AN INNOVATIVE POLICY FRAMEWORK FOR TECHNOLOGY CAPACITY BUILDING OF SMEs IN ASIA PACIFIC REGION By DR

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AN INNOVATIVE POLICY FRAMEWORKFORTECHNOLOGY
CAPACITY BUILDING OF SMEs IN ASIA PACIFIC REGION
ByDR. S.P.AGARWALPROF. HEAD, CITT, INDIAN
INSTITUTE OF FOREIGN TRADE, NEW DELHI,
INDIANATIONAL WORKSHOP ON SIS AND TECHNOLOGY
CAPACITY BUILDING POLICIES TO ENHANCE
COMPETETIVENESS OF SMEs ORGANISED ByUNITED
NATIONS ECON0MIC AND SOCIAL COMMISSION FOR ASIA
AND THE PACIFIC, CHINA COUNCIL FOR THE PROMOTION
OF INTERNATIONAL TRADEUNITED NATIONS ASIAN AND
PACIFIC CENTRE FOR TRANSFER OF TECHNOLOGYUNITED
NATIONS ASIAN AND PACFIC CENTRE FOR AGRICULURE
ENGG. AND MACHINERYBEJING, CHINA27-30 OCT.
2006
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UNCTAD TRADE DEVELMENT REPORT 2006THEME
GLOBAL PARTNERSHIP

• MILLENIUM DEVELOPMENT GOALS OF UN
• RELIANCE ON MARKET FORCES ALONE IS NOT ENOUGH TO
  ACHIEVE THE PACE AND STRUCTURE OF PRODUCTIVE
  INVESTMENTS AND TECHNOLOGY UPGRADATION FOR CATCH
  UP GROWTH AND POVERTY ERADICTION.
• IT IS NECESSARY TO REORIENT POLICY REFORMS TO
  STRENGTHEN CAPITAL ACCUMULATIONS, INNOVATION AND
  PRODUCTIVITY GROWTH

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TRENDS IN WORLD TRADE

• WTO
• RTA / FTA, GROUPINGS
• ENVIRONMENT, ENERGY, QUALITY
• FASTER TECH. DEV. AND IMPLICATIONS IN TRADE
• ICT
• TECH. MORE CAPITAL INTENSIVE AND HIGHER SKILLS
  ORIENTED
• TECHNOLOGY TRANSFER MORE COMPLEX
• HIGHER RISKS AND LEGAL ISSUES

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WTO

• TECHNOLOGICAL IMPLICATIONS IN ALMOST ALL
  AGREEMENTS INCLUDING TRIPS, TRIMS, GATS, TBT,
  TRADE FACILITATION, TECHNOLOGY TRANSFER GROUP SET
  UP
• ASYMMETRY IN TRIPS AND OTHER INTERNATIONAL
  AGREEMENTS
• PUBLIC FUND FOR SUPPORT OF RD AND INNOVATION
  ACTIVITIES
• CREATION OF HIGH QUALITY PUBLIC INSTITUTIONS
• A MECHANISM NEEDED FOR TECHNOLOGY CAPACITY
  BUILDING

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CHINA AND INDIA SHARES IN WORLD OUTPUT, TRADE
AND FDI
Source WIP Report 2006
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FDI INFLOWS, MAIN RECIPIENTS (US bn)
Source (WIPR 2006)
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OUTWARD FOREIGN DIRECT INVESTMENT STOCK
(US bn)
WIPR 2006
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RD Intensities of Sample Enterprises
Across Industries in India (percentage)

