Follow example of countries that are innovation leaders
In the past four decades, the UAE has evolved rapidly with many indicators showing positive economic performance and continued diversification away from the natural resource based economy.
Given the national ambitions, the economy needs to move into the next phase to become an innovator. The drive for innovation spurs businesses to develop novel products that give greater competitive advantage and economic returns, which can be used to further fuel expansion.
But unlocking innovation is no easy feat. Businesses, governments and academia have dedicated a lot of time and energy to solve that puzzle and yet there is still no easy answer. Innovation is only possible through work aimed at achieving a more fundamental level of understanding using in-house and indigenous resources.
So the question is: what should the UAE do to bring innovation to its shores? The answer perhaps lies in learning from the experiences of other innovators - Switzerland, the United States, Taiwan and others. What they have done to spark innovation is create a robust research and development infrastructure.
To begin with, any kind of development requires financial resources. Creating a robust R&D infrastructure is not a short-term undertaking. Unwavering financial commitment must be made to ensure momentum is maintained and that the infrastructure is put in place for each phase of growth.
A comprehensive R&D infrastructure needs to focus on three primary components. The first is basic research, which develops new ideas and is mostly carried out by academic institutions. Funding is often provided by a government body such as the US National Science Foundation, National Institutes of Health or a similar institution.
These funding bodies, due to their non-commercial nature, emphasise basic and to a limited degree applied research directed toward specific missions and fields of interest. Thus, they are dependent on government allocated budgets for the sponsoring of research.
Funds are allocated to academic and research institutions that are focused on the types of fundamental research critical to economic development. To this end the Abu Dhabi Education Council has already prepared a detailed strategy that could be implemented on a competitive basis through the "request for proposal" process and peer review systems.
The second component of a comprehensive R&D infrastructure is applied research, which translates new ideas and understandings into innovations that are the basis of industrial R&D. At this stage, the research is sponsored by industry through research contracts with universities and other research institutions. The contracts present a clear set of objectives, deliverables, timetables and budget.
The third component is demonstration and deployment, which creates economic value and adds to the competitiveness of the economy. At this stage, research organisations have to demonstrate a clear understanding of a new technology's relevance to the economy by connecting it with one or more end markets. This can be achieved by establishing start-ups based on the technology or transferring it to an established company or agency with an interest in commercialisation.
Industrial R&D and applied research require government incentives. Most countries with an established R&D infrastructure incentivise research through tax breaks. Since the UAE does not have corporate taxes, a different model is necessary. I suggest that government offers to match every dirham spent by a business on R&D. This would serve as a sort of cost sharing scheme.
This will help ensure that academic and research institutions have funding for R&D and, more importantly, industry will not only be the recipient of R&D output, but also will be able to hire students who have worked on the sponsored research.
Funding, however, is not the only ingredient to innovative R&D. It also needs the commitment and involvement of the various sectors - academic institutions, industrial enterprises, government organisations and businesses. The academic institutions must create the high quality human capital required to develop new idea. Industries must provide guidance, know-how and funding to those academic institutions in pursuit of industry-relevant solutions; and government must provide the policies and regulations that incentivise sponsored research that can inject life into the R&D sector. These commitments should be made on a steady, long-term basis.
It is obvious that transforming the UAE into a knowledge-economy based on R&D is not something that can be done in a short period of time. Take for example, the time required simply to educate a student to doctorate level with a focus on R&D as a career. That may require eight to 10 years of college education. For that individual to enter the market and secure venture capital for commercialisation of a new technology could require an additional five to 10 years.
A robust R&D infrastructure in the UAE require a far more complex set of supports than economic sectors such as real estate, energy or services. This component of the UAE's "knowledge economy" is far more time consuming and resource intensive, while rewards are not always certain. Patience, commitment and facilitation are needed to ensure that an R&D infrastructure is given the time and resources needed to develop properly and sustainably. To succeed in its ambition - transforming the economy towards high-technology productivity - UAE has to bite the bullet and put in place the needed R&D infrastructure as soon as possible.
Fred Moavenzadeh is the president of the Masdar Institute
Published: August 15, 2011 04:00 AM