Financing the Future: Technology and Innovation for Asia-Pacific Sustainable Development

ESCAP Executive Secretary Shamshad Akhtar speaking at the Symposium of the 17th China Beijing International High-Tech Expo (CHITEC) in Beijing, China.
Photo Credit: Zheng Qidong

Delivered at the Symposium of the 17th China Beijing International High-Tech Expo (CHITEC) in Beijing, China.

Your Excellency, Mr. Wan Gang,
Vice Chairman of the CPPCC and Minister of Science and Technology

Excellencies,
Members of the Media,
Ladies and Gentlemen,

It is a pleasure to be back in China.

Exciting developments in science and technology, and associated breakthroughs and innovations, have generated phenomenal knowledge and exceptional changes in every field of human endeavour. This has profoundly impacted the way we live, the way we produce, and the way our businesses operate. For instance, we have powerful computers which manipulate the most complex data, and create innovative genetic and production solutions. Advancements in information and communications technology (ICT) have integrated the world economy through trade, capital flows and enhanced communication.

With the click of a mouse we can now surf the cumulative store of human knowledge across all geographical boundaries. Information sharing platforms are generating big data, whose storage, interlinkages and processing, offers tremendous opportunities to help us, amongst others, better understand customer behaviour, diagnose diseases, plan healthcare services, and model our responses to the changing global climate.

Bullet trains have enhanced our mobility in both time and space. Innovations in more efficient infrastructure have spread production beyond national boundaries, reducing the costs of doing business.

Collaboration across different disciplines and between institutes around the world has stepped-up our research into the human genome, and we are now decoding DNA to offer deeper medical diagnosis and better treatments. Vaccines and life-saving drugs have enhanced longevity, and bio-technology has boosted crops, biofuels, household products and medical treatments, with genetic engineering technology holding even greater promise.

These developments assure us that while global challenges are abundant as stresses grow, be they of population, urbanization, unsustainable consumption, health, or threats to our environment, science, technology and innovation (STI) offer opportunities to outpace these challenges.

Knowledge and creativity need to be further enhanced to meet the immense scope of our growing threats. Even though wealth accumulation and generation has grown, and there is empirical evidence that STI are productivity enhancers and the keys to higher and more sustainable growth, it is clear that greater efforts will have high development dividends.

Technological improvements can come from either innovation (developing one’s own new technologies) or adoption and adaptation (introducing technologies that have been devised elsewhere and, if necessary, adapting them). Without technology diffusion and scale, there can be no universal benefit from our myriad achievements and investments in STI.

Nurturing STI is therefore critical, and will help address some of our greatest development dilemmas. Amongst our key considerations must be that:

  • STI has not been well-integrated in development agendas. Until now, STI has lagged in the global development discourse, but as a vital enabler of the United Nations post-2015 sustainable development agenda, it is rapidly taking centre-stage.
  • Working in silos on science and technology will not yield fast innovation. Going forward, national policy frameworks must develop a culture of working on STI in a more integrated manner, as together they can be ‘game changers’ – facilitating shifts in the development landscape.
  • ICT benefits must be more fully deployed, with dynamic approaches to the adaptation and diffusion of innovation. From the power of big data, to the latest mobile applications which simplify everyday tasks, cutting-edge technology offers opportunities to accelerate economic growth, boost productivity, increase social inclusion, and provide new tools in the fight against poverty, inequality, and cross-border challenges.
  • There is a growing need for Asia’s two-thirds of the world’s poor to “catch up” with technology, both through adaptation and adoption. East Asia, for instance, has the potential to become a major innovator in its own right and can serve as a new hub through the promotion of South-South collaboration.
  • Quality of education and research has been a real challenge in the promotion of STI. The move to greater creativity, better learning, and more effective knowledge generation has to be promoted across the globe to ensure our next generation can take our STI achievements to new heights.
  • Low levels of investment in research and development (R&D) have been a real constraint on STI. To realize STI potential requires the right kind of support and finance. China is in a unique position to nurture innovation. Exploiting its competitive edge, China already raised annual R&D spending to $284 billion in 2013 – up 22 per cent in just one year. At these rates of growth, China’s R&D spending is likely to reach 2 per cent of GDP, and will likely surpass Europe’s R&D investment by 2018, and the United States by 2022.
  • Greater levels of investment are especially warranted in sectors such as clean energy technology. Under the 2 Degree Scenario for mitigating climate change, the IEA forecasts annual investments in clean energy will need to rise over the next decade by $630 billion. Governments have the power to create markets and policies that accelerate development and deployment of clean energy technologies, yet the potential of these technologies remains largely untapped.

To its credit, Asia has made some great achievements in STI, but more is needed…

Capturing STI dynamism, the Global Innovation Index, ranks some Asia-Pacific countries, such as Japan and the Republic of Korea quite high, although still lagging behind the United States.

