Innovation not just for rich countries — report

DEVELOPING ECONOMIES are slowly growing their share of intellectual assets as multinational firms and increased public spending drive up patent filings and research, the World Intellectual Property Organization (WIPO) reported last week.

Low- and middle-income countries spent a combined $350 billion in research & development (R&D) in 2009, accounting for nearly 30% of the global investment worth $1.2 trillion. Their share rose 13 percentage points since 1993 against their wealthier counterparts which spent $854 billion in 2009.

While high-income countries still claim almost 70% of the spending, the global agency took the uptrend as indication of the indispensable role of innovation in corporate competitiveness, economic growth, and social development. This narrowing gap between developed and developing economies in this respect could be attributed to “The Changing Face of Innovation,” according to a report titled as such.

“[I]nnovation growth is no longer the prerogative of high-income countries alone…. [It] is a key ingredient of sustained economic growth. In high-income countries, studies have estimated that innovation accounts for as much as 80% of economy-wide growth in productivity,” WIPO said.

Material technology for consumer products and manufacturing no longer dominate the innovation paradigm. Innovation now covers modifications of processes and organizational models toward greater efficiency, productivity, and competitiveness,

Production of complex technologies — a collection of patentable “discrete technologies” and processes — are on the rise as well. Complex technology industries, namely, telecommunications, software, computers, and electronics, tend to build patent portfolios, which can be used as leverage in licensing and collaborations.

Finally, the globalization of firms, together with greater mobility of students, professionals, and highly skilled workers, led to the narrowing of the innovation gap between developed and developing economies.

Innovation performance, as measured by intellectual property applications and formal R&D spending, are based on investments in education as well. Governments, for their part, thus play a key role in innovation through public spending on national science programs, universities, and research organizations.

“Firms and other innovators depend on the contributions of public research and of future scientists to produce innovation of commercial significance. Science serves as a map for firms, facilitating the identification of promising venues for innovation, avoiding duplication of efforts by companies,” the report read.

“On average, government funding is responsible for about 53% of total R&D in the middle-income countries for which data are available. As the level of a country’s income decreases, governmental funding approaches 100%, in particular for R&D in the agricultural and health sectors,” the agency said.

“Exceptions are Malaysia, China, the Philippines and Thailand where, for both R&D funding and performance, the business sector has the largest share but, nonetheless, [public research organizations] play a key role in contributing to industry R&D and ensuing innovation,” it added. — Eliza J. Diaz, Businessworld