Bringing innovation

Congratulations! Now we exactly know how to bring about innovation in this country, and increase productivity: set up technology parks and incubation centres, improve academia-industry linkages, and attract venture capital, among a host of other factors. These were the key productivity-innovation messages handed out at the "First National SME Conference: contribution challenges and prospects of SME sector in Pakistan" organized by SMEDA and the University of Management and Technology yesterday.

One item that was obviously left out of the agenda was the role and purpose of SMEDA itself; what has it achieved in its long years of existence, and whether the country actually needs the state to hand-hold the SMEs in today's market-driven day and age. And if indeed the answer to the last question is yes, then what kind of reforms would it need to be really effective, given that it is seriously under budgeted, under staffed and precious little performance to show for.

One can't help but recall what Planning Commission's chief economist, Nadeem Javed told an eager audience at PIDE's conference in December 2015. He said that the biggest challenge to boosting productivity and innovation were (a) reforms implementation, and (b) behavioural change in the sense of creating a social capital.

Despite all the promises in May 2013, reform implementation is absent. As far as economy is concerned, the PML-N can boast of macroeconomic stability, the manna from the heaven (CPEC), and increased power generation. But it has nothing to show for when it comes to reforms. And it appears it has little interest in reforms too; when the pipe is being flooded (with CPEC flows), and then why bother fixing the leakages (reforms). In other words, that road is not going anywhere.

As for creating a social capital and bringing about a behavioural change to foster innovation and entrepreneurship, there is very little research done in Pakistan in terms of how to bring about that social change and what factors can change attitude.

One study that did attempt to fill that gap was by Mohammed Nishat and Talha Nadeem of the Institute of Business Administration. Presented at PIDE's mega moot last year, the study offered little hope. It said that "individuals who often hear stories of successful entrepreneurs in the Pakistani media are 4 percent more likely to fear failure, at 15 percent significance level. This may indicate that success stories in the media are given less weight than (failed) experiences of personal contacts."

In English, it means that success stories in media are not enough to encourage entrepreneurship (and plausibly innovation). Little wonder then even among the big ticket corporations in Pakistan, one hardly finds the spirit of innovation and entrepreneurship. Short of Engro Corporation that can boast some failed pilot projects (that suggests risk-taking genes of the group), there are hardly any (read: no) business groups that venture beyond me-too, box standard, sure-shot-success opportunities.

The IBA scholars suggest creating more networking opportunities between established and potential entrepreneurs, and exposing students to confidence building activities. These and activities like 'university-industry collaboration, 'cluster development' etc - that are critical for innovation linkages (see graph) - are always welcome.

But whether these should be done by the state, led by the likes of failed state-organizations, or whether the society should grow organically? These discussions are often sent to the backburner with cliches that these are old debates, only that they resurface time and again as failures become larger every few years.