product, process or service traded on the market.

It would be a mistake for policy advisers to concentrate too much on the research element of R&D spending without giving adequate attention to spending on development. Industrial research in countries with large R&D budgets and successful innovation systems is dominated by developmental activities.

The United States, for example, spent 60 per cent of its R&D budget on development in 2005 — compared with just 18.7 per cent on basic research and 21.3 per cent on applied research. In addition, 66 per cent of all US scientific and engineering professionals work in occupations outside their field — notably management and marketing.

In developing countries, most innovation occurs through learning from imported technologies. These are assimilated, absorbed and adapted to create new technological knowledge.

To make this happen, sub-Saharan Africa needs to train skilled engineers and technicians, and selectively deploy research scientists in new growth sectors.

Greater efforts should be made to improve design and engineering skills — that is, systematic engineering and scientific specification of products, processes and systems. These skills lie at the heart of production systems and are of more immediate relevance to late industrialisation in sub-Saharan Africa.

Policy advice to the region should focus on identifying the right kinds of skills, sectors and strategies that usefully engage engineers in technical and manufacturing employment. What sub-Saharan Africa needs are policies for growth with equity.

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