Continued.
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RD Intensities of Sample Enterprises Across
Industries in India (percentage)
Continued...
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RD Intensities of Sample Enterprises Across
Industries in India (percentage)
Note Parentheses show S.D. the bottom figure
represents number of observations
Source Nagesh Kumar and A.Agarwal
Liberalisation, outward orientation, and in-house
RD Activity of multinational and local firms
RIS, 2000, New Delhi
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CROSSBORDER MA PURCHASES BY BRICs COUNTRIES
US m
Source WIPR 2006
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CROSSBORDER MA PURCHASES BY BRICs COUNTRIES
No. of deals
Source Based on data from Zephyr
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HIGH TECHNOLOGY EXPORTS BY SELECT ASIAN
ECONOMIES, 1988-2003 (US Million)
Source UNCTAD
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RECEIPTS PAYMENTS OF ROYALTY AND LICENCE FEE OF
SELECT COUNTRIES
(2001 TO 2003) (US million)
Source World Bank, World Development
Indicators, 2003,2004 and 2005
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Expenditure on Higher Education
Source UNESCO Institute of Statistics (UIS).
Data used are most recent available data may
vary between 1998/99 and 2002/03.
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RD Spending in 2002
US billion
Source Global Competitiveness Report 2005 World
Economic Forum
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Scientists RD Expenditure
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Share in Global Research
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PCT AND DEVELOPING COUNTRIES
Although this is not a PCT contracting State,
applicants who are nationals and/or residents of
this State (or of any other State which is not
a PCT Contracting State) can file a PCT
application together with another applicant
who is a national and/or resident of a PCT
Contracting State
24.8 Increase in Applications in 2005 compared
to 2004, Representing 6.9 of all international
applications, which increased to 135602 in 2005
from 108,231 in 2001. (www.wipo.int)
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Global Competitiveness Rankings Among 125
Countries, 2006
Source Global Competitiveness Report 2006
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FOREIGN RD CENTRES IN INDIA

• No. OF CENTRES 7200
• RD INVESTMENT 1.13 bn(1998-2003)
• PLANNED INVESTMENT 4.65 bn
• MAIN SECTORS AGRICULTURE, IT, PHARMA, ENGG
  AUTO,
• 
  CHEMICALS
• PATENTS FILED 415, IN USA
• RD WORKERS 22,980
• INDIA PRFERRED DESTINATION - SKILLS
• - MARKET
• - ST INFRASTRUCTURE
• - IT
• - POLICIES
• TYPE OF RESEARCH AND CAPACITY
• BUILDING IN INDIA - CONTRACT
• - COLLOBORATIVE
• - SUPPORT OWN MANUFACTRUING
• - TRAINING FOR RD EMPLOYEES
• (IIFT, 2006)

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• Trends in R D Spending by Foreign Affiliates
• in Select Economies in 2003
• (Share in Business R D)

Total R D Expenditure in the World 676.5
b (2002) Total R D Expenditure of Foreign
Affiliates 67 b (2002) Total Business R D
Expenditure in the World 449.8 b (2002) (Source
WIR 2005, p.105,127)
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Technology Achievement Index (UNDP)

• LEADERS THOSE AT CUTTING EDGE OF INNOVATION
  DEVELOPED COUNTRIES
• POTENTIAL LEADERS RAPIDLY EXPANDING COUNTRIES
  CHINA, INDIA, SRI LANKA, THILAND, INDONESIA,
  ETC.
• MARGINALISE COUNTRIES LOW SKILLS, LIMITED
  DIFFUSION OF TECH. PAKISTAN, NEPAL, NICARAGUA
  ETC.
• (POSTNOTE MARCH 2004, N.D.216 PARLIAMENT OFFICE
  OF ST, UK)

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Characteristics Of ST In Developing Countries

• FAST MOVING VEHICLES INDIA, CHINA, BRAZIL
• SLOWER MOVING TRAFFIC MEXICO, ARGENTINA, SOME
  COUNTRIES IN MIDDLE EAST AND SOUTH EAST ASIA
• PEDESTRIANS SUB-SAHARAN AFRICA, SMALL ISLAND
  ESTATES
• (POST NOTE MARCH 2004, No. 16)
• (Parliament office of ST, UK)

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SMEs

• CONTRIBUTE SIGNIFICANTLY
• INDUSTRIAL PRODUCTION
• EXPORTS
• EMPLOYEMNT
• GDP
• LOCAL DEVELOPMENT
• INNOVATIONS AND TECHNOLOGY
• DEFINITIONS VARY WIDELY
• SCM INCREASING SECIALISATION AND VOLUMES
• IN TRANSITION, LIMITED RESOURCES
• NEED SUPPORT

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SMEs

• TECHNOLOGY DEVELOPERS (EU) 1-3
• LEADING TECHNOLOGY USERS (EU) 10-15
• TECHNOLOGY FOLLOWERS (WIPO) 80-85
• INTERNATIONAL COMPETITIVENESS 25
• (CHINA, US, SINGAPORE)
• SMEs at risk (JAPAN) 20-30
• SMEs insulated from globalisation 40-50
• (ESCAP 2006)

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Small Firms consistently and significantly
produce a Higher Number of patents per RD dollar
spent, in US
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KEY ISSUES

