EDITORIAL: It turns out that Pakistan was one of the countries that performed “above expectation” on the Global Innovation Index during the Covid years as research and development spending boomed and venture capital deals “exploded” across the world, which is very welcome.
According to the UN’s World Intellectual Property Organisation (WIPO), investments that drive innovative activities continued to grow last year even though the pandemic was still raging in many parts.
“This is contrary to what we expected,” according to WIPO chief Daren Tang, because the crisis sparked an upsurge in investment in “whole new areas” even though innovative spending usually plummets during downturns.
R&D spending by top corporates increased by about 10 percent to over $900 billion in 2021, higher than before than pandemic, with most going to areas like pharmaceuticals, biotechnology, and information and communication technology.
While countries like Pakistan did not have much by way of R&D spending, they did benefit from the rapid growth in venture capital (VC) which, according to the UN, is reminiscent of the internet boom and dot-com frenzy of the late 1990s. But this unprecedented VC surge might already be running out of gas.
WIPO says that the “VC outlook for 2022 is more sober” with geopolitical turmoil spilling out of the Russia-Ukraine war and growing climate, food and energy insecurity eating into productive investments.
“While innovation spending surged in 2020 and 2021, the outlook for 2022 is clouded not just by global uncertainties but continued under-performance in innovation driven performance,” the organisation said in its latest report; warning that the global economy was “at a crossroads this year”.
This ought to be a sobering moment for the international community. In hindsight, it is not really surprising to find out that the coronavirus, which literally shut the whole world down amid a wave of fear not seen in more than a century, advanced innovative spending in industries like pharmaceuticals and communication.
Nor is the sudden VC surge difficult to explain or understand. But the fact that the graph is turning and heading down as quickly as it went up is cause for concern. Yet this fact, too, is easily explained because the world’s most powerful, influential and rich countries went right back to business as usual as soon as the world reopened.
And now hot and cold wars, regime change conspiracies, sanctions, increased arms production and purchases, etc., dominate their agendas once again instead of things like saving the world from a virus that could well have changed life as we knew it.
It is also very important to acknowledge that the UN is perhaps the only outfit with the footprint and outreach to collect and compile such data and provide precious food for thought for global leaders. For all its failures to prevent just the kind of conflicts that are returning to the top of the news cycle and disrupting the interesting, and welcome, flow of innovative investment, it is also the first to notice such novelties and wave red flags when they are threatened.
It is also now the first to point out that the global innovation economy, traditionally heavily concentrated in North America and Western Europe, is gradually diversifying; with China, Turkey and India making significant advances.
It goes without saying, of course, that a world rebounding from the shock and shutdowns of Covid needs more, not less, innovative and VC investments because several poor countries are still struggling to find their balance.
Pakistan’s example of unprecedented VC inflows into its embryonic startup universe, a mini revolution of its own, is a fine example of how much things can change in very little time. Sadly, these trends are fizzling out just when they need to be protected.
Copyright Business Recorder, 2022
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