R&D key to boosting Asia’s trade competitiveness

3 October 2013
ITC News
Panellists at the WTO’s Public Forum say Asian economies need to boost spending in research and technological development to become competitive in global markets

Developing countries in Asia need to invest more capital in research and development (R&D) to encourage entrepreneurship and enhance trade competitiveness, according to panellists at the World Trade Organization’s (WTO) Public Forum.

A key message of the panel discussion on ‘Promoting technological capacity building and enhancing trade competitiveness in Asian economies’, held on Wednesday 3 October at WTO headquarters in Geneva, was about increasing funding to develop new technologies and strengthening collaboration among the business community, policymakers and research institutions to create an environment supportive of innovation.

The panel discussion was moderated by Vijay Kalantri, Vice Chairman, World Trade Centre (WTC) Mumbai.

According to panellist Mr Jayant Dasgupta, Ambassador and Permanent Representative of India to the WTO, the largest developing countries, including Brazil, China, India, Mexico and South Africa, are increasing their spending on R&D. In China, he said, the ratio of gross domestic spending on R&D to the gross domestic product (GDP) has climbed by 50% since 2002.

Investing in R&D is one way of ‘enabling the environment for innovation’, Mr Dasgupta said. ‘To do it in the best form, there has to be a very close and synergistic link between industries and research institutes.’

Another way to bring new technologies into a country is through foreign direct investment, in the form of manufacturing facilities or franchises, or through outright purchasing of technology, Mr Dasgupta said. For the new technology to be effectively used, governments must ensure their trade and investment policies support entrepreneurship and innovation.

Technological innovation

Technological innovation is particularly important for small and medium-sized enterprises (SMEs) because they use the technologies – such as mobile devices, websites and online payment systems – to tap new markets for their goods and services, said Arancha González, Executive Director of the International Trade Centre (ITC), during the discussion.

ITC is enabling SMEs to connect to new markets by using different forms of technology, Ms González said. Farmers in Liberia and Benin, for example, are using a phone app to sell their products to buyers when prices are favourable to them. ITC has also worked with information technology (IT) companies in Bangladesh to set up virtual marketplaces, enabling them to work with clients around the world.

‘Our experience is that innovation is 10% having a great idea and 90% about translating these ideas into long-lasting solutions,’ Ms González said. ‘The difficulty is the 90% that remains – to translate these ideas into long-lasting solutions. We work on this 90%. Our philosophy is to make sure these solutions will remain once our operations in the SMEs or sector are finished.’

Norhalim Yunus, Chief Executive Officer, Malaysian Technology Development Corporation (MTDC), pointed out that countries need to find niches and develop innovative technologies that specifically fit them.

‘How can we be innovative and address our own problems without aping other countries where we cannot follow?’ Mr Yunus asked during the panel discussion. ‘First and foremost, we cannot copy others. Our innovation will be different from any others because all of us are in different stages of development.’

Policymakers and members of the business community need to collaborate to create an environment that ‘celebrates’ entrepreneurship, Mr Yunus said. He added that universities and research institutes can work to pinpoint a country’s technological needs, he said, and once the technology is made available, entrepreneurs can use it to enhance their business competitiveness.

According to Jason Munyan, Associate Economic Affairs Officer, United Nations Conference on Trade and Development (UNCTAD), this collaboration among different stakeholders is the key to creating an ‘innovative city’. Consumers and producers connect with companies, support institutions and members of academia, and are supported by banks and venture capitalists, to develop technological solutions that enable them to connect to global value chains, he said.