• FINANCE
• TECHNOLOGY
• MARKETING
• HR
• ENABLING ENVIRONMENT AND POLICIES
• INTERNATIONALSIATION
• MIND SET

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TECHNOLOGY

• TECH IS A KEY DRIVER IN KNOWLEDGE BASED GLOBAL
  AND GLOBALISING ECONIOMIES
• TECH CAPACITY AS A FACTOR OF PRODUCTION
  DETERMINES COMPETTIVENESS AND GROWTH PROPSPECTS
• TECH CAPACITY BUILDING INTEGRATED WITH OTHER
  POLICIES AND STRATEGIES FOR DEVELOPMENT, AND
  INCLUDES
• TECH DEVELOPMENT, ACQUSIITON TO
  COMMERCIALISATION, INNOVATIONS, DESIGN ENGG.
  TECH MAREKTING AND TECH. BRANDING, ETC.
• TECH. IS A FACTOR IN FDI, MA, INTERNATIONAL
  BUSINESSES, ETC.

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ISSUES IN ST CAPACITY BUILDING

• RESPONSIVENESS
• COORDINATION
• LONGEVITY
• NETWORKS FOR INNOVATION
• FLEXIBILITY
• (POSTNOTE MARCH 2004, NO.16 PARLIAMENTARY OFFICE
  OF ST,UK)

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RD CAPACITY BUILDING(UNCTAD TRADE DEV. REPORT
2006)

• sPARTIAL RECOVERY OF PUBLIC RD OUTLAYS THROUGH
  ROYALTY PAYMENTS BY PRIVATE USERS
• ALLOCATE SUBSIDIES FOR RD THROUGH COMPETITION AS
  PER INNVOATION PROMOTION STRATEGY.
• FUNDS FOR PRODUCT DIVERSIFICATION, NEW
  TECHNOLOGIES,
• CAPACITY BUILDING
• TECHNOLOGY PARKS WITH INCENTIVES TO ENTERPRENEURS

Continue.
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RD CAPACITY BUILDING (UNCTAD TRADE DEV.
REPORT 2006)

• FINANCIAL SUPPORT FOR ACQUISITON OF TECHNOLOGY
• STRATEGIC SETTING OF COMPATABILITY STANDARDS OR
  STANDARDS FOR LARGE MARKETS IN DEVELOPING
  COUTNRIES
• ATTRACTIVE LICENSING SCHEMES TO PROVIDE
  INCENTIVES FOR INNVOATIVE RD INTENSIVE COMPANIES
  TO PARTICIPATE IN STANDARISATION PROCESS
• ENCOURAGE EXPORTS AND INDUSTRIALISATION

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POLICIES AND MECHANISMS FOR SMEs

• POLICIES
• INVESTMENT POLICIES
• INDUSTRIAL TRADE POLICIES
• FINANCING POLICIES
• ST POLICIES
• SECTORAL POLICIEIS
• CEN TRAL AND REGIONAL OR STATE POLCIIES
• OTHER POLICIES
• MECHANISMS
• ADMINISTRATIVE MINISTRIES AND DEPARTMENTS,
  COMMISSIONS, COUNCILS
• INDUSTRIAL ESTATES, CLUSTERS, GROWTH CENTRES,
  PARKS, INCUBATORS, INNVOATION CENTRES
• DESIGN ENGG. CENTRES, TRAINING AND PROTOTYPE
  CENTRES, STANDARDISATION AND TESTING CENTRES

Cont
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POLICIES AND MECHANISMS FOR SMEs

• MECHANISMS
• RD INSTITUTIONS, TT AND ADVISTORY SERVICES,IPR
  INFORMATION SERVICES
• MARKETING AND TRADE FACILITATION SERVICES
• BANKS,VCs, INVESTORS, STOCK EXCHANGES, MICRO
  FINANCING,
• INDUSTRIAL ASSOCIATIONS
• INTERNATIONAL AGENCIES
• INCENTIVES
• TAX CONCESSIONS, DUTY EXEMPTIONS, SUBSIDIES,
  PRIORITIES IN SERVICES LOANS, GOVT. PROCUREMENT,
  RD SERVICES
• GRANTS FOR TECH. DEV., DIFFUSION, UPGRADATION,
  ACQUSITION, TRAINING CERTIFICATON AND APPROVALS,
  EXPORT, PROMOTING COLLABORATIONS
• HIGH TECH AND START UPS IN ADVANCED COUTNRIES