China’s ranking is good, although some improvements in supportive institutions and market sophistication are needed if it is to rival other STI giants, and more effort is warranted on human capital and infrastructure.

Global innovation hubs are also increasingly located in developing Asia. Yet with all this dynamism, the least developed countries of Asia and the Pacific score particularly poorly, and less than 6 per cent of people in developing Asia-Pacific have access to fixed broadband. In Myanmar, for instance, there is just 0.01 per cent penetration, and in the Republic of Korea 99.6 per cent of young people have been active on the Internet for at least five years, while in Timor-Leste this figure is less than one per cent.

Asia and the Pacific is, in other words, still the most digitally divided region in the world. It is in ICT where STI has perhaps the greatest transformative potential, allowing us to more efficiently manage education, health and financial services. It is also the sector in which Asia-Pacific’s digital divides are most evident.

The ICT divide is especially clear as a gender gap – with women and girls in Asia and the Pacific, irrespective of location, level of income, or age, having less access to all forms of ICTs than men. The ICT divide is also pronounced in rural areas which remain underserved, or entirely unconnected, and over time this intensifies the ‘access trap’ – limiting demand and discouraging new market entrants.

These impediments to ICT development need to be addressed. Currently the real potential cannot be exploited until nationally-oriented Internet infrastructure networks are well integrated, affordable and reliable, and serve all. Significant investment in PPP infrastructure, and stronger public policy backed by regional cooperative frameworks, will facilitate ICT connectivity.

Besides looking at policy, institutional and regulatory frameworks and skill sets, it is also important for us to address other major challenges of STI financing – especially in the provision of greater support for innovation, R&D, as well as for entrepreneurial small and medium enterprises (SMEs).

To increase the availability and affordability of broadband Internet across the region, through better infrastructure, the Economic and Social Commission for Asia and the Pacific (ESCAP) has launched the Asian Information Superhighway initiative, and our member States will be meeting in October to discuss options for strengthening ICT infrastructure by leveraging the connectivity of our Asian Highway and Trans-Asian Railway networks.

Policy Agenda to Mainstream STI in Future Agendas

I have already covered a number of specific STI considerations, but STI promotion can further benefit from

First, improving the business environment, so entrepreneurs can translate ideas into commercial applications with calculated risk-taking. This should be complemented by trade and investment facilitation, effective regulations and corporate governance, financial and business education and training, and dependable infrastructure. Raising and enforcing quality standards for high-tech and knowledge-based industries will also be critical.

Second, facilitating high-quality FDI linking investors into value chains.

Integrating SMEs in global and regional production and supply chains calls for directing FDIs flows to SMES and allowing them timely and cost effective access to R&D, technology and other incentives.

Third, policy-based innovation and technology financing helps attract private investment. National innovation financing programs should leverage both equity and debt financing options, and capitalize on supply chain finance to improve liquidity and credit availability. Since SMEs suffer from a lack of collateral and information asymmetry, credit guarantees are also a key support mechanism, as is capital market development.

Fourth, enhancing human resource development to increase absorptive capacity for innovation and technology. There must be an emphasis on learning outcomes backed by good quality of relevant education, establishment of business and technology incubators and parks (which also attract FDI), and lowering the overall costs of doing business. The Multi-Media Super Corridor in Malaysia is a good example of providing the required infrastructure for innovation.

Fifth, using trade liberalization to support productivity and innovation. To improve competitiveness, there is a need to remove trade barriers, including trade facilitation, to reduce import costs and expand export opportunities.

Sixth, improving domestic intellectual property rights (IPR) legislation and enforcement: The challenge is to find the level of IPR protection appropriate to the stage of development of each country. In this regard, both China and India are in pivotal positions to shape the global intellectual property rights regime towards a more development-oriented approach. China itself accounts for the most significant increase in the use of codified and protected intellectual property rights, accounting for more than 24 per cent of global filings in 2012 .

Conclusion

In conclusion, science, technology, and innovation are central to promoting progress and are amongst the most powerful development tools available today.

The three main messages which I hope you will take away from my remarks are:

  • That the rising pressures of existing and emerging challenges require a fresh look at STI – and a renewed commitment to better partnerships – especially in regional and South-South cooperation;
  • That for sustainable development to have the greatest impact and highest chance of success, STI must be embraced as an enabler of our post-2015 development agenda; and
  • That STI requires greater nurturing and support – especially in terms of financing – to accelerate R&D for innovation, to facilitate wider sharing of knowledge, and to enhance adoption and adaptation of best technologies.

Properly supported, shared, and targeted STI can make the difference in our global efforts to end poverty, hunger, deprivation and inequality. They can help us to leap-frog outdated approaches, overcome resource scarcity, and reverse generations of environmental degradation.

As our Asia-Pacific economies drive the global recovery, our shared responsibility is to ensure that the tools of STI are employed to build a life of dignity for all, and to shape the inclusive future of shared prosperity which we want.

I thank you.