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Auto-Component Innovation System in India
-Infrastructure -Business Associations -Developme
nt, Eggs, -Design -FDI and Liberalizations -Incen
tives
Macro level
Competitive and Vibrant industry -Growth and
Exporting -Employment, -Innovation
capabilities -Increasing RD -Internationalizatio
n
Govt. Policies Market
-Information -Trade facilitation -Linkage and
Networking -Financing -External
Environment -Technology
Inputs
Outputs
Industry Entrepreneur
Micro level
-Finance and Marketing -Entrepreneurship
-Business Model -Engg.and Develop -Operational
efficiencies , -Cost reduction -Training
-IT -Easier Access to Technology
Proactive Government
Market Based Economy
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IT Innovation System in India
-Linkage and Networking -Research Training,
-Education -Eng.and Develop -Marketing and
Export Associations -Operational
Efficiencies -Seed Venture Capital -Training
-Investors
Micro level
-Start-Up -Innovations -Growth and
Exporting -Employment -High performances -Exports
-Globalization -Merger and acquisition -High
Value Addition
-People -Skills -Information -Financing -Trade
facilitation
Entrepreneurs Creativity
Inputs
Outputs
Macro level
-Policies and Mechanisms -Implementation -Infras
tructure -Implementation, -Research
Development -Education -Evaluation -Incentives
-International environment
Reactive Government
Knowledge Based Economy
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Emergence of a Model Bangalore as a multi-tech
global centre
Syngene
Biotech Cluster
Bio Informatics Startups
KNOWLEDGE INTENSITY
Biocon
Monsanto
Metah Flelix
Astra Zeneca
ARDC
IT Cluster
IISc
Infosys
Quest International
Bangalore Genie
LRDE
GE
Engineering Cluster
ITI
WIPRO
Strand Genomics
IISc
NAL
STPI
BEML
Aircraft Cluster
ITI
LRDE
IAM
ADE
NAL
BEL
SME Clusters
HAL
BHEL
HAL
IISC
Engineering Colleges trg. Cetnrees
NAL
HMT
IISc
Widia
CMTI
Public Private Partnership
50s 60s 60s 80s 80s 90s 90s
2k Time ( Not to Scale)
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SUGGESTED POLICY FRAMEWORK

• POLICIES
• DUAL TRACK FOR TRADITIONAL AND HITECH OR EMERGING
  AREAS,
• LONG TERM AND SHORT TERM
• TECHNOLOGIES NOT EASILY AVAILABLE FOR LOCAL NEEDS
• THRUST ON CAPACITY BUILDING
• DEMAND DRIVEN, TRANSPARTENT, EFFICIENT
• INTEGRATION AND COORDINATION
• SPECIFIC TECHNOLOGY POLICY FOR SMEs
• QUALITY EDUCATION AND TRAINING
• PREPARING FOR EMERGING WORLD TRADE RULES
• MECHANISMS
• REV IEW AND EVALUATE EXISITING POLICIES AND
  MECHANISMS
• AWARENESS IN SMEs
• Continued.

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SUGGESTED POLICY FRAMEWORK

• BANKS, VCs, ETC TO BE MORE TRANSPARENT, SENSITIVE
  TO NEEDS, RISK TAKING CAPACITY, TRUST
• PUBLIC-PRIVATE PARTNERSHIPS
• INFORMATION SYSTEMS, EXCHANGE OF EXPERIENCES,
  COLLABORATIONS AND NETWORKING, QUALITY ADVISORY
  SERVICES, ACCESS TO TECHNOLOGIES
• SENSITISATION OF POLICY MARKERS
• INTERNATIONAL INSTITUTIONAL MECHANISMS AND
  PROGRAMMES TO BE MORE RESPONSIVE AND DYNAMIC
• PROMOTE TECHNOLOGY MARKETING AND BRANDING
• ENTERPRENEURSHIP DEVELOPMENT AND ICT
• Continued..

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SUGGESTED POLICY FRAMEWORK

• INCENTIVES
• ENCOURAGE DEVLEOPMENT, ACQUISITION,
  COMMERCIALISATIONA AND TRANSFER OF TECHNOLOGIES,
  PATENTING AND PATENT UTILISATION
• SKILLS UPGRADATION
• ENCOURAGE TECHNOLOGY FOR BUSINESSES AND
  TECHNOLOGY BUSINESSES
• ENCOURAGE INTERNATIONALISATION AND COLLABORATION
  WITH TNCs
• RECOGNITION AND AWARDS
• ENCOURAGE ACADEMICS AND RD PROFESSIONALS TO
  INTERACT WITH SMEs

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Thank you